6 Strategies for Retailers to Boost Business Growth Through Referral Marketing
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In times of economic downturn, 9% of firms emerge from recessions stronger. They achieve this by strategically investing in high-growth opportunities, according to research by HBR. And one such remarkable opportunity is customer advocacy.
While it may seem counterintuitive to explore new channels during periods of uncertainty, the reality is quite different. Pouring resources into the same channels that have yielded inconsistent and underwhelming returns won’t magically transform your boardroom presentations.
The moment has arrived to focus on your most valuable yet often overlooked asset: your customer base. In this article, we will explore 6 referral marketing strategies that you, as a retailer, can employ to reshape the trajectory of your business economics.
Strategy 1: Customer-Centric Referral Programmes
When things get tough, it may seem like focusing on the numbers is the top priority rather than what customers need. In reality, it’s the other way around. This is when you need to truly understand what your customers are saying. Your job is to make sure they want to stick with you, by setting yourself apart from your competition. How? By creating experiences that make them feel valued and understood — essentially showing them “customer love”.
Being customer-focused is all about the day-to-day transactions. It means paying attention to customers, understanding their needs and actively listening to their feedback to ensure a great individual experience. On the other hand, being customer-centric goes beyond that. It’s a mindset that’s deeply ingrained in the company’s culture. While it’s obvious that customer-focused efforts should be displayed by the sales team or frontline staff, customer-centricity is actually something that everyone in your organisation should be on board with. In a truly customer-centric environment, it’s not just about focusing on the customer; it’s about involving the customer in every decision and design. Before making any referral programme moves, you should ask, “How does this affect the customer? How does it make them feel? What value does it bring to them”? It’s not just about a specific department; it’s about infusing this customer-first approach into everything your company does and finding a referral marketing platform that aligns with your vision.
Strategy 2: Leveraging Influencers
Back at the start of the social media revolution, investing in influencer marketing was a no-brainer. Content creators were building tight-knit communities, and their recommendations felt real and valuable to their followers. As social media grew and authentic creators became rarer, however, the charm of this strategy started to fade.
Even influencers themselves now realise this trend has a shelf life. Take Molly-Mae, one of the UK’s biggest influencers who’s distanced herself from the influencer label. Other TikTokers are foraying into acting and music careers too, showing they’re more than just influencers.
At the same time, new types of influencers are popping up all the time. There are cleaning influencers, organisational influencers and even chiropractic influencers. But when it comes to influencing our daily decisions, like where we shop, our friends and family hold a special power.
Face-to-face recommendations are the most popular and trusted way to share brand love (about 34% of ours come through personal recommendations delivered via our referral marketing tool, Name Share™). These everyday chats beat any flashy Instagram post with a smiling influencer and a discount code. They’re where the genuine, heartfelt brand endorsements happen.
So, you’ve set up a referral marketing programme tapping into our natural instinct to share the things we adore with the people we care about. In this case, you can build loyalty that will last well beyond the latest social media trends. For a more detailed take on the subject, check out our whitepaper about why all customers are influencers.
Strategy 3: Maximising Social Media Engagement
If you’ve got a bunch of followers on social media and you know they’re your biggest cheerleaders, giving them a friendly nudge about your referral marketing programme every now and then (once every month or two) is a great way to keep in touch. Through this communication, you can reach those customers who might not have otherwise been dropping by your website for another purchase.
Strategy 4: Email Marketing Referral Campaigns
Getting the word out about your referral programme through email can seriously amp up your results. Not only does it remind customers who might’ve been away from your shop for a bit to get involved, but it also inspires those who’ve already had a taste of your brand to share the love within their circles.
Here are some easy ways to make this happen:
- Send a Special Referral Email: Shoot out a dedicated referral email at least once every three months. On average, it can boost the number of people sharing by around 5%.
- Spice Up Your Newsletters: Don’t forget to slip in referral banners in your newsletters, especially when you’re excited about new products or ranges you’re about to introduce.
- Sprinkle Banners in Transactional Emails: Even those “boring” order confirmation and shipping confirmation emails can be jazzed up with referral banners.
- Celebrate Anniversaries: When a customer’s been with you for a while, why not send them a Happy Anniversary email and give them a little nudge about your referral programme? It’s like a friendly reminder.
- Don’t Forget Your Unique Email Series: Your special email sequences, like the ones after someone makes a purchase or signs up, can also be perfect for sneaking in a mention of your referral marketing programme.
- NPS Emails Are Gold: If you send out follow-up emails asking for reviews or NPS surveys, here’s a golden chance to tell happy customers that they can score cool rewards for bringing their friends your way.
With these email tricks, your referral programme will stay on everyone’s radar and get them excited to spread the word about your brand. If you’re interested in the technical aspects, take a look at this article from our help centre.
Strategy 5: Incentives and Rewards that Drive Referrals
When it comes to testing referral incentives, a common starting point is comparing percentage discounts to fixed-value discounts. Take, for example, PrettyLittleThing: they offered a £10 deal (with a minimum spend of £40) versus a 20% discount to see which one would encourage people to start talking and bring their friends into the world of fast fashion. The results turned out to be quite intriguing. Although the fixed-sum discount got shared more, it led to fewer new customers.
Now, let’s talk about the bigger discount being better, shall we? Not according to the customers of No1 Lounges. The airport lounge provider decided to experiment with a £10 incentive versus a £7.50 incentive for both referrers and their friends. Eventually, the lower discount attracted 29% more new customers and brought in a significant 42% more revenue.
The question you need to answer before starting referral marketing programme experiments is, are your customers in the sharing spirit or looking out for themselves? The results of ‘give’ versus ‘get’ offering comparisons can be quite revealing. For instance, pet insurer Animal Friends found that their customers were more inclined to share incentives that focused on rewarding their friends. This reaffirmed the significance of social capital: customers generally prefer to recommend brands that make them appear generous rather than self-centred.
Your recurring goal is to run statistically significant A/B tests to determine which rewards drive the most referrals.
Strategy 6: Measuring and Optimising Referral Success
Running an effective referral programme isn’t just about offering rewards; it’s about understanding and optimising the metrics that drive its success. In this section, we delve into key metrics you should keep an eye on and share some tips to enhance them.
Impressions per Order
Impressions per order is a vital metric. It tells you how frequently your referral offers are seen compared to the number of orders generated through referrals. For healthy performance, aim for a ratio over 100%, which means customers are noticing your referral marketing programme beyond the post-purchase overlay. To boost this metric, consider broadening your promotion efforts. Do you have a homepage promotion point live? Depending on your website’s traffic, it can drive up to 60% of all acquisitions.
The enrolment rate is another critical metric, indicating how many customers enrol in your referral programme compared to how often the program is presented. Remember, each customer can only enrol once per offer. To improve enrolment rates, promote your programme outside of the post-purchase overlay and don’t forget to remind those who have enrolled to start sharing.
The share rate measures how many of your existing customers actively share your programme with friends. Concentrate on the referrer side of the journey because customers tend to recommend brands that make them appear generous. Consider A/B testing different referrer incentives, such as higher discounts or added value, to encourage more sharing. You can also reorder the sharing methods based on popularity and find out how a simplified user interface performs.
Shares per Sharer
This metric reflects how often an average person shares. Encourage customers to share with more than one friend and experiment with different copy variations — e.g., singular versus plural language (share with a friend or share with friends) — to see what prompts more sharing. Another referral marketing idea here is to start a contest that offers an extra incentive, for example, a chance to win enticing prizes like a gift card or a bundle of your products.
Responses per Share
Responses per share reveals the number of share responses, like clicks on shared links and name searches, compared to the number of shares. Enhance this metric by enabling the personalisation of the text customers send to their friends, encouraging more click-throughs from potential new customers.
Incentives per Response
Determine how many people, after responding to a share, provide their email address and receive an incentive to shop. To improve this metric, consider adding social proof, like your Trustpilot score or reviews, to your creatives and copy. Test different Call-to-Action (CTA) approaches on the referee sign-up page. For example, try a reward-based CTA versus a Unique Selling Proposition (USP)-based CTA, like Get 10% off our award-winning furniture.
Purchases per Incentive
This metric quantifies how many of those who had received an incentive made a purchase. Enhance this by experimenting with USPs on the fulfilment or promise page, showcasing the benefits of choosing your brand.
The purchase rate measures how shared referrals convert into qualified new customers. Concentrate on the referee side of the journey. Create a sense of urgency by testing the validity period, such as 14 days versus 7 days, to prompt referees to make a purchase. You can also explore adding multiple CTAs to provide referees with more options and encourage them to explore your website, increasing the likelihood of making a purchase.
By understanding these metrics and implementing the tips mentioned above, you can fine-tune your referral programme for even greater success. If you need help with that, you’re more than welcome to get in touch with Mention Me — a market-leading referral marketing solution.