Rewards and referralsThe fact is that most consumers do not listen to brand messaging or advertisements as much as they listen to each other. This, however, is not all bad news. It simply means that brands can adjust their customer engagement approach to harness the power of referrals.

The rise of social media means that the reach of customer referrals extends nearly without end, and this presents a tremendous opportunity to build brand loyalty. Those that understand how to effectively leverage this strategy can not only use referrals to sell to their customers, they can actually use referrals to sell through their customers.

Yesterday’s informative Loyalty360 webinar titled, “Loyalty, Meet Referral: A Perfect Match,” addressed this very topic. Jen Gray, Director of Marketing at Extole, and Mark Goldstein, Founder & CEO of Loyalty Lab, discussed the basic tenants of referral marketing and how loyalty programs and referrals can go together.

Marketers need to be aware that anyone who interacts with their brand has the potential to become an advocate. This can always lead to a referral because, while a certain brand may not be the right fit for every single person, there is a very high probability that everyone knows someone else that is right for the brand. However, Gray also made it clear that referral marketing is not simply word-of-mouth promotion. It is more than that.

“What makes referral marketing deliverable and scalable is that the marketer deliberately creates referral links and makes it easy for advocates and loyalty members to share in ways that are already familiar to them,” Gray said. “And those links are specific, so that the entire referral program can be tracked, analyzed, and optimized.”

Referral marketing works because it reaches an audience that no other channel reaches. People who get sent referral links, for example, generally are not actively looking for those particular products or services. But those who send the links (those who do the referring) have a much better understating of what others in their social network will find meaningful and relevant.

Other advantages of referral marketing come by way of the enhancements it can make to a loyalty program. Research has shown that referred customers themselves are typically more loyal, which further builds upon the deep insights that loyalty programs can already generate.

Furthermore, offering a reward based on referrals is an ideal way to incentivize current customers, while also reaching far beyond the scope of a loyalty program to dip into the vast social networks of its members.Rewards and referrals

“Loyalty and referral are really tied together and they complement each other,” said Goldstein. “If your customers are referring their friends, you are going to have a long list of people wanting to get into your loyalty program and wanting to buy. If you don’t have an active referral program, you are going to have to spend a lot more money to try and acquire those next customers.”

The key to start using a referral program effectively - to market through customers instead of to them - is to make referrals easy to find and easy to use.

“Your goal is to drive acquisition and retention within your loyalty program, and the best way to do this is to present the referral opportunity wherever your customers are currently interacting with your brand,” said Gray. “Because the more sharing chances you create, the more people will share, and the more who’ll convert. And loyalty-specific locations like account pages and program homepages are just the start.”

Gray recommends also using mobile apps, email streams, social profiles, podcasting, and even offline avenues such as in store promotions and sales associates to help drive referrals. Any or all of these channels and touch points can and should be used.

But, again, the most important concept is to always make the referral program easy to find, and available wherever the customers are.

Gray also recommended a few additional tips and strategies for marketers to consider:

  • Put calls-to-action on all promotional, transactional, and welcome email streams
  • Facebook pages can contain dedicated referral tabs
  • Offer top referrers a different reward or extra special gift to keep them referring
  • Offer surprise and delight rewards for those who make eye-catching referrals
  • Market differently to loyalty members and non-members
  • Inspire and thank top advocates with hand written notes
  • Personalize links that customers can send directly to friends
  • Let customers personalize their own referrals to friends
  • Reward everyone instantly
  • Make the rewards visible and exciting so everyone will want to share more

Beyond simply being an extremely effective marketing strategy, Gray believes that referral programs could be where the entire landscape is headed.

“Referrals bring loyalty programs to a whole new level of customer engagement and retention,” said Gray. “They create a mobile sales force out of a brand’s most influential fans. Referral marketing gives you the chance to embrace a loyalty strategy that is truly different. It’s effective at acquisition. It’s personal. It leads to better customers. And it could just be the future of customer loyalty.”

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