January 22, 2018

Referral: Embed It In Your Marketing Strategy For Success In 2018

With 2017 fast becoming a distant memory, most marketers will already have taken a look back at the performance of their marketing activity for the past year and applied these learnings to plan ahead. What made the grade? What was bottom of the class and should be banished from your marketing toolbox, never to return? Coupled with this, of course, is the always moving development of new technologies and strategies that promise to make your marketing more effective and efficient, and work harder and faster for you. 

Not all developments are necessarily well thought through or tried and tested however, and hopefully, you’ll already have a core plan running for the forthcoming year. But to hit your (inevitably) increasing targets you’ll either need to make existing channels work harder or implement new activity. To do this you’ll naturally need to convince the holder of the purse strings to give you the budget to launch any new marketing channel that is not already in your arsenal. Influencer marketing, heralded as a more honest and powerful channel than celebrity marketing, has for some fallen in favour as doubts are cast on its ROI and authenticity. What about leaning on the power of word of mouth with referral marketing?

If you don’t yet have referral as part of your mix, here are three compelling insights that are worth sharing with your team.

  1. Referral marketing can operate on a guaranteed CPA

There are very few channels where you can guarantee the CPA you’ll pay for each new sale, whilst maintaining volume. Tried and tested channels like PPC (which often forms a significant part of a marketing plan) have generally become more expensive in recent years as the cost per click has increased rapidly. Whilst you can now work towards a max CPA with Adwords, CPA bids can really drive down the volume of traffic.

A good referral platform can deliver a steady stream of new customers at a cost you can build into your marketing plan. No nasty surprises on your bottom line.

  1. Referred customers spend more, and more frequently

Never has trust been so important in marketing. In the era of fake news, the Edelman 2017 Trust Barometer shows consumers’ trust in businesses and media is at an all time low.

So who do we turn to when considering a purchase? Nielsen report that 83 per cent of us turn to friends and family for recommendations – way above any other media source.

So capturing this advocacy via a referral program seems an obvious solution. But can you be sure that these referred customers are as good quality as your existing customer base? Might offering a referral reward just attract discount hunters who take your offer only never to return?

You might be surprised to learn the opposite is true. Referred customers are generally more valuable than your existing customers. Having analysed the referral programs across a number of brands we have found that on average referred customers:

  • spend 25 per cent more (in fact this recent case study from retailer Cath Kidston shows their referred customers have an AOV 34 per cent higher than customers acquired by other media)
  • are 3 times more likely to refer someone else
  • are more likely to make a repeat purchase

In an era of heavy discounting and Black Friday flash sales, it’s a relief to know that there is a channel that can actually increase LTV.

  1. Referral can be scaled up

When you find a media that works, you really want to scale it up whilst maintaining control over the CPA.

With paid search you’ll want to work on the long-tail keywords to drive those incremental orders at a lower cost. Traffic is limited on these long-tail keywords, but the flipside to this is that whilst high volume keywords will drive more traffic they will attract a much higher CPC. Meaning your cost per conversion will increase.

Optimising your website and implementing an SEO strategy can certainly drive more traffic. But sadly this isn’t something that can be delivered overnight.

Referral is different. It can be scaled up whilst maintaining exactly the same CPA.

When first launching a referral program it makes sense to choose a few key customer touch points where you learn what works best for your customers. Typically the best place to start is at the point of greatest customer delight. After all a delighted customer is one more likely to recommend your product.

The point of delight will vary by product. Often this is just after purchase or when the product is delivered. The trick is to find the sweet spot where your customer just has to share their purchase with a friend. Either in person or online.

Learning what combination of referral offer, images and messaging work at a few touch points means that when you expand to more points in your customer lifecycle you can really drive increases in referral.

In addition you could consider tiered rewards and offer higher rewards the more friends a customer introduces. A great way to drive additional volume.

Whether referral marketing is something you have only briefly considered, or a strategy that you are already looking at, make sure your 2018 marketing plan is robust and features all marketing channels. Your loyal customers are your best asset and leveraging their loyalty could pay dividends.



By Andy Cockburn, CEO and Co-Founder of Mention Me. 

Written by

Andy Cockburn,
CEO & Co-founder at Mention Me