4 minute read
It’s an interesting world out there these days. Businesses are having a tough time bringing in new customers - and traditional channels are just not enough. It's time to get creative and look outside the comfort zone.
In any economic climate, both B2B businesses and consumer brands can rely upon referral program software as a beacon of cost-efficient, high-value technology.
The organizations harnessing the power of word of mouth marketing across their social networks, through email and text, have a leg up on their competition. They have a strong, growing base of supporters who are ready to help to support their favorite brands.
There are an innumerable number of benefits to using an easy-to-use, yet powerful referral software platform, but let’s start with 5 reasons it makes sense to invest in technology right now:
1. Referral program software delivers high ROI
Throwing costly advertisements and offers at random customers doesn’t mean you’ll generate more sales. But factually speaking, a customer is four times more likely to make a purchase when referred by a close friend or colleague. And not only are peer-to-peer referrals more effective, but they also cost much less to generate, meaning your cost to acquire new customers is significantly less expensive than via traditional channels.
Referred customers have repeatedly shown to be the most loyal, high value clients. Building a steady flow of these customers will ensure a low-churn rate and more long-term customers; a one-two punch of revenue increasing success.
2. Referral marketing builds trust
Customer reviews are playing a much larger role in purchasing decisions than ever before. After all, without actually walking into a store and shaking hands with the owner, you’re heavily relying on what you see online to get a sense of the brand.
Now what if someone you trust recommends a product or service that you were researching anyways? You're probably more likely to go with it. In fact, only 15% of customers trust company-to-buyer social media messages, while 92% trust opinions from friends and family.
We live in a social first world and putting a face to a brand is more and more important to customers. Building a customer referral program to incentivize your customers to go out and build that trust for you is invaluable, and just can’t be accomplished through more traditional advertising channels, where outreach is expensive and ROI is low.
3. Referral marketing is viral
The idea of a viral campaign is pretty well known. One of your friends sends you a video, you send it to 10 of your friends, and he sends it to 20, ad infinitum. Referrals follow the same trajectory, where one friend refers two more, those friends refer 5…you get the idea.
This means that referral programs bring with them a compounding increase in sales. With word-of-mouth marketing you’re not just targeting one customer. You’re targeting one customer and the entirety of their social networks. With an effective referral program you can have hundreds of brand ambassadors driving awareness and increasing revenue for your brand, rather than reaching only one customer through a traditional acquisition channel.
For the math geeks, there’s a cool way to calculate the virality of your campaign using a viral coefficient formula. See how this applies to referrals, and you’ll get an idea of how effective word of mouth marketing can be.
4. Referral program software makes it easy to measure and optimize results
Given the social nature of referral marketing online, it’s relatively easy to track the ROI of your referral program software, thereby allowing you to optimize your campaigns to further increase revenue. Having the right referral program software will provide you with the information you need to make your program more effective, which significantly improves ROI.
5. Referral marketing doesn’t end online
Word-of-mouth programs have ripple effects that extend across all of your social networks, both online and off. If you’re talking to one friend, chances are your friend will talk to another. This goes back to the idea of viral campaigns, but with the right referral program in place you’ll be able to reach networks of customers that would be inaccessible without brand ambassadors promoting your brand offline.
Of course an online referral program is most successful when it's tracked and optimized frequently. Having the right referral program software in place to help you to meet your goals is the difference between exponentially increasing your revenue and being left behind by your competitors that are benefitting from the most powerful and easy-to-use technology. That’s not a place you want to be.
Posted July 15, 2020 in Referral Program