Customer referrals hinge on one basic concept that is preselection. Humans are social creatures and like to discuss with their friends and family before making a buying decision. Most of our choices are to some extent influenced by the people around us.
What is a Customer Referral?
A basic illustration of a customer referral is as follows:
Customer A buys a product
Recommends the product to his friend B
B purchases the product.
Customer A receives a cash reward for a successful referral.
Examples of Customer Referrals:
“Hey, nice shirt where did you buy this from? “
“Have you heard the neighbor’s new music system? I wonder what brand it is”.
“I’ve always bought a vacuum cleaner from this company. It offers the most reliable product. “
In most of these statements the product being discussed has already been vouched for. There is no need for the company to make a long drawn sales pitch or invest heavily in customer acquisition.
What do the Customer Referral Statistics Say?
Customer Referrals have a 30% Lead to Conversion Ratio.
Let that sink in. No other marketing campaign can have the kind of success as a customer referral. Your existing customers are your greatest assets and have the potential to be champions of your product.
Important Points for Customer Referrals
Build A Community: The key step to implementing customer referrals is to build a community around the customers. A community promotes two-way interaction. By listening to your customers and addressing their concerns you will be able to build a more customer-centric product.
Referrals should be based on One-to-One Interactions: Social media sharing of a product does not have the same impact as a verbal discussion between the referrer and the referred. A customer sharing a link to the product with his contacts is also a suitable approach. All good referral practices hinge on an existing customer convincing someone to try your product.
There should be rewards: A customer should be rewarded for making a referral. The best motivation for a customer would be a monetary benefit should his referral translate into a successful sale.
Automate your referral process: Customer referrals should be seen as an important activity that should be carried out in tandem with sales. The best way to ensure ongoing referrals and enthusiastic customer engagement is to design a clear referral program template. The process for customer referrals and its rewards should be clearly outlined on your website/app.
For any buyer, word-of-mouth has always been a reliable way to make decisions. Most companies are realizing the value of customer referrals and are finding innovative ways to incorporate it into their marketing strategies.
To read more about customer referrals click here.
Source: Annual Report Ampifinity.