Referral marketing may seem simple. It is the process of letting your website visitors, subscribers, and customers to refer their family and friends to your business. You can easily create your referral program with referral marketing software.
Most platforms have compatible referral software that works with it. Whether you’re running your site on Shopify or WordPress, there is a software that you can use to set a referral program with a few clicks.
But running a successful referral marketing campaign is not that easy. If it was that easy, every eCommerce website that has tried setting one up must have been successful. But that’s not the case. With this, it is essential to look at brands that managed to use it successfully. In this article, you’ll learn about the strategies of some top brands in referral marketing.
Why Use Referral Marketing?
If you’re on the fence on using referral marketing for your business, here are some reasons why you should use it.
Referral Marketing Gives You Targeted Leads
Unlike other forms of marketing where you mostly target cold leads, referral marketing allows you to target warmer leads. This is because the business is promoted to the prospects’ family and friends. Since they have a close relationship with the referrer, their chance of acting on the promotion is often higher.
With this, you no longer need to use different analytics tools to analyze the characteristics of your customers. Your customers will look for relevant targets for your business.
Referral Marketing Can Help Your Business Go Viral
How can a business become viral? It happens when enough people talk about it. The best way to encourage this is to have a referral marketing program. With this, your customers and website visitors will have a referral page that they can use to refer people to your site. This is word-of-mouth marketing gone digital, so it has a broader reach.
On top of this, there is also the power of reviews. With this, products and services don’t only get shared. Customers also air their opinions about the said products and services. This convinces potential buyers to take out their wallets and buy.
Referral Marketing Is Based On Trust
When you promote a brand new product or service to someone you hardly know, their reaction is often a bit hesitant. They will usually evaluate if what you are saying is real and is beneficial to them. But in referral marketing, your work is done for you. This is because your referrers can only recommend your products and services to people who are close to them.
Given their relationship, the referrer doesn’t have to convince them to buy a product or service overly. Their recommendation is enough to convince them to provide the products or services a try.
Referral Marketing Results In Incremental Growth
You will never see another marketing method that has results as fast as referral marketing. The viral nature of referral marketing makes it easy for prospects to find the business. And with the power of social and digital sharing, it has now become easier to promote anything.
If you will harness this power and multiply that by the number of your referrers, you can expect your business to grow at a faster rate. This is the reason, why having a referral program is essential to your business. It is the quickest way to profits.
How Top Brands Are Using Referral Marketing
Now that you know how useful referral marketing can be for your business. Here are some examples of how top brands use it to refer more people to their business. What makes it more interesting is that most of them used this when they are just building their brand. This shows that this is the secret method for getting more traffic, subscribers, and sales, even for a brand new business.
You’ll know Google as the top search engine on the Internet. But it is more than that. Google is popular not only because of what it can do. It is also because of its referral marketing program.
Before a brand becomes significant, it starts from nothing. But it is only able to build its user base if it has a referral program. So when Google launched its new product – Google Apps for Work, they ensured that it has a referral program. This is where they paid everyone who has signed up for an amount of $15.
Referrers also have their dedicated link that they can use to recruit people. This works because it allows users to try out their new service before they subscribe. It is also designed so that users can refer the service to their family and friends. It shows that even a big brand like Google is considering referral marketing to grow its business.
Another technology that gained traction because of referral marketing is Uber. This works not just for the riders, but also for the drivers as well. They were able to recruit drivers in their platform by giving them rewards and incentives.
Early drivers in the platform claimed that their income is better when the app is just starting. This is because referral programs take some time to pick up.
Also, Uber rewards its riders by giving them discounts for first-time rides. This will encourage users to try the platform. On top of this, they also provide free rides to the friends of existing riders. This encourages their friends to sign up.
3. World of Warcraft
One of the brands that got viral attention is World of Warcraft. This is one of the most popular brands when it comes to MMORPG (Massively Multiplayer Online Role-Playing Game) games.
The great thing about these games is that they can offer rewards as limited-edition in-game items. They don’t even have to resort to giving out cash to get players to promote their game. The in-game item is often enough. Since they gave away a limited edition flaming horse for every referral, their players acted on the referral program and promoted the game on their own.
Another brand that managed to grow because of referral marketing is Dropbox. This is where they gave away an extra 500MB of free storage to anyone who successfully encourages a new user to sign up to the website.
They claim that this has been very effective for their business. They found that their sales grew by 60% from this. What makes it useful is the nature of the reward. They know exactly what their user needs, and they gave them just that.
This shows that they took a step back to understand the customer before they launch their referral program. They ensured that the reward is relevant to the needs of the customer. Because of this, their customers acted and promoted the referral program to their family and friends.
Another company that understood the needs of its customers is Evernote. Evernote is more than just a note-taking platform. It allows users to put different types of content and media for later access.
However, their free version has its limits. So, they lifted the restrictions for anyone who successfully refereed new users. From here, their user base grew to 100 million. This shows how compelling listening to customers’ needs can be.
PRO TIP: Evernote’s referral program is exciting because it doesn’t only reward users when they successfully refer someone to the website. Instead, they also reward them when their friend upgrades to a premium account. This encourages referrers not only to ask friends to sign up.
They even convince them to improve. This is beneficial to both the referrers and the business owner. This is the reason why their referral program is so effective.
Maple’s referral program is proof of how rewarding both the referrer and the friend is the right decision. Maple is a meal delivery service that is based in New York City.
Similar to Uber, it was able to get its early users through referral marketing. The secret is in their creativity. While other businesses throw in a discount code as a referral reward, they have something different in mind. What they did is they rewarded the friend with a free meal and the referrer with $15 credit with every successful referral. The idea of a ‘free meal’ attracted tons of new users for Maple.
However, there are some limits. Every user can only participate in the referral program once they have done two transactions with Maple. From here, they will be able to promote the program to their friends for a free meal. But there’s also a limit of 5 referrals per user. This way, the reward system will not be abused.
The great thing about this program is that it doesn’t only encourage users to try the service. It also helps them to transact with the brand at least two times. From here, the relationship with the brand would have been made. It will then be easier to get the user to order again. This is an intelligent way to structure your referral program.
What do you consider as a ‘successful referral’? It seems that businesses have different definitions for this. While most business owners consider sales conversion as a ‘successful referral,’ it is not the case for ReadyTalk. Instead, the brand chose to reward smaller acts of promotion like a single share or like. From here, they can build and nurture a relationship with their customers.
The approach of ReadyTalk is unique. Instead of launching an ordinary referral program, they approach their top advocates to do their referrals for them. Since they have already nurtured their relationship with them, it is easier to convince them to promote the program.
Tesla offers a unique product – an electric car. Because of this, they also provide an excellent referral program. Since they are offering a high ticket item, it is harder to get a new customer.
Their old referral program rewards customers who refer a friend with $1000. But they figured that it will work better if they encourage their customers to refer more people. To do this, they implemented a contest-type referral system.
In this system, their customers can win certain prizes when they refer people to the brand. On top of this, they also reward every person who can refer 20 people in their region with a free electric car model. The rewards are so great that it is hard for their prospects to refuse such an offer.
FreeAgent has a different approach because it is selling software. In their referral program, they also chose to reward both the referrer and the friend.
This is where they give both parties 10% discounts to their software. As long as they stay subscribed to the system. This is good for the brand for it encourages users to stay subscribed to the system plus they get a discount on their subscription.
Referral programs are not just for digital products. It can also be used in retail businesses like Harry’s.
Harry’s is a male grooming tool brand. They sell razors and shaving equipment. What makes their referral program unique is their users are automatically signed up to their referral program when they subscribe.
When they give their emails, they will be taken to a page where they have a referral link that they can share with their friends. On top of this, they also have a referral contest with prizes. This encourages more customers to refer people to the business.
You can learn from the experiences of these brands to come up with creative ways to launch your referral program. You don’t even have to be a big brand to reap the benefits. Even a brand like Best Hunting Bow Labs did this successfully.
These days, it is not enough to create an ordinary referral program. You have to step back and take a look at the needs of your customers so that you can give them a fitting reward. When you do this, they will sign up for your program on their own free will.