Why Referral Marketing Is Awesome

This post was originally published on the ReferralCandy blog as an infographic.

While content marketing and social media marketing are discussed and debated regularly, referral marketing is often neglected.

So, to remedy that, we’re going to discuss what referral marketing is, how it works, why it’s so effective and why we think you ought to seriously consider incorporating it into your own marketing efforts.

Why Is Referral Marketing Awesome?

We’re wired to understand referrals.

I mean, think about it. If you had a good experience using a product or service, wouldn’t you want to share it with all your friends?

If FedEx had taken the extra effort to ship your wedding dress overnight so you wouldn’t miss your own wedding…

Would you tell everyone about it?

I bet you would.

We naturally share our experiences with our friends. It’s part of our conversations. We talk about it.

It’s a win-win-win for all of us. We make referrals because everyone wins.

But there is a sad, unfortunate truth buried somewhere here.

And that is:

Your customers aren’t telling their friends about you. 83% of satisfied customers are willing to refer products and services… but only 29% actually do.

They love you, but they aren’t telling their friends about you.

Why?

There are many reasons, chiefly because they are busy and forgetful. They want to tell their friends about you and your product, but life gets in the way, and it slips from their minds.

What is Referral Marketing?

While it is disappointing to realize that your best customers aren’t telling their friends about you, you can do something about it.

Good marketers and entrepreneurs don’t leave things to chance. Good marketing, incidentally, is about deliberately influencing the process.

And that’s where referral marketing comes in.

Referral marketing is deliberately encouraging your customers to tell their friends about you.

Is It Worth The Effort Though?

Or is it better to focus on “proven” channels like SEO, Facebook Ads, and content marketing?

Well, statistics suggest that, yes, it is worth the effort.

Here are a few that would make your eyes pop:

• People pay 2X more attention to recommendations from friends.
• 92% of consumers trust recommendations from people they know.
• Referred customers are less likely to leave, making them more loyal to your brand.
• Referred customers bring you higher profit margins (as high as 25%!)

Referral marketing is the secret weapon behind the growth of some of the big-name brands today. Shopify says: “Word of mouth is our best form of advertising.”

So, yes, referral marketing works.

It helps you attract customers who are more loyal and more profitable.

If Referral Marketing Is So Powerful, Why Don't All Businesses Use It?

Referral marketing is fantastic as a marketing channel, BUT it is difficult to manage on a larger scale.

It’s easy to give out rewards to your customers and their advocates if you’re only a small shop with a few customers to serve.

But that’s not where you want to stay right?

You want your business to grow. You want it to expand.

That means — as your business grows, it becomes more and more difficult to keep track of every single customer and friend that comes by your store.

Most businesses give up instead.

How Do I Use Referral Marketing To Grow My Business?

If you belong to the group of business owners who believe that referral marketing is the way, then here are some solutions to consider:

1. Use a Custom-Built Solution

If you’re a massive brand, like Zara or ASOS, you can afford to hire specialists to build a custom solution for you.

While the good thing is that you have full control over the entire process… the process can be long and tedious.

2. Use a Referral App

As a smaller business, your alternative is to use a referral app like ReferralCandy. Apps like ReferralCandy (available on the Shopify App Store) allow you to get started quickly, outsource your technical headaches and go back to focusing on your core business.

Essentially, a referral app allows you to:

1. Focus on improving your core business
2. Make your customers happier
3. Help their friends get what they need and…
4. Grow your business

It’s a win-win-win-win.

And this is WHY referral marketing is awesome.

About the author: Si Quan Ong is the Content Marketing Manager at ReferralCandy. ReferralCandy has helped thousands of eCommerce stores run successful referral programs. Try ReferralCandy free for 30 days here.