Benefits of Referral Marketing for Local Business Owners
When it comes to the question which movie should I watch next or which restaurant should we go for our special celebration, which is the first place you go to? That’s right – your friends and family! So how can Referral Marketing help local business Owners?
Word of mouth is one of the most powerful forms of marketing. As a potential client, you’ll also ask your friends about their thoughts of a certain place or product, and, as an end customer, you’ll probably give out a recommendation yourself.
In the business world, this is known as Referral Marketing and it’s recognized as one of the best forms of marketing, when it comes to sales and long-term conversions. What makes it especially successful is that it relies on precision targeting. After all, people tend to know what their friends would like or will be willing to buy.
The trust factor also plays a significant role. Think about it: when a salesman promotes a product, you are likely to doubt their sincerity and authenticity – after all, it’s their job to sell you that product, isn’t it? Recommendations from friends, however, are an entirely different thing and their genuinity is one of the major strengths of Referral Marketing. People generally feel more comfortable when a product or service is recommended by someone in their circle – especially, if this product is expensive. Because it doesn’t actually involve direct selling, a friend’s recommendation will immediately transfer the trust to your company.
There are many systems and ways to implement a referral marketing campaign into your business. Word-of-mouth is, of course, one of them, but more and more people are relying on the Internet and social media in particular. The different systems for referral marketing include Facebook and Twitter, email, Whatsapp and specific platforms for recommendations, such as Voice of Friends.
What makes such platforms especially successful is that they offer you a greater reach and a long-term conversion rate. Compared to another form of marketing, such as daily deal sites, for example, Voice of Friends and Referral Marketing, in general, yields significantly better results. Because of the above mentioned reasons, referral marketing provides you with more sustainable customer growth with retention rates between 8% to 10%, while the deal packages only result in a short-term peak with a low retention rate (around 1-2%).
Moreover, with deal packages, AdWords, Facebook Ads or any other form of marketing, your reach is, ultimately, limited. Referral marketing platform, however, relies on a completely different way of promoting a company or a service. Each of your loyal customers will have a different circle of friends and acquaintances, which greatly expands your reach and brand awareness.
In addition, by employing Referral Marketing strategy, you can focus your budget on customers that have a higher likelihood of becoming loyal clients themselves. Your loyal clients will make recommendations, only if they’re satisfied with how your company operates and the products or services you offer. In turn, by recommending you to their friends, chances are that they’ll be satisfied and willing to spread the word, as well. This ultimately leads to an efficient and speedy generation of satisfied clients, which ensures continuous cycle of repeat customers and even more referrals. Definitely a better way to grow your customer base than cold calling!
What makes referral marketing platforms, such as Voice of Friends, especially successful is that they provide your customers with an extra incentive to share their positive experience and recommend your company to their friends and family. A recommended company can decide to offer a small “welcome” voucher to their new customers, which promotes greater client satisfaction and increases the likelihood of referral; or reward their loyal customers to encourage them to recommend your company even more!