Referral marketing is regarded as a powerful and highly cost-effective technique for any business. The sad part is that, despite this knowledge, a vast majority of businesses do not have a referral marketing system in place.
There are enough research material and statistics available to prove that referral marketing can make a colossal difference to your sales and conversions figures. Referral marketing is a word-of-mouth marketing method where consumers purchase products based on the opinions or influence of others. As buying decisions are based on the experiences of other people who they trust, referral marketing is deemed as one of the most powerful marketing channels.
Buying decisions also are influenced significantly by famous and respected figures of society, social media influencers, and big stars. It is a practical and commonsense marketing strategy as consumers love to share their good and bad experiences with others. Referral marketing is amazingly effective and powerful because of the following reasons:
A successful marketing campaign has two key elements—a powerful, convincing message and sharply focused targeting. Precision targeting can be achieved by referral marketing because the buyers know the source of information well and trust the information provided. When they praise or recommend your products or services, the brand message is sent out more persuasively than other marketing strategies.
Referral marketing works because of the trust factor involved. When it comes to buying a valuable thing, trust is the key factor that influences your buying decision. With referral marketing, though, the recommendation or, in this instance, the sales pitch comes from someone you know well or from a resource you have trust in, such as a favorite blog spot.
Unlike in the past, the reach of the average consumer is not limited to a few select people or advertisements. Their reach is much broader now as they have easy access to numerous social media platforms, smartphone apps, and other communication channels. They can access easily the information shared by specific products and services on such platforms. It obviously follows that consumers now have the power to make a raging success of a brand or dump it, literally.
Effective marketing referral programs can be built by planning carefully. The key to building a great referral network includes identifying top referral resources and taking good care of them so that they serve your short- and long-term marketing needs.
Knowing the resources that are qualified to send you customers is important for the success of your referral marketing strategy. Often, the ideal and most effective resources are businesses operating in the same domain and possibly serving the needs of the same market that you are targeting. Business leaders and persons who can influence decisions as well as industry associations can propel your marketing ideas to success by selling them to consumers through favorable views, opinions, and reviews.
It is equally important to define your target audience and know their needs. A target audience represents individuals who influence that market. A simple example is that of parents buying merchandise for their children. In this case, the parents are targeted by marketers as the audience to reach their target market—the young children.