11 minute read
While the primary goal for most referral marketing programs is to bring in new business, it's equally important to consider the other side of the proverbial coin: customer loyalty. According to a study by Customer Insight Group, Inc., loyal customers make up 55-70% of sales for a business. Furthermore, 78% of loyal customers are more than happy to spread the word about a brand they love.
How can brands leverage a referral program to nurture and engage current customers and kickoff a cycle of loyalty?
Let's start with why referral marketing?
Whether you're an online shopping aficionado or new to the world of digital purchasing, we can all agree that we're tired of banner ads and pop-up ads. Taking off my marketer hat for a minute, as a buyer, I would much rather ask and listen to the people I know and trust. That’s family, friends, peers, and colleagues.
And I'm not alone. In fact, 82% of Americans seek recommendations from their networks when considering a purchase.
Putting my marketing hat back on, it's clear that consumers want more information before buying products and services. With online conversations about brands ramping up at an unprecedented pace, there is the potential of scaling and tracking referrals and recommendations through unique personal sharing. That's where referral marketing comes in.
Referral marketing is a strategy to encourage happy customers and brand ambassadors to directly refer their network to your business.
How can a customer referral program boost loyalty?
There are many reasons to create a customer referral program for your business. It’s cost effective, builds trust between customers and your brand, provides a strong ROI, and drives retention. In fact, a study by Bain and Co. revealed that an increase in customer retention of just 5% could increase profitability by up to 95%. More so, Gartner Group indicated that 80% of a business’ future revenue is generated by just 20% of their existing customers.
Given the importance of these metrics, here are 8 tips to give your customer referral program a boost today.
1.) Make outstanding customer experience a priority.
Providing your customers with exceptional service shouldn’t ever be an afterthought. To the contrary, according to “Leading on the Edge of Chaos” by Gartner Group, making a commitment to customer experience can result in up to a 25% higher customer retention rate and revenue than focusing on just sales and marketing.
2.) Go above and beyond in every interaction.
Whether it’s answering a question about your product over the phone, meeting with a customer in person to deliver your product or service, or handling support after the sale, your aim should always be to ‘wow’ your customers. Make every customer feel as though they are your most important asset and they’ll want to do business with you again and again.
3.) Humanize your brand.
People who feel loyal to a certain company usually do so because they feel a personal connection. Regardless of the size of your organization, you should be striving to demonstrate to your customers that there are real people behind your brand. Show your personality through email, social media, and personal interactions with customers.
4.) Always be honest.
In a poll by the Better Business Bureau, an incredible 93% of US consumers listed a company’s reputation for honesty and fairness as extremely important to them. If you want customers to trust you, you have to give them ample reason. Don’t engage in any activities that could be perceived as deceptive, or you’ll end up losing in the end. Instead, create a culture of honesty and transparency.
5.) Treat them like insiders.
Want to really win your customers over? Treat them as if they’re an integral part of your company. Give them special sales and promotions that are only for your most loyal customers. Ask them for feedback and show them that you value their opinions. The more they feel like part of the team, the more loyal they’ll become to your brand.
6.) Admit when you are wrong.
Nobody’s perfect, and that goes for businesses as well as individuals. If you made a mistake, own up to it. Apologize to your customer for their bad experience and offer to make it right. Doing so will go a long way toward fostering long-term loyalty. Not only that, but according to The US Department of Consumer Affairs, customers who’ve had their issue resolved in a positive way are likely to share their good experience with 4-6 additional people.
7.) Make it worth their while.
One of the greatest benefits of customer loyalty is the word-of-mouth marketing it generates. Yet, even though 83% of satisfied customers would be willing to spread the word about their good experience, only 29% actually will. Make it worth their while to share your brand with others by implementing a quality customer referral program. This means incentivizing your customers with the right rewards.
8.) Say ‘thank you’.
Don’t just assume your customers know how much you appreciate their business….tell them. Send an email after the sale, or if it's possible, pick up the phone or write a note to thank them personally. Doing so will regularly remind them how important they are to your business, which will in turn foster a deeper commitment to your brand.
Scaling your program with customer referral management technology
Loyal customers are the lifeblood of any successful business. By implementing these 8 tips, you’ll be well on your way to improving customer retention and reaping all the amazing benefits that come along with it. And what if you could automate your referral program to be seamless and more efficient?
By automating the customer referral marketing process, you remove much of the complexity, tedium, and guesswork from running multiple campaigns with many program members.
Ultimately, automation allows your brand to scale this particular customer acquisition channel while freeing up your team’s time and resources to focus on the things that really matter — executing efficient, measurable, and profitable programs that, over time, positively influence every aspect of your marketing strategy.
Posted June 03, 2020 in Referral Marketing