Referral Program – an Effective Tool to Attract New Customers
Referral programs have been known for a long time, but still prove their effectiveness and value.
The word of mouth promotions was originally tried out offline, perhaps, centuries ago, but with the advent of Internet online retailers started using it as a sales promotion tool.
Why Referral Programs?
Almost all shoppers highly appreciate trustworthy advice and expert opinion regarding multiple available products and services.
Recent studies revealed that word of mouth promotions have from 3 to 5 times higher conversion rate than other marketing channels (Source: Extole). According to Nielsen Global Trust in Advertising Report, 2013, 83% of people worldwide trust in recommendations from people they know, and all these 83% take some product related actions, in order to read a review, or supervise its features, or just purchase it. So, referred prospectives are loyal and active participants of the pre-sale process and can be more easily converted into real customers.
65% of new business comes from referrals, New York Times
Before starting a referral program you should plan and implement several obligatory steps.
Offer Your Referrers Worthy Rewards
The first thing to consider while starting a referral program is to find out truly effective incentives, which are able to foster your brand advocates recommend your products.
In fact, only a few customers are able to become your referrers and the reward you offer is to be closely related to their needs. Or you may appeal to your partners or even employees asking them widely recommend your products and, in this case, the prize is going to be a bit different. Moreover, sometimes non-cash intensives may be even more attractive than discounts or reward points.
Note: According to The university of Chicago research, non-cash incentives are 24% more effective at boosting performance than cash incentives.
Actually, possible options are almost endless, so you should pick up some ones, which sound really appealing and test them on buyers.