It's a new year. Time to start afresh, put that new marketing strategy into action, and drive long-term results.
But if you're wondering how you'll hit those ambitious targets, don't panic.
Here's how referral can drive your business – regardless of its size, sector or target demographic – to achieve six key objectives for the coming year and beyond.
1. acquiring new Customers...
New customer acquisition is tough. Advertising costs are high, budgets are tight and consumers are spending more carefully.
Against this challenging landscape, referral marketing can cost-effectively increase new customer acquisition by as much as 30%. Whether you're a challenger startup like Nutmeg or an international giant like PrettyLittleThing.
But the truth is, referral requires work.
AB testing is crucial to finding the incentives, creative and sharing options that resonate with your target audience segments. Are your customers generous or selfish? Aspirational shoppers or bargain-hunters? Likely to share your brand via a link or in-person?
There's only one way to find out. Once you start getting answers, apply your learnings across your entire marketing strategy for optimal results.
2. ... AND keeping them
Acquiring new customers is well and good. But it can quickly get expensive if they disappear after their first purchase.
That explains why 97% of marketers now consider retention a key priority, rather than a secondary consideration to acquisition.
While the likelihood of customers returning varies between sectors – people are a lot more likely to buy clothes again than a mattress or exercise bike – you can still take steps to increase your chances.
Implementing an effective referral programme is one such step. Referred customers are 54% more likely than other customers to make a repeat purchase.
3. building a valuable Database
Every marketer's dream is a huge database of customers matching their target profile who have actively opted in to receive emails.
But achieving this is no easy feat. In a world bursting with content – much of it pointless or irrelevant – customers are discerning about what they agree to receive. On average, just 1-5% of customers opt-in to receive emails.
Referred customers are 5x more likely to opt in to receive e-marketing.
That's right. On average, 25% of referred customers sign up to receive emails.
And this figure remains strong even among those yet to make a purchase. Their friend's recommendation means they already like and trust what your brand has to say. Nurture this positive sentiment with high-quality, targeted content, and it won't be long until they convert into a loyal customer who loves your brand.
4. increasing customer Loyalty
If your brand provides a good product and service, customers are likely out there recommending you to others. But do you know who they are?
Identifying and engaging with these individuals is key to unlocking significant growth for your brand.
There's a number of ways to do this. You can monitor who's talking about your brand on social media. You can ask customers how likely they are to recommend you (and if they already have). And you can run a referral programme that not only tracks recommendations, both on and offline, but incentivises them, too.
The latter incorporates the complex psychological processes involved in recommending brands and tailors your approach to drive desired results from your audience.
5. Re-Engaging contacts
We all know the disappointment of having hard-earned customers disappear.
But if you want to avoid those people falling firmly into a competitor's funnel, it's crucial you re-engage them.
The first step of a successful win-back cycle is segmentation. Identify lapsed customers who are likely to re-engage. A maternity fashion brand, for example, is likely wasting time and effort attempting to persuade women who are no longer pregnant to shop again. Instead, they'd be better off focussing on driving sales among pregnant customers, while sending brand-building content to new mothers who may be pregnant again in future.
Next, hone in on your messaging. Tell your lapsed customers why they should return. Communicate your USP, what makes your products and service better than the competition, and why they should come back.
A referral incentive, from a discount to VIP invite, may be just the thing that compels people to return. And you never know, they may turn out to be your biggest brand ambassadors.
6. Increasing customer lifetime value
Referred customers aren't only easier to acquire, more likely to stay, and more engaged. They also could be your most valuable customers.
On average, referred customers spend 10-25% more on their first order. They're more likely to shop again and they're 3x more likely to go on to refer others.
All that adds up. Referred customers have double the average lifetime value of other customers.