Whether you are a new business or have been around for a while, growth is usually something you are going to be aiming for. Most marketing savvy businesses have a growth strategy, both in terms of how they plan to bring more clients or customers on board, and how they plan to scale the business up as they do. Growth naturally brings in more revenue, however also creates a greater demand for resources, so a growth strategy is not just about how to achieve and sustain growth, but also how to support it.
Here, however, we are going to look at the marketing side of your growth strategy. There are lots of ways your marketing can be designed to expedite or increase growth, however many business owners and marketing managers don’t consider all of them when putting together their strategies and marketing mixes. One method that can be so incredibly effective it is often used by growth hackers is referral marketing. In this article, we are going to look at what referral marketing is, how to implement it easily, and why it is a powerful tool in terms of promoting growth.
What is Referral Marketing?
Referral marketing is not a complicated concept. The idea of it is to incentivize your existing customer base to invite or refer people in return for a reward. Some notable examples of big names who use this include Dropbox, who offer more free storage space to customers who refer friends, and AirBnb, who give discounts to new customers as well as the friends who referred them when somebody signs up and makes a booking through a referral. Look around, however, and you will see almost endless examples of companies using referral marketing in one way or another, from mobile games that offer in game rewards for getting friends to play, through to utility companies and even banks giving people appealing perks if they recruit new customers on their behalf. Even companies that give their services away for free like Google sometimes use an invite scheme when they launch a new product, meaning that those who are early adopters can encourage new people to become users and grow the audience.
How to Effectively Use Referral Marketing
Referral marketing relies very much on you offering a reward people actually want enough to go to the effort of telling their friends about your product or service. You also need to give them a good product or service to begin with, as most people won’t be comfortable recommending something they’ve had a bad experience with even if they do get a reward for doing so. Look for value and add things you can give them that don’t cost you anything (like Dropbox with their offer of extra storage), or offer discounts. However, if you can’t think of anything enticing enough you can do that way then cash or vouchers will always work, though the expense of offering these needs to be offset by the gain of on boarding a new customer.
You also need to be able to efficiently manage the data on your existing customers and their referrals to run a referral marketing program effectively, though there are some great referral marketing Saas tools here that can help you.
What Makes Referral Marketing So Powerful?
There are a number of reasons why referral marketing can be one of the best tools in your marketing arsenal.
For one thing, it allows your customers to do a lot of the marketing work for you, and leverages your existing customer base and their networks. If the rewards are inspiring enough, people will go out of their way to pitch people they know, or even just their social media followers, to sign up with you. If the majority of customers want the rewards and sign up more than one person each, your business can grow exponentially from referral marketing alone.
Another benefit is that it creates a good corporate image with new customers from the outset. Because they had your business recommended to them, usually by someone whose opinion they trust, they are likely to already see you as a good company before they even begin to use your services or products.
If you don’t currently have any referral marketing beyond simply asking your customers to share your website with their friends or similar, then it is well worth looking at what rewards you can offer to get a good return on investment with a full referral marketing program.