ClickBank sees a lot of success with affiliate marketing in today’s ecommerce landscape – but what about referral marketing?
Pop quiz time: What’s the difference between affiliate marketing vs referral marketing? Affiliate marketing uses third-party affiliates to help sell products, while referral marketing uses existing customers to spread the word. (In theory, they’re basically the same concept, but they’re applied differently in practice.)
If you’re not taking advantage of referral marketing for your ecommerce or affiliate business right now, you could be leaving a LOT of cash and growth on the table!
[hubspot portal=”5154711″ id=”7642b9fe-5d46-49e7-aa54-737c33f9221c” type=”form”]7 Tips for Referral Marketing Success
So, how are product owners and affiliates leveraging the power of word-of-mouth referral marketing lately? In this detailed guide to the best referral marketing strategies, we’ve included several ideas that can help your businesses take advantage of this crucial marketing channel.
Here are the top 7 key referral marketing strategies and tips for you to try this year, plus a quick start guide!
1) Use double-sided referral programs.
According to recent data provided by Referral Factory – a world leader in referral marketing software – double-sided referral marketing programs convert much higher. Did you know that 91.2% of consumer referral programs are double-sided?
A single-sided referral program is where the person referring gets a reward, but in a double-sided referral program, both the referrer and the invitee get a reward when they convert. If your referral program isn’t double-sided yet, it’s worth testing to see if it can boost your conversions over the next few months!
2) Develop referral programs with WhatsApp share.
Companies are making it extremely easy for customers to refer their family and friends and invite them over to their referral programs. And it’s no wonder – recent data from Social Media Today suggests that companies allowing their customers to refer via WhatsApp Share are getting consistently better results than through Facebook and Twitter.
This is mostly because WhatsApp shares work as a one-to-one message, rather than the one-to-many approach on Facebook and Twitter. Think about it: You’re a lot more likely to trust the word of a friend in a one-to-one message than what a random stranger shares in a tweet.
3) Do not implement static or one-size referral programs.
Most businesses use a static one-size-fits-all referral reward program. According to the State of Referral Marketing report from SaaSquatch, only 13% of referral programs use a tiered reward structure.
If your business has multiple customer types or tiers, consider implementing referral marketing strategies that reward each customer type. A tiered structure will drive more engagement and better return on investment (ROI) for your business. This is similar to how an employer referral program works – they may offer a $1000 bonus when referring someone for a lower-skilled position like customer service rep, but a $3000 bonus for referring a highly-skilled DevOps applicant.
4) Pick the primary goal for your referral program.
We’ve covered many of the best referral marketing strategies available to customize your referral program, but now, it’s important to define your actual goal before launching tons of marketing campaigns around it.
Answer the following questions before implementing your referral marketing strategies in the marketplace:
- Do you want more sales from new customers or bigger purchases from your existing customers?
- Are you trying to get better conversions or increase your CTR?
Any affiliate marketing metrics can be set as achievable goals, but you may need different referral marketing strategies tailored to each individual goal in your referral program. I recommend implementing one strategy first and seeing how this affects topline revenue for at least 2-3 months before switching to another goal.
5) Focus on ways to drive repeat purchasing behaviors.
Here’s an underrated way to take full advantage of your referral program.
Many companies focus on the best referral marketing strategies for customer acquisition, which helps to drive growth in new business – but what about repeat purchases from your existing customers?
If you set up your program properly, you can get new customers and repeat business to reinforce future purchases or continued membership in a program.
Here are a few things to consider:
- Reward your referrers with store or subscription credit, depending upon the type of business.
- Reward referrers with an upgraded product or service.
As an example from the referral marketing software leader, Referral Factory, this company increases the trial period of all its referrers to 30 days if you book a demo with one of their customer success agents. If you can make the referrer’s reward beneficial to your business, the growth potential is incredible!
6) Implement referral marketing best practices to reduce friction points.
Rewards are nice, but it’s just as important to make the process easy for your customers and the people they refer. That means you should make your referral programs super easy to find, with the entire referral process taking 2-3 steps at most.
Here are a few best practices that can make your referral program frictionless:
- Don’t place your referral link anywhere your customers won’t find it.
- Pre-populate your referral messages. Don’t force your customers to craft their own referral messages. All they should be asked to do is click “Send.”
In addition, set up automated email messages to streamline the whole process for people on all sides of the referral program. This ensures everyone knows what to do and when!
7) Always use catchy headlines.
Catchy headlines are the most important part of your referral marketing strategies.
Why? Simply put, your referral program’s headline is the most visible part of your program. The headline should succinctly explain the value of your referral program to help your business get more referrals, and as a result, more customers.
Here is a bad referral marketing program headline: “ClickBank’s Marketing Refer-a-friend Program.”
The headline is apt and accurate, but it’s still a bad one – because it’s not telling people about why they should bother, and it’s definitely not compelling, catchy, or memorable.
Consider using great examples like these as a starting point for your own referral program headlines:
- Earn $100 just by sharing!
- Give $100 to a friend and get $10 for yourself!
- Tell your friends about us and get $100 each!
- Share your demo and get 3 months free!
And remember: Always focus on what’s in it for them, not for you.
How to Design a Referral Marketing Program
Ready to put this referral marketing stuff into practice?
First, you should understand where a referral program fits into your marketing. A typical sales funnel takes prospects and turns them into buyers – but what then?
If you’re thinking long-term, you want a new funnel to take those new buyers and nurture them into brand evangelists and raving fans who refer new customers to you!
This doesn’t happen by accident, and it doesn’t happen overnight, but it’s the defining factor in whether you’re just selling a product or actually building a brand. As Ben Harris, Senior Marketing Manager at ClickBank, says:
“If you can get one person to tell one other person about their experience, you have a million-dollar business. Referral marketing is what separates the product sellers from the brands.”
To set up a successful referral program, it’s all about the post-purchase communication sequence with your buyers. Most of the time, this will be via email, although you can also include package inserts with your physical products to start the referral conversation.
To succeed with referral marketing, focus on delivering value first and asking for the referral second. A quality product does a lot of the selling for you, but what you say after someone buys from you – or whether you say anything at all – will make a world of difference in building brand loyalty.
“If you can get one person to tell one other person about their experience, you have a million-dollar business.”
Once you’re ready to implement a new referral program, you’ll need software to manage your campaigns. We recommend Referral Factory as a perfect starting point, because their software offers everything your referral program needs, including templates, flexible rewards, and notifications.
3 Benefits of Referral Marketing
So, now that we’ve covered these different referral marketing strategies and shared how to get started, here’s a quick summary of the top benefits your ecommerce brand can enjoy with a brand-new referral program.
1) More referred customers lead to higher customer retention.
Referral marketing generates customers who have higher lifetime values and a better loyalty rate! Driving more referred leads to your business will help you retain more customers over time and ensure that your growth is fast and sustainable.
2) More referred customers bring higher profits.
A case study from a leading German bank on ResearchGate proved that more referred customers led to more profits. An analysis of almost 10,000 accounts over a 33-month period showed that accounts referred by their existing customers generated better profit margins. On average, every referred customer was more profitable by 4.5 cents per day.
3) Referred customers have a lower cost per acquisition.
Another data and research survey paper published by global referral marketing software provider Referral Factory suggests that referral loops can lower your overall cost per acquisition by up to 34%.
This referral marketing benefit is really exciting for demand generation nerds! Once you have acquired a customer from a paid ad, you can ask that customer to refer a friend. Whenever a customer acquired from a paid ad refers someone that converts, then you acquire 2 customers for the price of one!
Not all leads will refer, but businesses can drive enough referrals to lower their overall acquisition cost by 34%.
Best Referral Marketing Strategies Wrap-up
I hope this post has reinforced the incredible power of referral marketing for ecommerce brands. Remember, if your business is set up so that one person is willing to tell one other person about you, then you have all the ingredients you need for a brand-based business that can scale forever.
Think of the compounding sales if each of your customers told just one other person to buy from you and so on. Start implementing these referral marketing strategies today and watch the sales climb!