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Ask For Referrals

Many organisations are reluctant to ask their customers to refer their friends and family to the business, yet this can be an excellent source of new customers. Not only will it increase your revenue but it is also cost effective.

Learn more about why you should ask for referrals and the methods you can use here.


Why Should You Ask For Referrals?

Referrals are an excellent way of gaining new customers. Research conducted by Nielsen concluded that 92% of customers trust the product and brand recommendations from their friends and family more than other forms of marketing.

Another study by Harvard Business Review, of 10,000 German banking accounts, found that customers who were referred by friends and family had a higher Lifetime Customer Value. The study concluded that customers who are referred are 16% more profitable than those acquired through other means.

Further research from Jack Morton found that nearly half of all consumers say their main source of awareness for new brands comes from their friends and family.

When looking at these statistics it is easy to see why referrals should be a major part of your marketing strategy. Yet this is not the only reason. It is important to realise that because your current customers fit a certain consumer profile, their friends and family are highly likely to as well. Having a direct contact with that target audience can save you substantially in marketing revenue.


Do You Want to Pay For Referrals?

Some businesses will offer their current client base a financial reward for referring their friends and family. Sometimes this will be a discount on future purchases or a future bill, a cash sum or a voucher for an online store.

Some businesses ask for referrals but do not give a financial reward. For instance, Amazon encourages their customers to inform their friends of their purchases by giving them a method to share their recent purchases over social media.

Amazon’s strategy takes advantage of the fact that 81% of online consumers’ purchasing decisions are influenced by the social media updates of their friends. Amazon’s strategy also fulfils another customer desire to ‘show off’ their latest purchase.


How To Ask For Referrals

Many businesses may understand the need to ask for referrals but don’t know how they should ask for them. There are several methods which businesses can undertake in order to generate referrals.

Amazon’s social media sharing is one method already highlighted. This can be very effective as a social media update can be seen by dozens if not hundreds or thousands of potential customers. Having your brand and product exposed to this number of people will generate web traffic but this method is likely to have a low conversion rate.

Email referrals are also a good way of generating new customers. Having your customers pass on an email to their friends and family to share information of their purchase and your brand can be pretty effective.

Emails account for a significant proportion of online purchases, and the customer lifetime value is 12% higher than average. This is also possibly one of the easiest methods to track if you are giving a reward for referring through the use of a unique URL.

Email also has a higher chance of conversion as it is likely most friends would warn when they are sending such an email. Therefore having an email referring system is probably one of the most crucial aspects of your word of mouth marketing.


It’s Not All About Sales

Many businesses don’t understand that customer referrals don’t have to be about paid products. Simply pointing their peers to your brand in any form can be part of your referring system. Some of the content you could have as part of your referral system includes:

  • Blog articles on your website.
  • Email newsletters sent to your mailing list.
  • Free Ebooks visitors can download.
  • Podcasts you currently produce.
  • Videos you have produced on YouTube.

The easiest way for your presence to be expanded this way is to ask your visitors to share the content via their social media profiles and email.


Don’t Forget Your Offline Referrals

There are many methods you can use to encourage your customers to share your brand offline: sharing out business cards, inviting customers to use car stickers or posters, branded clothes and other methods.

The problem with offline referrals is that they are hard to monitor and they can be more costly than those of the electronic world. On the other hand, that physical element between the referrer and their peer could be more persuasive and generate better results.


How To Ensure You Get Referrals

All of these techniques are great for facilitating referrals, but they are useless unless you can provide a great customer experience. If you are not able to delight your current customers it is more than likely that they will dissuade others from purchasing from you.

Also, those who are willing to make referrals don’t want to be spending a significant amount of time doing so, especially if it is online. Taking heed of Amazon’s example you can see that they make social media shares really easy by creating the update and adding a simple button which will automatically post the content for the consumer.

Similar concepts can be carried across your brand no matter what you would like your customers to refer. A blog post, ebook and email can have similar pre-determined text and automatic sharing facilities added into them to make it easier for the audience to pass on.

If you make it easy for them to share, you’ll gain more referrals and higher traffic to your site.


Action Steps:

  • Set up a process from start to finish which aims to provide the best customer experience.
  • Consider whether you can afford or wish to implement a referral reward system.
  • Create social media and email sharing tools to help your customers refer your products and brand.
  • Create and distribute emails requesting referrals.
  • Ask your customers for referrals in your communications.

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