Learn about Referral Marketing and increase your sales

Every marketing and sales professional feels satisfied when a lead converts, and even more so when it arrives through a recommendation made by a partner client. Generally, the leads that arrive in this way are more likely to close a deal because they already have initial knowledge about a product or service.

This way of bringing potential customers to companies is known as Referral Marketing, a very useful and powerful strategy to increase sales and conquer new customers at a low cost and in less time to act. However, as it is still a little-known and explored strategy, many companies do not use it, losing a good opportunity to acquire competitive potential.

Do you want to know how Referral Marketing can help you get better sales results and acquire new customers, saving time and investment for that? Keep reading this text until the end and find out!

What is Referral Marketing?

Referral Marketing is a set of initiatives that encourage and stimulate customers, through their positive experiences with a brand, to recommend it to family, friends, and acquaintances, thus making them potential customers as well. In this way, customers who are already loyal end up becoming brand promoters, creating a recurring lead acquisition channel capable of bringing in new customers periodically.

Known as Referral Marketing in English (translated in Portuguese as Marketing de Indicação), this strategy instills greater confidence in those who approach a brand through the recommendations of other people who have used it and had positive experiences. Furthermore, this approach has significant potential for acquiring new customers through the referrals of existing customers.

How does the strategy work in practice?

To encourage customers to recommend your company, it is necessary to encourage them, right? And how do you do it? There are several ways, and we are going to give you some examples to help you understand them better. You’ve probably seen some of these strategies around.

Streaming services (such as Netflix) and ride-hailing apps (such as Uber and 99) are classic examples of companies that use Referral Marketing. In order to increase their user base, they work on campaigns with initiatives for their customers to recommend their services. Netflix, for example, has already encouraged its users to share already watched titles with friends and acquaintances, thus encouraging recommendations. On the other hand, ride-hailing apps offer credits or discounts in exchange for referring new passengers.

An example of a company that has been quite successful using Referral Marketing is Dropbox. This tool for storing files in the cloud offered, a few years ago, extra storage space in its users’ accounts for each referral made. The promotion rocked! The company has gained almost 4 million new customers with just the referrals.

The importance of Referral Marketing for your business

You have already realized that Referral Marketing is a very interesting strategy to use in your company, right? To prove its importance, we have brought the main benefits it can bring to your business. Check them out below.

Higher lead qualification

This can be considered one of the best benefits of Referral Marketing, as a lead that arrives through a client’s referral has a higher qualification rate. This means that this lead is more likely to become a regular customer. This happens more frequently because the lead is already previously qualified, either due to the identification of his profile by the person who refers him or because of the doubts that he already solves at that moment. This also represents a decrease in the initial work of the sales team, optimizing time and resources when winning a new client over.

Shorter time to trade

When a lead that has been identified reaches the sales team, the negotiation for them to become a customer takes less time, shortening the cycle. As a result, customers are converted more quickly, and the sales team is able to dedicate itself to more contacts within the same period of time.

Lower customer acquisition cost

Customer Acquisition Cost (CAC) is lower when acquiring customers via referrals. Even with the offer of financial benefits or discounts in exchange for referrals, the investment is usually lower than in other campaigns aimed at generating leads, whether online or offline.

How to get referrals from customers?

We realize that the results of Referral Marketing can be very good. However, many companies do not take advantage of this strategy as they should. As much as consumers are willing to make recommendations, many brands are not committed to actions that encourage them to do so.

This happens because there is a certain “fear” on the part of companies of causing a conflict of interest or inconvenience to their clients and, thus, harming the carefully built relationship with them over time. But it is indeed possible to align the Referral Marketing strategy with satisfied customers and encourage them to make referrals.

To do this, you need to deeply study your customers and create a well-structured campaign with actions that encourage them and make them feel comfortable recommending your products or services. They should even feel valued for doing so. However, it is also necessary to consider that not every client will be able to make a referral right away.

How to set up a referral marketing campaign

Now that you know what Referral Marketing is, its importance, and the benefits it can bring to your business, let’s learn how to put together a campaign in practice. Keep following us around here.

1. Have an aligned goal

As with any other marketing strategy, Referral Marketing also needs to have aligned and very clear objectives. Increasing sales, improving conversions, and building even more customer loyalty are some of them, but you can go further.

It doesn’t matter what your initial goal is; the important thing is to focus on it and follow a plan correctly to ensure that you can achieve it.

2. Study your customers

In addition to a well-defined objective, you need to study and get to know your customers in-depth and find out which of them are more likely to advocate for your company. There are those who are in the initial phase of getting to know your brand, those who have not had a positive experience with it, and those who remain neutral. In this case, it is more interesting to invest in those who demonstrate to be more satisfied and who are more willing to recommend your brand to acquaintances and strangers alike.

3. Choose what to offer in exchange for the referral

After aligning the objectives and identifying the customers who will promote your company (those who will make referrals), it’s time to analyze what to offer in exchange for those referrals. This offer should serve as an incentive and help the person who was nominated to become a customer and close the deal. In other words, you will need to think of a benefit for those who refer you and another for those who are referred.

To provide this “reward,” it is important to study and understand your business personas, enabling you to choose something that truly makes sense and is attractive to everyone. For instance, consider offering discounts on products or services, providing gifts and exclusive promotions for referrals (such as paying half the price if you refer someone), and so on.

4. Always evaluate the results

It is very important to evaluate the results, measuring the entire Referral Marketing strategy, to be able to identify and understand possible problems along the way. Thus, you will be able to adjust actions over time, such as finding new ways to engage your promoters and evaluating the CAC and exchange options for referrals, for example.

As we have seen, Referral Marketing is a great strategy to retain existing customers and attract new ones through incentive campaigns. So, are you ready to include this strategy in your company? Do you still have questions about how to get started? We can help you! Get in touch with us.