The basis of a referral: Trust
At the heart of a referral is trust.
In fact a referral requires trust from start to finish. By our reckoning there are five types of trust that act as links in a chain and that are all required for a referral to happen...
1. The customer trusting the product or service
This is the most important part of a referral. The customer needs to not only like your product or service, they also need to trust it enough to be sure that it will deliver for their friend as well as themselves. If they don't have this level of confidence then there is no chance of them ever referring you. As a company, if you don't have a product that you are genuinely proud of then don't expect your customers to refer it.
2. The customer trusting the site not to spam their friends
Not only does the customer need to trust the product or service, they have to trust the way that the refer-a-friend mechanism works. If they think that there is any chance that their friends will receive spam then they will not share. They need to trust the site to not embarrass them in front of their friends.
3. The customer trusting their friend to react positively
The referrer needs to be able to trust their friend to react to a recommendation in a way that they expect. If there is any uncertainty about how a friend will react then they simply will not share with that friend.
4. The referred friend trusting the recommendation
Whilst critical, this trust is almost always there. All of us value recommendations as a way of finding new things and are willing to trust friends almost all other sources of information. This trust varies by friend. We all have friends who we trust more than others based on how similar we think they are to us and how frivolous they are with their recommendations. However most recommendations are filtered to minimise the chance of a rejection and so most recommendations when received are trusted.
5. The referred friend trusting the product or service
This is the easiest part of the trust journey. The trust that carries through a recommendation is very strong and so the new customer arriving on your site from a recommendation will have significantly higher trust than someone arriving cold, for example from an online search. As a result of this trust they are far more likely to convert and to spend more money with you. This trust is the reward for all the hard work that goes into keeping the trust throughout the earlier stages of this chain.