Harvest > Referrals and Upsales Plan

Why

Referral marketing works because everyone trusts the opinions of real people who have used a product or a service more than they trust traditional advertising. Researchers say that people are four times more likely to buy a product or service when it’s referred by a friend. While referrals usually come from friends and acquaintances. These days, influencer marketing is considered a form of referral marketing, as influencers often share their favorite products with followers via organic sharing and sponsored posts. Referral marketing can come from friends, influencers, celebrities, and even online reviews. You can see good examples from TripAdvisor, Yelp, and now Instagram.

A well-organized referral program can help any small or midsize business gets new, loyal customers at a very low price. These programs encourage happy customers to share their feelings in exchange for a small gift. Also, a successful referral program generates substantial and tangible ROI.

How

When considering referral marketing you can identify customer and partner referral programs. It helps bring new customers, partners, and even employees into your business. They can encourage happy customers to share their experiences. But how can you set up a program that gets results?

• Product-Market-Fit
  • Without a strong Product-Market-Fit, there are no referrals in the first place. If you don’t have a Product-Market-Fit (PMF), you’re not ready for a Referral Marketing Program. If you do have PMF then what value exchange can you offer? This is one of the areas that can be tested and optimized so you can create multiple hypotheses here.
• Trade or value exchange
  • A ‘value exchange’ between a consumer and brand is one of the fundamentals of modern marketing; the basic transaction of swapping rich data for better experiences, as a means of facilitating commercial transactions and improving connection and engagement. 3 stages work together to create a ‘value exchange’ between the brand and the customer:
  • The trading of money for goods or services.
  • The consumer sharing information in return for a reward.
  • The promise and delivery of better consumer experience.
• Social currency
  • Social currency refers to the actual and potential resources from presence in social networks and communities, including both digital and offline. It’s an action made by a company, to which consumers feel a sense of value when associating with your brand, while the humanization of your brand generates loyalty and “word of mouth” virality for the organization.
• Setting up goals
  • If you decide to create a goal like referring X people or earning Y points then it’s better to make that goal not look like a stretch and more of a direct approach. Being able to show an alert them to progress along the way is essential.
  • Talk to your sales, account management, and support teams to find out how often referrals are made.
  • Consider the average dollar value each new customer brings into your business.
  • Figure out how many referrals you will need to sell to at least to break-even (compared to time and effort spent marketing and managing the program).
  • Use a break-even point and a 10% conversion rate, calculate how many referrals your advocates would have to make to fuel your funnel.

References

• 8 Follow Up Sales Strategies to Boost Your Referrals
• Referral Marketing: What It Is and Why It Works
• The Epic Guide to Referral Rewards and Referral Incentives
• 8 Powerful Referral Strategies That Will Double Your Sales
• The Referral Marketing Handbook: Best Practices to Boost Sales
• 5 Quick Tips to Building a Customer Referral Program