Most young companies tend to have issues when it comes to standing out and becoming an authority. And this is especially true when it comes to competitive industries. We’ve all seen it or heard it – a company has the resources and the quality of service but just seems to lack the business. And most of those companies end up going out of business because of the lack of a new income of moving leads. Luckily, there are plenty of ways to ensure this never happens to your business. And using the many benefits of referral marketing is just one of the strategies to follow here.
What is referral marketing and why is it so important?
Referral marketing is a way for your customers to advocate the services or products that your company offers. They recommend them to friends and family members, thus contributing to your brand development strategy. And all this works on the basis of offering incentives of rewards to motivate the customers to participate in the referral program. While it seems as though it requires a lot of promotional effort and investments, there are also plenty of benefits of referral marketing. Therefore, using this tactic is definitely one of the finer ways to expand your customer base and secure new leads for your business.
The 13 benefits of referral marketing and how best to use them
Here are all the primary advantages of using this particular method to boost your business. So, here are the upsides:
#1: People trust referrals
The foundation of having others recommend services or products to you is that people tend to trust referrals. In fact, according to recent consumer polls, people trust reviews and recommendations more than other ways of advertising your business. When referred to a company by a friend or family member, we are four times more likely to convert.
#2: Improved customer retention rate
Engaging new customers is a much more expensive endeavor than retaining current ones. However, another one of the benefits of referral marketing is that you can eliminate this expense. People that participate in referral programs lean more easily towards remaining loyal customers.
#3: Increased marketing reach is another one of the benefits of referral marketing
With the implementation of a referral system, you don’t need to stress over how big or small your marketing outreach team is. Here, you will be able to recruit other customers to advocate for your company. And this will grant you access to events and occasions that are ordinarily off-limits to your team of marketers. So, you end up with a free backstage pass to potential clients, without having to put in any real promotional or sales work. Instead, others will tell friends and coworkers about you, thus growing your customer base as a result.
#4: Referred customers are bigger assets
When someone recommends a quality product or service to you, you are far more likely to remain loyal to that referral then them. Therefore, your value as someone who came in over a referral is much higher than that of the person that got you there. In fact, according to studies, your value is 25% higher than that of regular customers.
#5: Valuable data
I often talked about the importance of knowing your target audience. Personalization can bring about higher engagement, and it can build stronger relations with customers. Referral marketing offers the potential to track consumer referrals and engagement. That makes it easier for you to know how best to meet the needs of customers and offer them a personalized experience.
#6: The benefits of referral marketing – Great ROI Value
It might seem expensive to invest in an award program for referrals, but it isn’t. When you compare the potential ROI for each referral you get, you end up saving a lot of money on offering discounts and gifts. That mainly has to do with the fact that you can avoid having to immediately gift someone for recommending your business. Instead, you can implement a rewards system or membership club to streamline your referral marketing.
#7: Automation of the marketing process
Sure, it might take some effort and investments on your part in the beginning. However, once you set up an entire referral system, you can just sit back and watch it run itself. Because one of the benefits of referral marketing is the automation it brings to the table, having everything done by others.
#8: Increased engagement with customers
The high level of engagement that referrals can bring you directly influences the strength of your brand awareness and reputation. And as a result of this, your potential revenues grow as well. Referral engagement are far more likely to at least visit your website or contact your company than simply ignore it.
#9: Identify and target your most loyal customers
Customers appreciate the notion of recognition just about as much as you probably do. So, showing a little appreciation towards clients can get you a long way. On the other hand, brand indifference easily leads to as much as 68% of customers leaving. With the benefits of referral marketing, you can offer a much more personalized interaction experience.
#10: Increase brand awareness and reputation
The end game for most company plays is to ensure that reputation and brand recognition they work so hard for. Consumers today seek out strong brands to align themselves with and to believe in. And for that, you need your company to possess a strong voice and a positive influence. With the help of referrals, all this is more than possible to achieve. Referral marketing offers authenticity and transparency to your brand because others tell your story.
#11: Customization and easy to modify
With all the software solutions companies have today, it’s easy to customize referral platforms to match your particular needs. They are user-friendly and simple to tweak. Making changes to match current trends or experimental programs comes with minimal effort.
#12: Social media boost
For consumers today, social media has become a fundamental portal leading to all markets. So, having a referral program in place over social media channels is definitely a step in the right direction. And as part of this benefit of referral marketing, your company gets an added boost in social media advertising.
#13: Easy progress tracking
Finally, you can gain a detailed insight into the engagement rates and the overall success of your referral marketing through tracking reports. These reports are crucial for perfecting your referral strategy and bringing in more revenue for your business.