What is Referral Marketing?
Well, it is a simple methodology and as the specialists in referral and affiliate marketing in New Zealand we’re very well qualified to answer the question.
Referral marketing is a method of promoting products or services to new customers through referrals. Commonly this is known as ‘word of mouth’. Referrals of this nature often happen spontaneously, imagine you are at a BBQ and someone asks about the beer you are drinking. You can either recommend it or denounce it. If you recommend it and that friend then buys the same beer next time they visit the supermarket you have effectively influenced their decisions and been a successful referral marketer.
With the rise of digital communications and social media this can take place on a greater scale and businesses can influence this through appropriate strategies as well as track the return on investment and the success of their referral marketing channel.
As a formal marketing strategy, referral marketing is a process to encourage and significantly increase referrals from word of mouth, perhaps the oldest and most trusted marketing strategy. The basic principal is to encourage and reward current customers, and a wide variety of other contacts, to recommend products and services to their online network.
It is a simple 3 stage process.
Stage 1 – Refer a customer
Stage 2 – Get a reward
Stage 3 – Repeat stages 1 and 2
Online referral marketing is the internet-based using a referral marketing software provider such as S.L.I.C.E. Digital.
By utilising our tracking technology to measure results and customer behaviour you can effectively gauge the return on investment from your referral marketing spend. Online referral marketing increases brand awareness, referrals and, ultimately, revenue on a pay for performance basis.
A study conducted by the University of Frankfurt and the University of Pennsylvania, on referral programs and customer value concluded that referred customers were both more profitable and more loyal than customers acquired through other marketing channels. Referred customers had a higher contribution margin, a higher retention rate and were more valuable in both the short and long run.
There have been a large number of hugely successful businesses that have been built on the referral marketing model. Some of the famous online referral marketing pioneers were Uber, DropBox, PayPal and Airbnb… all of whom are still running highly effective referral schemes as their primary source of generating new customers, rewarding current customers and building highly effective brand advocates in the process.
If you would like to know more about referral marketing and using S.L.I.C.E. Digital to increase your sales and leads please contact us now to discuss the options.