Referral marketing has been a part of marketing for decades. It is only recently that the tools have arrived that make tracking and executing the programs easier. Referrals are one of the top reasons consumers give when asked why a particular product was purchased. Referrals are effective today no matter what the medium. Referrals can be given face-to-face, through social media or through third-party review sites. There are several reasons why businesses should implement customer referral programs for their business.
Businesses should always consider implementing referral marketing because they are incredibly effective. Customer referrals are still considered one of the most trustworthy and meaningful factors when consumers are making purchasing decisions. A single referral can change the mind of a consumer who has had a poor previous experience or who has heard negative marketing from competitors. Referrals are taken more seriously than most advertising efforts.
High Return on Investment
Customer referral programs have a high return on investment when measured and tracked properly. The cost of a referral can sometimes be completely free if a customer has a truly positive experience. Even an incentive program that rewards customers who make a successful referral often cost far less than other marketing efforts. This is because the incentive can have a low cash value but a very high perceived value. The cost of this type of program is usually nominal once all of the different software and marketing elements are in place.
Simple to Implement
These programs are much simpler to implement than other marketing strategies. There is often little need to change basic order taking or other systems within the business. A simple program could be an entirely separate element of marketing that does not directly affect core business systems. A number of new tools are now available that make planning, executing and tracking a program very easy.
Complements Other Marketing Strategies
The referral marketing will not become the dominant marketing strategy within a company. These programs can complement other strategies. Referral incentives can enhance existing loyalty programs. They can increase participation in print or email offers. They can be included in mailers or package inserts. This lowers the cost of the program. It also helps to keep customers aware of the benefits of making referrals. Referral programs can be attached to nearly any current marketing strategy.
Lasts Longer Than Other Forms of Marketing
Customer referrals are not like other types of marketing. They will last longer than an advertisement, web promotion or email campaign. A single person could provide referrals for years without any added incentive. Additionally, someone who has a positive experience in response to a referral is likely to start referring other people as well. Referrals could bring in new business for a long time without requiring any additional action.