How to Use Referral Marketing to Get Ahead of Your Competition

By Arlen Robinson

Do you want to know why referral marketing is effective in driving traffic and sales even to a brand new website?

Referral marketing is useful because it leverages personal networks. These networks include an individual’s family members and friends. It works in driving traffic and sales because of the existing trust that exists between them. They already know and like each other. So they naturally act upon the recommendations of the people that they know.

Think about it. Would you instead look for someone you can hire, or will you hire someone who has worked with someone you know? I am sure that you will prefer the latter.  

So whether you like to know how to promote a Shopify store or you like to get more buyers for a product that you have just released, referral marketing is your best bet. 

Look at the following statistics.

  • Consumers are 4x more likely to purchase something that is recommended by a friend.
  • Over 70% of consumers will purchase something if their family or friend recommends it.
  • Word-of-mouth marketing is the reason behind 20 to 50% of purchasing decisions.
  • Referrals have an average lifetime value that is 16% higher than those who are not referred.
  • They also have a higher retention rate of more than 30%

So what does this mean for you and your business?

Well, it means more customers for a lower ad spend. It also means getting more responsive customers who will not only try your products but buy from you again and again. 

Trust is powerful. Business owners try to win it by creating content that proves their expertise. But instead of starting from scratch. You can always leverage the existing relationships of other people. This is the fastest way to promote a brand new business. A brand called Drum Set Lab did this, and they succeeded in getting more sales because the customers they got are already interested in their products. Referral marketing is excellent because it helps you find the best customers for your business. Customers would often advertise your products and services to the people who need it the most. 

How to Use Referral Marketing in Your Business

Now that you have seen the value of referral marketing, you may want to know how to implement it in your business. Here are some steps that you can follow to do that. 

Understand What Motivates People to Share Products and Services

Word-of-mouth marketing doesn’t just happen. It happens because you have motivated your customers that it is worth the share. You have to make them think that your products or services are so great that they must share it with other people.

One of the main reasons why people share a brand is a product. You need to ensure that you have a fantastic product, and other people will commend you when they use it. If you have this, the testimonials will naturally come in, and social proof can encourage others to start sharing your products and services.

Another way to encourage shares is to offer a reward. You can do this if you have an affiliate or referral program. This is a great way to get your business off to a good start. This is a strategy that Hunting Bow Lab used, and it helped get their business off the ground. 

Start an Affiliate or Referral Program

Now that you know how effective referral marketing can be for your business, you’ll now want to start an affiliate program or referral program. Fortunately, you can do this easily with software. There is referral software that you can use to create referral programs with a click of a button. You need to decide on the reward and the mechanics, and you are ready to go. 

Make it Easy

If you want more people to share your referral program, you have to make it easy. More than having a contact form where users can input the email addresses or contact information of their family and friends, you should also have an option for easy social media sharing. By doing this, you make it easy for referrers to join your program and recommend your brand to their family and friends. 

Make Your Referrers a Part of Your Team

Your referrers help you promote your business. With your referrers, you can get more traffic and sales to your business without doing anything. They will be doing the advertising for you. But that doesn’t mean that you should sit back and relax. You also need to do your part to nurture your referrers. Be sure to reward your most loyal referrers and give them access to premium referral incentives. Even better, invite them to an offline event to get to know them better.

Leverage Influencers

You can have a better performing referral system if you include influencer marketing into your strategy. Influencers are great for product recommendations because their followers listen to them. You can leverage this by creating an exclusive referral program for an influencer. To do this, you need to set up a page with their brand and contact them about your proposal. Since it is exclusive, they are far more likely to say yes. 

Turn it Into a Contest

If you want more people to start sharing your referral program with others, you have to give more than rewards. You also have to provide them with some extra prizes. You can do this by implementing a referral or affiliate contest. In this system, you commend your best affiliates and referrers. 
As you can see, you don’t need complicated affiliate marketing tools or an intricate referral marketing strategy to make this method work for you. Referral marketing can help you stand out from the competition because it leverages personal in-person networks. The circle of trust facilitates all promotions and transactions, and this system makes it very useful in driving traffic and sales. So if you ever want to promote your e-commerce site or another business website, this may be the best way to do it.

Arlen Robinson is the co-founder and VP of Business Development at OSI Affiliate Software
He is also the host of The Ecommerce Marketing Podcast where he discusses marketing strategies with experts from all over the world.

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