October 24, 2017

Referral Marketing: The Revival Of Trust In The Digital Age

As marketing is seen as increasingly more subversive, intrusive and generally untrustworthy, brands are making increasing efforts to ‘humanise’ their messaging and content. On the receiving end, consumers have seen their inboxes, browsers and social media feeds dramatically transform into noisy, overcrowded spaces, where brightly coloured creatives fight for their eyes – and clicks. But there are methods of marketing which are efficient, lucrative and well-trusted by consumers and savvy marketers alike; practices that are drawn from the oldest structure of advertising there is: word of mouth.

Word of mouth is, and continues to be, the pinnacle of organic brand growth. After all, what better way to secure a ‘human-centred’ brand image than to let your human consumers be brand advocates themselves? As loyal, satisfied customers share a product with influence and authority, the positive brand associations are received far more receptively than any brand could hope to achieve through paid media channels. Andy Cockburn, CEO and Co-Founder of Mention Me, caught up with us to explain how referral marketing continues to pack a weighty punch in consumer engagement and acquisition.

Would you say marketing is having something of a trust crisis?

I wouldn’t go so far as to say that marketing is having a trust crisis, but I think there has been a consistent erosion of trust in marketing more generally. Our research on this shows that in the last five years, almost all the mainstream marketing channels have become viewed as less trustworthy year on year. The only two channels that aren’t are reviews, and referral from a friend. So an over-reliance on mainstream marketing channels effectively means that people are trusting the messages that brands put out there less and less, and your job as a marketer is getting harder.

Why is this distrust becoming so prevalent now?

I think it’s largely because of the evolution that marketing’s been going through. Marketing has been through such a huge amount of change in the last 20 years. The change in the last five years alone has meant that there’s a lot more information about brands out there, and it’s much easier to validate a brand’s marketing message. Whereas 50 years ago, people would happily believe billboards, because it was so hard to validate or question what those billboards were saying. Now people are able to look at reviews, they look on social media, and they look to their friends. It’s very rare that a consumer relies solely on the message a brand is putting out there.

Is the rise of new technologies responsible for this erosion of trust, or does it actually hold the answer for the rebuilding of it?

A lot of the recent technology that has been introduced has contributed to the evolution of marketing, and that evolution means that we just can’t depend on the same things that were working five years ago. People need an injection of trust in their marketing, and they are looking to external sources to do that.

Some of the capabilities that technology provides, like personalisation for example, provide a great customer experience, and that is really important for building trust. But ultimately, you can never get away from doing the right thing by your customer and treating them as well as you possibly can. The role of personalisation is playing a role in helping build trust, but really, for marketers looking to get out and find customers, they need to be thinking about how they can leverage the relationships that new customers might have, and external validation that says they are a brand that people should buy from.

As well as confidence between consumer and product, part of it is offering the customer that value exchange. They get something valuable from their interaction with your brand.

In the vast majority of cases, you want to be in a place where the consumer likes your brand and trusts it enough that they feel some kind of relationship with it. When people use a refer-a-friend program, there are obviously incentives, and people are rewarded for sharing with their friends. But interestingly, we find that the reason a consumer shares with a friend in the first place is very rarely because of the reward. They’re sharing with a friend because they like the brand a lot, they think the friend will benefit from it, will judge them positively for having shared it, and their social capital therefore increases. The things that drive people aren’t necessarily monetary, but it’s about the relationship and feeling good about things that really drives the relationship with the customer.

In a way, word of mouth marketing is taking a step backwards, not in a reductive way, but in a way that reconnects brands with the earliest key values of marketing, and sits at the very core of customer loyalty.

There is nothing better than an existing customer that likes you telling a friend about your brand. It’s normally the best friends of your best customers who are doing it, so that’s powerful itself. But more than that, when I tell a friend about a brand that I like, the amount of trust that I have in that brand is immediately transferred to my friend. They are then ready to buy and have a good relationship with that brand themselves. With all other marketing channels, it normally takes a lot more time, and more touch points to get a customer to the stage where they trust a brand enough to buy. That trust that means the customer will spend more on their first order, they’ll stick around for longer, and they’ll have a higher lifetime value. That’s the trust that you need to manage as a marketing team and really care for over time, so that you can ask your customers to do things for you in return.

When you think about referral it can seem like it’s just a widget on a site, but it’s actually much more than that. It’s about understanding that you have this happy customer base that you’ve worked really hard to build, and encouraging them to bring in their friends in a way that is beneficial to both parties. And then you up with a virtual circle, where your most trusted customers are bringing in more trusted customers who are predisposed to liking and trusting you. This is how marketing should be- when you’ve got a great brand, you want your existing customers to be a source of new customers.

How does referral marketing differ from influencer marketing? Both are using brand advocacy as a tool for driving engagement, but how are these two marketing methods be distinguished from each other?

It’s true that there are a lot of similarities in the dynamic between referral and influencer marketing. When we think about referral marketing we tend to think about much closer relationships, and our KPIs reflect that. With referral marketing, we are looking to encourage 20-30 per cent of a customer base to refer a small number of friends and family who they have very close relationships with. With influencer marketing, you’re looking for a smaller number of influencers to refer and share with far more people. The dynamic is different but the mechanics are pretty similar.

We ran some research recently and asked consumers who they trust for recommendations when they’re looking to buy from a new brand. We found that quite significantly by age, in the younger cohort, 10-15 per cent of people were looking for influencers or bloggers to influence their decisions about where to buy from. For all the other age groups, it is always friends. More than 50 per cent of people would trust a recommendation from a friend.

When it comes to referral, there’s quite an interesting dichotomy between age groups. The younger generation will share content widely and promiscuously, but a lower percentage of those recommendations will be taken up. Older generations, on the other hand, will share far more sparingly, but we see a much higher rate of conversion from those recommendations. This is a reflection of the way in which technology mingles with pre-existing user behaviour; the older demographic is sharing with people who are much closer to them, and it’s a more direct, more traditional way of sharing. Whereas the younger generation are sharing more freely, but appreciate the comparative lack of trust from their wider network. It will be interesting to see how technology shapes user behaviour over time and what differences this will lead to in terms of engagement and sharing habits.

So what are some of the challenges or misconceptions which are preventing marketers from being successful with referral marketing?

There is certainly the risk of the “build it and they will come” mentality. We’ve worked with clients who have tried referral in the past and the number one mistake is failing to promote it enough. Quite often people say “we’ve done referral marketing” but it was only in the footer of their website. And if customers aren’t aware of it and regularly reminded of it, they won’t share it. It’s a matter of getting the incentive to them at the right point, and we try to get it to customers at their happiest point, whether that’s buying, or unboxing, or actually starting to use the product.

Often brands are really focussed on the reward and the idea that they need to give a really generous inducement, but referral really isn’t about the incentive. Referral does need to make sense in relation to whatever else the brand is doing, and it can make a big difference when we test different incentives. But it is not the main reason referral will work. The real test of a referral scheme’s worth is getting the psychology right. This is where you drive a relevant experience that’s truly worthy of your customer’s respect and trust.


Have the benefits of referral marketing caught your eye? Or perhaps brand trust and brand advocacy is a current focus at your business? If so, you can watch Andy’s presentation from the Figaro Digital Marketing Summit here. To watch the rest of the videos from the day’s presentation track, click here.

Written by

Andy Cockburn,
CEO & Co-founder at Mention Me