Referral marketing: concept and practical uses

Referral marketing is a strategy based on the power of customer recommendations to generate sales. It is a very effective form of marketing, since people tend to trust the recommendations of others more than traditional advertising messages. In this post we will talk about the concept and its practical uses.

The idea is to take advantage of the degree of influence exerted by those who have already tried a product or service. Customers or users are usually more willing to buy a product or service if it is recommended by others. The level of trust and credibility is obviously higher than if the message comes from the brand itself. In addition, information from other consumers helps to make more informed purchasing decisions.

For all these reasons, it is key for any brand to know the real opinion of its customers. Referral marketing only works if customers are satisfied with the brand and its products or services. Satisfaction surveys, review websites and other tools will provide relevant information in this regard.

In addition, it is necessary to work and deepen the analysis of consumer habits and determine which products or services are most in demand. All the reasons associated with this approach will be very useful.

An example? Imagine you are super happy with the use of an email marketing platform.Another user who is looking for a tool like this one and who is looking for options consults you. It is very likely that the decision will be clear and immediate thanks to your recommendation.

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Referral marketing: concept and practical uses

Practical benefits of referral marketing

Among the benefits that this marketing strategy can bring to a brand, we can highlight the following:

  • Increased sales: Customer recommendations can attract new customers and increase the loyalty of existing ones.
  • Improved satisfaction: Recommendations are a vehicle for brands to identify and satisfy customer needs.
  • Reduced marketing costs: Also, recommendations can help generate sales without the need to invest in advertising.
  • Increased brand trust: It is easier and faster to convert consumers who come through this channel due to the trustworthiness of the prescribers, since their opinions are considered transparent and objective as they are based on their own experience.
  • Lowers the cost of customer acquisition: the cost is minimal when advertising is done by the customers themselves. In this sense, it is smart to invest in improving what can increase their satisfaction to, in turn, feed back into the process and generate more recommendations.
  • Greater brand relevance and reach: this is a global consequence of all of the above. A good job in this line increases brand awareness.

How to implement referral marketing

To do so, brands can use a variety of strategies, among which we can highlight the following:

  • Referral programs: this involves offering incentives to customers for recommending products or services to others. These incentives can be discounts, gifts or loyalty points.
  • Online communities: These can be an excellent space to generate customer recommendations. Brands can create online communities for their customers to share their experiences with products or services.
  • Data analysis: Helps identify customers who are more likely to make recommendations. With this information, the brand can target these customers with personalized offers.

Photo credit: PX

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