7 Powerful Tips On How To Use Referral Marketing To Boost Sales

Brody Hall

Written by:
Brody Hall

referral marketing - header

While recently browsing the Playstation Network Store, I stumbled across a game called Stranded Deep. I don’t know about you, this is probably a unique fantasy I have, but I’ve always wondered what it would be like to find myself deserted on a remote tropical island.

Boom, my fantasy realized!

It was time to slip into a worn, ripped and sun-beaten business suit, master the art of paddling an airplane-deployed safety raft, and enjoy a few freshly picked coconuts on a sun-drenched stretch of golden sand.

Fast forward many hours of gameplay later and I’m enthralled; this very underrated indy gem is just the castaway outlet I’ve been searching for.

I can’t help myself, before you know it I’m on the phone to a fellow gamer friend. While still on the phone he has quickly jumped onto PSN and downloaded a copy of his very own.

Cha-ching! 

Sony just earned itself a genuine $30 referral, courtesy of yours truly. No money spent on advertising, no highway billboards, no radio or TV ads, just little old me recommending a great product to a fellow gaming enthusiast.

Neat, right?

That’s the beauty of referral marketing – the buyers do the marketing for you.

So how can you achieve this same kind of marketing wizardry? With a well put together referral marketing program.

I’m going to teach you how to do exactly that in this article.

 

What is Referral Marketing?

Referral marketing is a marketing strategy that uses your happy customers as advocates for your business, passing on their positive experiences with your brand’s products and services to other yet-to-be customers. 

It is relatively low in cost and high in reward, making it an essential part of your long-term marketing strategy.

This can exist in many forms, usually passed on by someone people trust.

For example, a referral may come about by an influencer’s Instagram recommendation, via a fellow Reddit user’s contribution on a forum thread, or, as my gamer friend experienced, through genuine word-of-mouth via a phone call. 

A friend that shares similar interests and trusts my opinions on video games through and through.

For this reason, referral marketing trumps other marketing tactics in many ways. 

 

Why Does Referral Marketing Matter?

Far too often, traditional marketing strategies leave much to be desired for both the advertising brand and potential customers. 

For small and large businesses alike, it is far too easy to outlay countless hours, a whole heap of effort, and, most importantly, a ton of cash without knowing how much you’ll get in return.

And consumers don’t trust traditional advertising anyway.

In comparison, referral marketing is up there with the very best tactics you can implement within a marketing campaign.

Why?

Well, everybody involved wins. 

A happy customer receives social validation by talking about your brand, their friend gets to hear about a fantastic new product, and a trusted source has done some mighty good pitching for you without you having to lift a single finger.

Oh, and best of all, referral marketing is basically free. The cost of a customer telling a friend about how awesome your product is costs absolutely zip, nada...

...nothing!

Not only that, but referral marketing is also highly influential and very effective. A potential customer is more likely to trust the word of a friend over your other marketing strategies, no matter how awesome your marketing campaign happens to be.

In fact, it has been shown that the most credible and trusted forms of advertising come straight from your customers’ friends and loved ones.

A survey conducted in 56 different countries, found that 92 percent of consumers claiming they trust earned media, such as word of mouth recommendations from friends and loved ones, over all other types of advertising.

Not only that but also 60 percent of marketers claim that referral marketing generates a high volume of leads. While another 54 percent say that referral marketing has a lower cost per lead.

referral marketing - why does referral marketing matter infographic
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So yeah, referral marketing works.

 

How to Set Up A Referral Marketing Program That Works

You can spend all the money in the world on marketing but that doesn’t necessarily ensure that your customers are talking about your brand.

So how can you encourage this type of customer interaction and start taking advantage of referral marketing?

First, start by creating a plan. You can use a template like the one below.

referral marketing - plan template
Customize this plan template and make it your own!Edit and Download

Next, here are seven solid tips to get you started.

Tip 1: Provide Your Current Customers With Exceptional Products And Services

Now that you’ve racked through all the boring technical stuff, it’s time we got tactical.

Providing exceptional products and services to your current and most valued customers is the first step to kickstarting a successful referral marketing program.

Offering anything less will stop your referral program before you even get it off the ground. 

It’s simple: if what you offer isn’t exceptional, then people won’t recommend you to their social groups.

Therefore, make sure you’re getting your basics on point before launching a referral program. 

And that’s not just for your products, either. Build customer trust, offer share-worthy products and services, provide top-notch customer service, and tighten up your after-sales services.

In a world of faceless services and sales (I’m talking to all you introverted eCommerce owners) providing customer support is something people really value.

Get all of the above on point and you’ve got a solid foundation from which to grow a successful referral marketing program.

Tip 2:  Build A Referral Marketing Program That’s Preferred By Your Customers

The second aspect of referral marketing you need to understand is that building a successful program is that all brands, and their customers, are different. 

As an example, a referral program for a clothing eCommerce store is going to be built somewhat differently from an electronic eCommerce store because their customers are different.

Take Adore Beauty, for example. They not only offer $10 off to the referring customer but also give your referred friend a discount of $10. Kudos to them for this marketing gem. 

referral marketing - adorebeauty example

Offering $10 off for both parties encourages a new customer to shop with them while also securing a returning customer. A smart move when selling products that are of high turnover, like clothing and apparel.

Take a look at Evolve electric skateboards referral strategy. They have a slightly different approach but still reward both parties. 

referral marketing - evolve example

Electric skateboards and corresponding accessories are more likely to be a one time purchase. Therefore, their referral program gifts a 10% discount to the referrer and a $95 to the referred friend for their new board.

To ensure the success of your referral marketing program perhaps ask yourself these questions:

  • Who are my most valuable and top spending customers?
  • How can I encourage my referred customers to take advantage of their referral opportunities?
  • Am I offering something to my current customer as well as the new customer? If so, what would each of them prefer to receive? How can I leverage this to upsell my other products or services? 

Tip 3: Make Your Referral Process Super Easy And User Friendly

The best referral programs are ones that make it super easy for your customers to take advantage of the opportunities you are offering them.

If a customer has to bend over backward to refer a friend, they’ll very quickly give up, meaning you lose a potential customer and profits.

Take this health and wellness store, Beauty Chef, for example. They not only made the process of referring a friend and receiving their rewards super easy, but they’ve also laid out how to do this in a simple 3 step guide.

referral marketing - beauty chef example

In fact, during my visit to Beauty Chef’s website, I couldn’t resist checking out their loyalty program. And man, they’ve killed that also. 

It’s super easy to follow, set out in a user-friendly fashion, and encourages their loyal customers to return again and again.

referral marketing - beauty chef example

Congrats Beauty Chef!

While setting up your referral or loyalty program, it’s worth your while to take a page out of Beauty Chef’s playbook. Make your referral programs as easy as possible for your customers to use.

Tip 4: Ensure Your Offers Aren’t Spammy

There is a time and a place for pop-ups, email notifications, and chatbots on your site. However, they can get in the way of a good old retail binge.

And nobody wants that. 

If you have a customer visiting your site that is midway through a shopping spree, the last thing you want to do is to slow down, or worse, drive them away due to frustration.

Take this into account. 

A 2016 study found that 50% of participants rated pop-ups as “very annoying” or “extremely annoying”.

The thing is, though, when pop-ups are used in an effective manner, surveyed brands are seeing a drop in bounce rates of up to 40% and an increase of conversion rates of between 10% and 50%.

Take ModiBodi here as an example. Rather than smashing a big old pop-up right across the entirety of your customer’s screen, like many online stores are guilty of, they have instead placed these neat little buttons. 

referral marketing - modibody example

They are both obvious without encouraging your visiting customers to bounce from your website. 

And when clicked on, their referral button pops out like this:

referral marketing - modibody example

These subtle banners make for a much better customer experience. The customer is choosing to actively participate in the brand’s offers rather than having ModiBodi’s message shoved down their throat.

Tip 5: Track Your Referral Program

In order to know whether or not your referral marketing program is a success, it’s an absolute must to integrate an analytics and tracking system within your program. 

Referral program software does this best. 

A good referral program software will come with integrated analytics, referral link distribution, and referral tracking.

One such referral marketing software is ReferralCandy. ReferralCandy specializes in referral programs for small businesses, integrating easily and seamlessly within BigCommerce, WooCommerce, PayWhirl, MailChimp, Shopify, and WordPress, just to name a few.

referral marketing - track your referral program

You can also track everything right inside of Google Analytics, like which social media and websites are referring new customers to your business. Although it often isn’t as comprehensive as some paid referral program software, it is free of charge and isn’t a bad option to get you started.

Tip 6: Consider Integrating A Product Or Service Review System

Customers love to see other customers’ experiences, preferring their insights and opinions over your sales pitches. Positive online reviews will help to build brand credibility, customer trust, and customer loyalty. 

In fact, reviews by your loyal customers are also referral marketing, encouraging potential customers to trust your business and make a purchase. 

Timberland embeds reviews right in their product descriptions, removing any doubt about whether or not people recommend this product.

referral marketing - timberland example

These types of reviews have an incredibly powerful influence on people, increasing your sales, upping your ROI, and acting as a free form of referral marketing.

And considering that reviews can increase conversion rates by up to a ridiculous 270%, it’s worth using them in your online shop.

You should also consider sharing reviews on social media by using a template like the one below.

visual review data - review testimonial graphic
Customize this template and make it your own!Edit and Download

Create Your Own Referral Marketing Program

Setting up a successful referral marketing program doesn’t have to be complicated. If you’ve got a strong incentive and a program that is super user friendly, then your referral program can basically run itself.

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About the Author

Brody Hall is a digital nomad, content writer, and SEO buff for ReferralCandy and CandyBar. He quite enjoys sharing his knowledge of environmentalism, self-care, and board sports. You will often find him enjoying an early morning coffee while checking his local surf breaks. If you feel like a chinwag, find him on LinkedIn.

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