Referral Marketing: Make Your Customers Sell For You!

Increase the number of leads, reduce the cost of customer acquisition (CAC), speed up the sales process…. These goals are hardly part of your business strategy at this time.

And, in the face of these challenges, numerous actions and tactics are adopted:

  • Social selling
  • Active prospecting
  • Inbound Marketing

But there is one that, many times, is forgotten in the Marketing and Sales plans: the Referral Marketing – also known as the good old indication!

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So that you can start to make more concrete use of word of mouth to generate new business, in this article we will present ideas and cases on how to structure a good Recommendation Marketing plan. Good reading!

What is Referral Marketing?

As mentioned above, Referral Marketing is nothing new in the business world. It’s good old-fashioned word of mouth, the indication that comes proactively or from some stimulus from your current customer base or even prospects.

What needs to be absorbed by the Marketing and Sales areas is that this is a very efficient strategy to constantly increase lead generation and reduce (a lot!) the acquisition cost. In other words, it needs to be one of the main focuses of the entire commercial operation.

To illustrate how Referral Marketing is rejected, just look at the data collected by Loyalty 360 : 72% of Marketing and Sales professionals do not understand the value of word of mouth and do not invest in it as a solid sales tool either. A good reason to start rethinking your actions!

A referral is worth double

Perhaps you are thinking at this point in the article that the reason Referral Marketing is not a priority is related to its low effectiveness.

But this can be a big mistake and be leading your company to miss out on good opportunities!

To help understand the power of word of mouth within a sales strategy, we have listed some important data about this methodology below:

  1. Word of mouth generates twice the results when compared to investments in Referral Marketing and paid advertising campaigns (McKinsey).
  2. The LTV (Life Time Value or lifetime of a customer) is 16% to 25% higher when the customer’s origin is some indication (Wharton School of Business).
  3. 20% to 50% of purchases are the result of a recommendation from a customer (AdAge).
  4. Consumers who are recommended by other customers tend to have 37% more retention with the brand. ( Deloitte )

Is this data enough reason to start encouraging word of mouth in a structured way? We believe so!

Who Uses Referral Marketing Successfully?

Before getting to know practical tips on how to start using Referral Marketing as part of your Marketing and Sales strategy, it is interesting to remember some good examples of companies that built a good part of their customer base from this focus.

The biggest cases of Relationship Marketing are from technology startups and, probably, you’ve even participated in some action of these brands!

1. Dropbox

To this day, Dropbox offers extra storage space in its free plan for those who recommend the cloud file backup service to new users.

That’s how the company reached 4 million users in its first two years of operation, between 2008 and 2010.

2. Uber

Not only Uber, but also its competitors, offer race discount vouchers to every new user who comes in from a referral code.

This was an important driver for the company’s growth around the world. After all, in addition to sending the code to a group of friends, users also had good reasons to convince them to use the app!

3. Airbnb

Airbnb also has a very interesting Referral Marketing (or referral marketing, in Portuguese) program, offering discounted nights for every new friend who makes a reservation with their discount code.

The nominee, of course, also has a financial benefit for their first accommodation, resulting in a win-win operation.

4. Trello

Trello is another management and productivity tool that offers benefits for those who bring new users to the platform, even in the free version.

For each new user who joins this project management software, you have access to 1 month on the premium account, which has more benefits.

How to Boost Word of Mouth Marketing?

Now you already know the benefits of investing in Recommendation Marketing and recalled some examples that are part of our daily lives.

Thus, it is easier to think about how your company can implement a referral program or some referral campaign that brings real results for the business. Of course, always looking for the best return on investment!

Check out some tips below:

1. Invest in loyalty programs

The customer loyalty programs make a lot of sense when you operate in the B2C market and then in the B2B market, when you have a product or recurrent or facilitated acquisition of service.

Among the premises of a good loyalty program is the fulfillment of certain goals or objectives to reach an award.

This is the case of points programs that can be exchanged for leisure vouchers or product purchases, for example.

Here, the important thing is to have a solid platform with a good experience for the user, bet on development techniques similar to games or contests and have good prizes to be pursued.

After that, with good publicity, the results start to show up regularly!

2. Guarantee rewards to your customers who refer

Even if you don’t have a structured loyalty program, nothing prevents your company from recognizing those customers who make good referrals when this happens spontaneously.

Stimuli that are usually relevant are discounts on your product or service or an extra service, such as a small consultancy. For the B2C market, discount coupons also often bring good results!

By rewarding a referral that came naturally, you value your current customer’s act and encourage them to repeat the action again when there is a similar opportunity.

3. Encourage leads, not just customers

Often, the recommendations come from those who have not signed a contract yet, but are in the negotiation phase with your company.

Whether due to the delay in approving the budget, the need to fulfill a technical requirement or simply the lack of urgency on the part of the potential customer.

In longer negotiations – but always well conducted – it is common for the lead to replicate what he heard to colleagues from similar companies or with the same type of demand.

And to make it easier for him to reach the final agreement as well, be sure to acknowledge him in some way. A discount on hiring that is at stake can be a good way to go!

4. Customer Success is essential

It’s no use having an excellent customer relationship program if your homework isn’t being done well.

The chances of a recommendation skyrocket when your service is well provided and when your support and service team has customer satisfaction as its main objective.

Here on our blog, you will find good examples to structure an area of ​​Customer Success and ensure that word of mouth exists spontaneously.

Of course, collaborators in this area can always ask if there is any opportunity for a recommendation in any of the interactions!

5. Enchant at all touchpoints!

And, speaking of interactions, it doesn’t hurt to remember that all the contact points of a prospect or customer influence the Referral Marketing to happen.

From the lead generation page, through the first onboarding contact, support in case of doubts or problems, to billing for services: service and communication need to be impeccable, personalized and facilitate your interlocutor’s routine.

From an enchanting experience, how can you not replicate this to your professional contacts and become a true brand ambassador? Very difficult!

Invest in this little explored channel!

In this article, we went through the concept of Referral Marketing or Recommendation, we saw how it is still little explored as a lead generation channel and we also know some ways to implement it.

What matters is that you, as a sales manager, know how to recognize how this strategy can bring value to the business on a recurring basis, with lower acquisition costs and greater optimization of the time of salespeople, who focus on warmer leads, instead of bet on cold prospects.

Increasingly, this type of methodology that brings efficiency in sales and, at the same time, manages to engage customers and potential buyers, will be essential for business success.

Keep an eye on keeping your company competitive!