Learning how to get referrals for your online store is probably one of the easiest and most cost-friendly ideas out there.
In business, referrals are when someone in your network refers or recommends you to someone else in their network.
In marketing, referrals come with the same idea but offer different opportunities.
As a store owner or marketing manager, you ask your customers to refer you to others. For example, you sell hair care products to your customer Sally. So you ask Sally to refer you to her friends who are interested in hair care products too.
Referrals are also known as word-of-mouth marketing.
In this article, we’re going to talk about referral marketing, what makes a referral and then we’ll show you how to get referrals for your online store.
Why word-of-mouth matters
There’s a reason word-of-mouth has a larger impact than other types of marketing.
That reason is: Trust.
People generally trust each other. As a store owner, you probably do that too.
You need help with some website development, so you call a friend or family member and ask for a referral, someone they know or have done business with.
Or maybe you need help refurbishing a bedroom. Yes, you’re likely to search online but you’re also more likely to think of a person you know who did this project not-too-long-ago and ask them for a referral.
Referrals in business and marketing work the same way.
People tend to trust referrals because, in a way, they act as social proof. Mark liked your ice cream so he’s inviting his friends and family to try it.
The proof? Your friend Mark has tried this ice cream and since you already know each other, you trust his recommendation.
Trust is a big word. And it’s the main reason referrals work.
For businesses considering a word-of-mouth campaign or marketing strategy, here are 6 more reasons why referrals are a great opportunity for your business:
- Trust: People trust each other. More people are likely to try a new brand or product simply because someone in their group of friends or family told them about it.
- Less cost: Referrals as part of referral marketing programs tend to require little costs to create and use.
- Higher lead quality: Since customers trust each other, it’s likely you’ll get high quality leads. Why? Because customers refer those similar to them.
- Lower cost per lead: The investment in referral marketing is low. And since you’re asking current customers to refer you, you won’t need to spend a ton on marketing to get new leads. They’re already coming to you through referrals.
- Measurable: One of the main benefits of using a referral marketing program is that you can measure your word-of-mouth marketing efforts. You can see which customers are referring you, how many people they referred per month or quarter, and how many of those referrals completed a purchase.
- Create loyalty: Referrals indicate that someone trusts your brands, which means they are loyal to you and your brand.
By learning how to get referrals, you will, in a way, be building brand loyalty for your business.
Referral marketing vs affiliate marketing
It’s important to understand the differences between referral marketing and affiliate marketing.
While both types of marketing rely on giving incentives to consumers to generate revenue, the main difference is in how affiliate marketing relies on third-party brand advocates.
These third-party advocates are the ones who send customers to the business creating the affiliate marketing campaign in exchange for a flat fee.
Affiliate marketing “is like enlisting a reputable yet unknown salesperson to spread the word about you online,” explains Saasquatch.
On the other hand, referral marketing is about getting customers to refer you and reward them for their referrals.
Referral marketing relies on the relationship between your customers and their friends and family and encouraging these people to try your brand.
Your current customers are like your brand ambassadors. In return for their referrals, you reward them with points, vouchers, or gifts.
“Referral programs are based in personal interactions,” notes Saasquatch, adding that they’re “like bumping into a friend on the street and having them share a great tip or piece of advice with you.”
Referral statistics you need to know
To get a clearer idea of how big of an impact referral can have on your business, here are a few statistics worth considering:
- In the United States, there are roughly 3.3 billion brand mentions across 2.4 billion brand-related conversations every day! And that was 10 years ago. (Adweek)
- Nearly 92% of consumers say they trust referrals from people they know. (Nielsen)
- Customers are 4 times more likely to purchase a product or service that was referred to them by a friend. (Nielsen)
- Roughly 77% of consumers are prone to buying a new product based on a referral from a friend or family member. (Nielsen)
- Leads coming from referrals enjoy a 30% higher conversion rate compared to those coming from other marketing channels. (Ross via Finances Online)
- Leads from referrals have a 16% higher customer lifetime value compared to leads from other sources. (Ross via Finances Online)
- Around 84% of people considering a product will trust recommendations from family, friends, and co-workers. (Nielsen)
What does this show?
Referrals are a great marketing and sales opportunity. Which means you need to learn how to get referrals and leverage this opportunity.
In addition to the above, the referral marketing software market is expected to reach $713.3 million by 2027, registering a compound annual growth rate (CAGR) of 15.5%, according to a 2020 report by Fortune Business Insights.
This figure marks an increase from $226.9 million registered in 2019.
7 Tips on How to get referrals
You now know the differences between referral marketing and affiliate marketing and the benefits of having a referral program.
Now it’s time to learn how to get those referrals.
1. Offer great customer service
Customer service or support goes a long way into building a brand. It allows you to get in touch with your customers, help them out with their problems, and build a long-term relationship with them.
Stores that have great customer support tend to have loyal customers who feel at ease when shopping from them.
On the other hand, stores with weak customer support teams, or those that take forever to resolve a problem, usually don’t enjoy repeat customers.
2. Offer a shareable experience
To get customers to refer you, they need a reason to do so. Yes, rewards are great. But another great motivator is making them feel appreciated and that they’re enjoying their overall experience with you.
The better the experience your customers have with you as a store, brand, and products, the better your return on that experience will be.
You want to create customer delight in a way that keeps your brand top-of-mind for them.
To create a unique experience and succeed in enhancing it, here are a few tips:
- Understand your customers and their pains
- Find out what success means and looks like to them
- Constantly provide products and services that solve their problems
3. Stay true to your promises
Whatever your product or service is, show your customers that you understand them and try to deliver what they need.
If you promise to deliver a product within 5 days, make sure that the maximum time needed for delivery is in fact 5 days.
If you offer a money back guarantee, make sure you include when customers are eligible for such a guarantee and that this information is accessible.
4. Over deliver
Over delivering helps you build a connection, which you can later use to get referrals.
Did you just deliver a shipment to a customer? Send them an email and ask them for a review.
If they give you a positive review, then go on and introduce them to your referral program.
5. Pair referrals with positive experiences
Customers tend to refer others when they’ve experienced something great.
So, a happy customer will gladly refer you, whereas an unhappy one won’t.
Once you provide a positive experience for a customer, use that to ask them for a referral or enlist them in your referral program.
If you don’t deliver a good experience, then hold off on asking for referrals.
6. Get online reviews to work for you
Did you know that 88% of consumers trust online reviews as much as personal recommendations? (Invespro)
Customer reviews are great because they act as social proof that your product or service is worth buying.
They also help new customers make decisions. If customers don’t see reviews for a product, they may look for something else somewhere else.
But with reviews, they feel validated in their choice. They can see that 20 other people bought the same product and were happy with it. It prompts them to complete their purchase.
7. Use a referral program to ask for referrals
The above tactics build rapport. But using a referral program helps you, as a business, track your customers and their referrals.
At the same time, it helps your customers keep track of their referrals and see the rewards they are earning when they refer friends and family.
8. Follow referral marketing best practices
Every product or service out there comes with a set of best practices. How many posts have you read about Instagram posting best practices? Probably a ton. (And they never do much!)
Referral marketing comes with best practices too. But unlike Instagram, they’re actionable and easy to carry out.
How a referral program works
For businesses looking to benefit from word-of-mouth marketing, it’s not a great idea to simply provide great service and hope for the best.
So how do businesses solve this dilemma?
The answer: with a referral marketing program.
With a referral program, you can ask your customers to refer you and reward them for their referrals.
It’s your way of saying ‘Thank you’ and at the same time encouraging your customers, who are now your brand ambassadors, to refer you to more people they know.
Getting referrals with Gameball
If you’re using Gameball’s referral program, you can offer rewards in 3 ways:
1. Rewarding your customers only
Since Gameball offers a gamified loyalty and referral program, your customers are called Players.
In this first option, your customers (aka players) get a reward for every successful referral.
A successful referral is defined as a person who signs up to your platform using a referral link from one of your customers.
Once they sign up, your customer (let’s call her Sally) gets a reward.
2. Rewarding customers and friends
In this second option, you’ll be taking your rewards a bit further by not only rewarding your customer (Sally), but also the person Sally referred (Andrew).
This helps you entice the referred person early on and encourages them to shop soon after they join.
Your reward can come in the form of points they can use as a discount or voucher on their first purchase for example. Or a bonus number of points to help them get to the first discount.
3. Rewarding customers and guests
In this option, you’ll be rewarding your customer (Sally) and her referral (Andrew) who doesn’t create an account in your online store but does complete a purchase.
“Both the player and their guest friends will be rewarded for the successful referral. However, the friend does not have to sign up on your platform. The referral is deemed successful when the guest friend completes and pays for an order,” explains our product team.
Gameball tip: We highly recommend you reward the referred party because it entices them to explore and buy from your store from the moment they land on your homepage. This step also helps introduce them to your loyalty and referral program right away.
Referral program examples
Referral programs aren’t just used by small and medium-sized businesses. Many larger and well-known brand names have been using referral programs for years.
Here are some of the world’s most well-known companies and their referral programs.
The ride-hailing app is known for its referral bonus for first-time users.
When someone signs up, they get a personalized referral code to send to their friends and family. When these friends and other members sign up, the customer whose code they used to sign up gets a 50% discount on their next ride.
In some countries, both parties get their next Uber ride for free.
The online storage service provider offers a referral program that rewards customers with product-based benefits. Dropbox offers both their customers and their referrals an additional 500 MB of free storage.
This program helped Dropbox grow its customer base by as much as 60% in 2010.
Evernote is a note-taking software that’s often used by authors and copywriters. The company’s referral program rewards customers with points for every referral that signs up to their platform.
If a referral buys Evernote’s premium features, the customer that referred them gets more points. The software provider currently enjoys 100 million users, of which 13 million came from referrals.
These are just a few examples of how companies get referrals and how they reward the customers who help them.
Referral marketing, and learning how to get referrals, is a unique tool and opportunity for getting high quality leads. As you can see with the Dropbox example, you don’t have to break-the-bank to offer benefits to customers.
You can simply do so using products you already sell or offer perks for referring customers.
The important aspect about referrals is having a community of followers who are willing to refer you. If you’ve been struggling with delays recently, then hold off on asking for referrals till your suppliers and deliveries are back in order.
Similarly, if you’re a big retailer with call center issues, wait a bit before you ask for referrals. The biggest problem is asking an unhappy customer for a referral. (Hint: They won’t give you one!)
If you’re looking to give referral programs a go, then I invite you to explore Gameball’s gamified loyalty and referral programs.
At Gameball, languages are important for our customers. That’s why our programs currently support 10 languages including English, French, German, Spanish, Italian, and Arabic.
And if you have questions, our customer support team is there to help you 🙂
Get customers to refer you with Gameball today!