Finding the right method to attract new customers to your company is not easy. In the coming years, the e-commerce industry will find out that market leaders are going to focus on personalizing experiences and leveraging machine learning and AI algorithms in order to attract new consumers. However, there’s another tactic employed by web giants like Amazon, Booking.com, Slack, and Airbnb that has proven to continually attract customers. The method that they all use is called referral marketing.
Referral programs have helped each of these companies grow exponentially by engaging and capitalizing on their most important assets: customers. What started as good ideas for developing these businesses resulted in skyrocketing their growth with well-executed programs that leveraged referral marketing.
But creating an effective and successful referral marketing program is just the beginning. The real challenge is to ensure that your marketing activities incentivize referrals on an ongoing basis. They should result in loyal customers recommending your products or services to their friends and family.
As the owner of an e-commerce store, you can leverage referral marketing in many different ways. In this article, we want to showcase the benefits of referral marketing and provide you with the right tools that’ll help you get referrals from your existing customers. Before we get into the basics, check out Post Affiliate Pro, a great tool for managing your affiliate program.
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Referral marketing is a form of promotion that takes advantage of various strategies to encourage product recommendations. At the same time, it can also be perceived as driving sales from recommendations made by a third party.
Several studies have confirmed the advantages of referral marketing.
The 2019 State of Referral Marketing Report highlights that 30% of companies already have a referral program in place, and 75% of those say it’s the cheapest method for acquiring new customers. What’s more, according to a Nielsen report, 92% of consumers trust recommendations from people they know.
The most important advantage of referral marketing is that people tend to trust recommendations from someone they know much more than the information provided by a brand itself, online reviews, reports, or market research.
Check out additional referral marketing benefits below.
It’s almost guaranteed that you will gain more satisfied customers because they are already going to be more aware of your products or services and are incentivized by someone they trust. It’s true that final sales results will still depend on your commercial ability, but this undoubtedly paves the way for success.
With referral marketing up and running, sales cycles become shorter and the marketing budget is kept under tighter control as it focuses on encouraging a single, simple action – referrals.
A referral marketing strategy doesn’t change the company’s sales processes or the overall marketing plan. It also doesn’t require much time or effort from the marketing team because your customers do a lot of the promotional “work” for you in terms of their recommendations to friends or family members.
Every potential customer attracted to your online store by referral marketing activities will indirectly access information about your brand, so their brand awareness will be automatically boosted as a result.
Referral program incentives can be created and customized based on the extensive information obtained from customers who are interested in your products or services, and which is supplemented by knowledge from loyal customers who actively refer your brand to others.
Practically anything could be your referral incentive. In return for promoting your products, services, or online store in general, you can offer your customers a discount, money to spend in the store, a gift card, physical gift, or sample product. It’s strongly dependent on your offering and internal calculations.
It’s hard to give a definite answer to this question. If your products or services are not bought often, you can send referral emails to customers after each purchase. However, if you sell fast-moving consumer goods or, in general, have many returning clients, you can set special requirements that your customers have to meet in order to receive a referral offer.
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