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Referral Marketing: A Simple Way to Spend Your Marketing Budget Smarter

10 minute read

For many marketers, referral marketing, advocate marketing, or word-of-mouth marketing (whatever you want to call it for now) is a new type of MarTech. In fact, many of you may be learning about it now for the first time. There's no Gartner Magic Quadrant. There's no Forrester Wave. There's no definitive place to explore all of the vendors in the space, let alone a simple way to separate the low-cost, bare bones players from the robust, proven, all-in-one platforms.

Then again, that’s one of the challenges with developing a new category. HubSpot certainly experienced this when it created the idea of inbound marketing. And the same could be said of Salesforce when it introduced cloud-based CRM. It's our job to address that challenge.

Your problem? Referral marketing programs drive revenue. And, as a marketing manager or executive, it’s your job to prove that you're helping drive revenue. But how can you make the argument for referral marketing when it’s such a nascent category?

The Easy Answer: Referrals Deliver Proven Results

The good news is that you already know referrals drive revenue.

Truth is, marketers can never get enough referrals. We know they're gold. And research backs this up. For proof, check out the video below, which highlights some results from a 2016 Nielsen Harris Poll Online survey conducted on behalf of Ambassador.

 

 
 
 
 
 
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Wistia video thumbnail - The Power of Referral Marketing
 

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That said, the issue has always been that driving, managing, and optimizing referrals has been incredibly difficult at any sort of scale. In fact, until now, most marketers relied on spreadsheets or some sort of wonky homegrown system to manage the process.

The result: Because of the manual effort that approach to referral marketing requires, you and your team don't put much of an effort into building a scalable and effective program. As a result, you end up leaving money on the table — money your competitors are using to steal market share from you.

How to Get Much More Out of Every Dollar You Spend

Using Ambassador, we routinely see customers across multiple industries — fashion eCommerce, solar, B2B software, health and fitness, online mattresses, etc. — achieve 600% or greater ROI through referrals. And that success isn’t a fluke. In fact, one of our customers is achieving 300% higher conversion rates from referrals over all other marketing channels combined.

So, here’s my advice: Take a long, hard look at your "set in stone" budget for this year. And ask yourself this question: "For the cost of the right referral marketing software, are there areas from my budget I should cut to make room to purchase this software now?"

If the answer isn't “yes,” I'll be shocked.

Keep in mind that the goal isn’t to rob Peter to pay Paul. Instead, what you're doing is redirecting your marketing dollars to a channel that you know — and studies confirm — is far more effective at creating awareness, driving leads, and generating revenue. When you do that, your dollars will work harder and smarter, and you’ll see much bigger results.

Trust me. As a VP of Marketing, I have to be agile and weigh the costs/benefits of the investments I make. I can tell you that if I'd heard of referral software a year ago — let alone known how effective it can be — I would have made the necessary cuts in my marketing budget to find room for referral software.

Why Now is the Time to Take a Closer Look at Your Budget

Now, I'm not making these statements because I work for a referral marketing software company.

I'm making them as a professional marketer with more than 20 years of experience who knows the power of referrals and how they help companies grow. I’m also making them because I know that paid advertising and other forms of “modern” marketing are not as effective as they once were. Why would I spend $40k per month on AdWords when I could generate far better results through referral marketing — for a much smaller investment?

Here's what you should do: Take a look at your strategy and re-evaluate your budget.

If there are areas that are underperforming, cut them and re-direct your investments to referrals. Because if and when you find the right referral marketing software partner (one with the right platform and great support), your only regret will be that you didn't learn about it earlier.

 

Building A World-Class Referral Program eBook

 

 

Posted in Referral Marketing, Best Practices

Jeff Epstein

Written by Jeff Epstein

Jeff Epstein is the founder and CEO of Ambassador Software, the World’s #1 Relationship Marketing Platform which enables brands like Hewlett-Packard, HubSpot and Madison Reed to build & scale referral, affiliate, partner and influencer programs.

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