If there is one tried-and-tested strategy for getting more customers, it’s referral marketing:
Your customers talk about your products and services to the people they know, who then go on to buy from you.
As a result, you gain new customers and increase your revenue! Cha-ching!
Now if your offerings are top-notch, your customers will naturally recommend them to others. But apart from this, there are also other ways of encouraging referrals.
In this guide, you’ll learn the benefits of referral marketing and five strategies your brand can use to get more referral sales.
Let’s dive in!
Why use referral marketing?
Between learning of a product or service from an online ad and from a friend, family member or colleague, people tend to trust recommendations from the latter more.
“In contrast to other marketing and sales tactics, leads from referrals tend to be of better quality, convert more readily, and are typically faster to close,” shares Evian Gutman, founder and CEO of engagement ring retailer Ringcommend.
“They are almost always cheaper to acquire in marketing costs, and since they are more likely to become repeat customers, end up having a higher lifetime value to your business.”
Once you’ve gotten your referral system up and running, referrals tend to come in freely with minimal effort on your part.
What’s more, certain referral marketing strategies can help build communities of loyal customers. These customers are then likely to recommend your brand even more, compounding the strategy’s effectiveness!
So how can you get started with referral marketing?
5 referral marketing strategies to consider adopting
1. Make a donation to charity for every purchase
People who feel good about buying from you are more likely to share about their buys with their friends.
Ideally, customers should already be happy to buy your products and services as they are. But if your brand is big on corporate social responsibility, you can make your offerings even more attractive by pledging to make a donation to a relevant charity for every purchase.
This way, customers will feel like they are doing a good deed when shopping with you. Then, not only will they be more inclined to buy from you, but they will also be more likely to help spread the word about your brand!
Founded in 2006, shoe company TOMS built a following by promising to donate a new pair of shoes to a child in need for every pair it sold. The initiative was wildly successful, with the company giving away almost 100 million pairs of shoes to children in at least 25 countries.
Wanting to make an even bigger impact on the world, TOMS pivoted from its original “One for One” model in 2019 to giving away $1 for every $3 that it makes. Talk about putting its best foot forward!
2. Launch a controversial (but meaningful) product or service
Another thing that gets people’s tongues wagging is controversy. Controversy is usually seen as a bad thing, but you can turn it into a force for good.
How? By introducing a product or service that challenges established social norms in a meaningful way.For example, leaking pads and tampons tend to be a big worry for ladies on their period. Well, faced with their own period problems while growing up, three women decided to do something about it by founding Thinx, a company selling leak-proof underwear, in 2014.
At that time, periods were (and still are) a taboo subject that people preferred not to discuss openly. So Thinx immediately grabbed attention with its bold branding and eyebrow-raising ads (posters of peeled grapefruit resembling lady parts, anyone?)
But women loved the products, and Thinx has since expanded into selling period underwear for tweens, as well as pee-proof underwear for incontinence.
There’s a feel-good factor to buying Thinx products too: the company works with various partners to help make basic hygiene products accessible to people around the world (see point 1 above about donating to relevant charitable causes).
3. Encourage the sharing of customer experiences
What’s better than shopping from a favorite brand? Having that favorite brand notice you.
People love attention, and there are various ways for brands to incentivize customers to share their experiences with the brand’s products and services.
For example, you could announce that customers who post photos and videos of your products will get the chance to see their posts on your company’s dedicated microsite.
All they have to do is to use a branded hashtag in their posts so that you can find them. (The hashtag helps you measure the success of the campaign, too.)
To further sweeten the deal, you could also give away prizes.
By now, you’ve probably heard of Apple’s “Shot on iPhone” campaign. It all started with the company running a challenge where the best 10 photos shot on an iPhone would be featured in Apple stores, online and on billboards around the world.
Not only was the challenge a huge success, but the phrase “Shot on iPhone” also sparked an entire movement of photographers looking to capture stunning photos on their trusty iPhones.
To date, over 18 million posts and counting have been tagged with #shotoniphone on Instagram!
4. Offer rewards for referrals
Setting up a referral program is a great way of getting more referrals.
After all, everyone loves a good discount. If your customers could get discounts from referring your offerings to others, then chances are that they just might!
For example, did you know that PosterMyWall has a referral program?
Each person whom you’ve invited to join PosterMyWall will get 50% off their first download. At the same time, you’ll also get 50% off your own next download!
There are many ways of setting up a referral program. A simple way of doing so is to offer your customers a unique discount code that they can share with others. Whenever a discount code is used, the sale is tagged to the referrer so they can receive the reward.
These platforms help you manage referrals in a centralized dashboard or build tiered reward programs for your biggest fans, among other cool features.
5. Gamify your giveaways
Every now and then, you may want to host a giveaway to promote a new product. Don’t miss this chance to gain new customers as well by turning your giveaway into a game!
That’s because after participants have successfully entered your giveaway, you can offer more chances of winning if they share the giveaway on social media.
For example, if they shared about the giveaway on Facebook, they would get three extra entries. Or if they tweeted about it on Twitter, they’d get five extra entries.
Or if they shared the giveaway on both Facebook and Twitter, they would get a total of eight extra entries!
This is exactly what alcohol dispenser MyBar is doing in a giveaway right now:
A counter shows giveaway participants how many entries they have so far, while a countdown timer tells them how much more time they have to try and get more entries.
To gamify the experience further, you could also put up a leaderboard showing who’s in the lead, and who needs to get more entries if they want to have a higher chance of winning!
What will your referral marketing strategy be?
I hope this guide has given you some inspiration for your own referral marketing strategies.
If there is one thing that all the above strategies have in common, it’s that they all incentivize customers to spread the word about products—whether by making it fun, being related to issues that they care about, helping them feel good about themselves or dangling some kind of reward.
So when you’re crafting your own referral marketing strategy, be sure that your strategy incorporates at least one of these incentivizing factors. If you can make use of more than one, even better!