Back To Basics: How To Cook Up A Referral Storm

by Caity Dalby, Content Manager, Figaro Digital

Continuing on from part one of the referral marketing conversation, Deconstructing Demographics: Referral By Sector, Figaro Digital spoke to Tim Boughton, CTO & Co-Founder of Mention Me, about taking digital marketing back to basics and how to cook up a referral storm. As a software-as-a-service (SaaS) referral marketing platform, Mention Me aims to help brands develop their customer acquisition. But at the heart of referral marketing is the question, what actually makes a referable product or service?

With the key ingredients in the referral mixing bowl ranging from brand trust to adequate motivation, in this interview Tim shares insights into why these key elements contribute – or are necessary – to refer-a-friend success.

FD: The main focus of the second infographic is brand values and trust, what makes these so important to a refer-a-friend program?

TB: It doesn’t matter how great your offer is or how amazing your product looks, if you’ve not invested in developing brand values and trust, the lack of these will outweigh the benefits. These will be things such as parcels not turning up on time, not being able to get through to customer services, or lack of trust in the offer because it seems too good to be true. Those things are like deadweights on this kind of programme and literally no one will recommend it. We call it social capital and risk, the act of referral customers saying to their friends that they really love this brand. No one will refer a brand if there’s a risk they will disappoint their friends or theoretically put their friendship at risk.

When we do this kind of research we find an incredibly strong emphasis on trustworthiness, so we always tell brands that before even thinking of a refer-a-friend scheme they need to do the basics well. There’s no point worrying about a referral programme if delivery times are slow, customer service is poor, the online reviews are bad, or the site doesn’t work. So we put brands through a filter before we work with them, to make sure that they have something worth recommending.

FD: Only three per cent of consumers would trust a recommendation from a celebrity. How do you think this is changing in what seems to be the year of the influencer and micro-celebrity?

TB: There is so much hype around micro-influencers and brands turning to influencers, but in actuality they have such a small effect on the numbers compared to a recommendation from a trusted friend or family member. People don’t look to celebrities for good, trustworthy advice of what products to try. The dedicated followers of those celebrities might be influenced to purchase on their recommendation, but the majority of people are not swayed by it because they suspect there’s a commercial motive. They know the celebrity is being paid for this, so why should they trust that they are really telling the truth?

It automatically merges into advertising or other forms of marketing, which we know are less trusted. The only other thing is that its age weighted, there is definitely a younger audience for celebrity blogging but it is still has quite a small effect.

FD: Finally, what are the different aspects you have to consider when trying to create a perfect refer-a-friend-scheme?

TB: Firstly, there’s no such thing as a perfect refer-a-friend scheme as they’re constantly a work in progress. Having said that, our platform is designed to help brands create the best scheme for them. The idea is to put the controls in the hands of the marketing team and give them the tools to play with different variables and learn over time what works for their brand. But importantly we have a client success team that works closely with our clients as our incentives are aligned – we charge on a performance basis, so we only make money when it works.

As I’ve mentioned, it doesn’t stop once you’ve found the perfect point in the process. You never finish developing a referral scheme, but with adequate testing and hard work you’ll find something that works for you and is commercially viable. You need to look at the margin on acquisitions and play with the incentives. Often when you test you’ll find that 15 per cent off for each referrer and their friend, works just as well as 60 per cent off or 70 per cent off. Play with all the different variations of what your refer-a-friend programme could be and how it works in order to get it just right to meet your internal goals.

It all depends on the client: some are optimising for volume so are looking for new customers, while others are optimising for their profit margin so they want new customers but they want them at a certain price and they are not willing to pay more. Depending on what they’re objective is, they will be doing different kinds of testing involving different experiments during the process. It’s a very controlled process that we’ve made into a science, whilst also bringing expertise from all the sectors we work with. Through this we can spot trends in different sectors and apply them across sectors when that’s appropriate.

Much like a refer-a-friend scheme our work is never finished, so when we add new features to the platform to make it work better for one client, we can then apply those features for other clients.

Download the How To Cook Up A Referral Storm infographic here.