Could referral marketing be the most important tool in your ecommerce marketing toolbox?
Yes it might very well be.
Customer referrals and word of mouth have always existed as a great way to grow a business. In fact, some people might even say it’s the oldest trick in the book. Even if it’s not, it’s a form of indirect advertising that we’ve all experienced. All of us have at one point gone through the experience of a business owner (perhaps of a local shop or restaurant) asking us to “tell your friends and family about us”.
Assuming we had a good experience, great service or great products from that business, many of us have probably also gone ahead and actually told a handful of friends to go check it out.
The funny thing about referrals is that because it’s such a no brainer, a lot of businesses don’t have a formal program setup to ensure e that they’re maximizing this channel, by automatically or programmatically asking all their customers. That’s both a shame and an opportunity lost, because for every one customer who may be naturally inclined to refer or recommend a businesses to their friends “without” being asked, there are almost certainly a number that will be too busy, or not inclined to refer anything without being asked to do so.
That’s reflected in the research as well. Some research done by Texas Tech showed that while 83% of consumers indicate they’d be willing to refer a business they frequent, only 29% actually do. That’s because surprisingly most businesses simply don’t ask.
A quick and easy customer referral program is not only a great marketing strategy on it’s own, because of that gap in consumer willingness and businesses asking, there is also a really good chance that setting up a customer referral program is great low hanging marketing fruit you can take advantage of.
In ecommerce that opportunity is even larger.
Many ecommerce businesses these days are often a hobby or side project that many of you are pursuing. Thanks to platforms like Shopify and BigCommerce it’s never been easier to “open” a store. However in that rush to get a storefront running, actually marketing your store might fall by the wayside. Even if it doesn’t because some elements of online marketing are so labor intensive, such as SEO and setting up a social media presence, some easier tactics like word of mouth marketing with referral software can especially be overlooked.
Let’s take a look at why this is something you should look to address.
The power of a happy customer or advocate today is vastly different than what it used to be. In fact that power will only increase over time.
The reason why is really centered around 3 areas.
One of the biggest secrets to great marketing and great marketing campaigns is targeting. Great marketing isn’t just about reaching as many people as possible with a message, it’s about tailoring a message to reach a specific audience as effectively as possible. The great thing about referrals and word of mouth is that that type of indirect marketing is able to target in an exceptionally effective way based on the fact that most people will befriend people with similar interests and tastes. There is almost no better way to target a group of people with similar interests than by targeting a group of friends, or in some cases family.
Even if friends don’t have exactly the same tastes in products and services, what they will no doubt have is a degree of trust. Intuitively most of us would assume that a recommendation from a friend or family is more trusted than a generic advertisement. Again research shows that this is absolutely the case. The recent Neilson trust index research shows that not only are referrals and recommendations the most trusted for of advertising, they are the most trusted form by an exceptionally wide margin.
Neilson study on trust in advertising
Finally the reach that the average consumer has today is enormous. Whereas a happy customer in the past could refer or recommend a business to a handful or perhaps a dozen friends and family over the course of a few days or weeks, today’s consumers are hyper-connected. With a simple Facebook post, the average consumer can reach, hundred, if not thousands or friends (who again trust their opinions) in a matter of seconds. That kind of social reach should not be underestimated. Inn fact really savvy businesses should be doing their best to get ahead of this social chatter, and customer referrals are an idea way to grab a piece of that word of mouth opportunity.