5 Mistakes You’re Making With Your Referral Marketing Strategy

by Grace Miller |

5 Mistakes You’re Making With Your Referral Marketing Strategy

Studies have consistently proven that referral marketing is one of best types of marketing for sales and conversions, yet it is still one of today’s most overlooked strategies. Referral marketing evolved from word-of-mouth advertising, which has been around considerably longer than the internet.

It happens when your Uncle Bennie tells you how great his new twelve-blade shaving razor is, and it’s a powerful marketing tool because we trust the opinions of relatives, friends, co-workers, social media influencers, and famous entertainers and athletes. After all, we get advice from our friends on which restaurants to frequent and which movies to see, and we are happy to spread the word ourselves, especially when the products or services are exceptional.

As powerful and reliable as word-of-mouth marketing referrals are, many ecommerce and retail marketing professionals are getting left in the dust because they make one or more of the following mistakes or missteps that prevent them from leveraging the full potential of internet referral marketing.

Misunderstanding Your Customer

Even if your customer is a fan of your products and business, they probably won’t participate in a referral marketing program unless they see some immediate benefit. Incentives to entice referrals may include discounts, cash, store credits, gift cards, freebies, or experiences.

A 2016 Nielsen Harris Poll found that more than 75% of American consumers prefer to be rewarded with money for referrals. Money talks… and sells! Non-cash rewards like freebies or experiential rewards may also appeal to customers, but give your rewards careful consideration according to your target audience. A customer who receives a referral incentive that is useless in his eyes might send the message that you don’t really know your customers.

Referral Marketing mistakes

Overlooking Open Graph Elements

You probably track your web traffic, Google rankings and Twitter followers, but it’s time to get scientific with a referral marketing program that keeps track of leads and tests incentive offers. Take full advantage of social media by utilizing Open Graph elements in order to make sure your referrals are shareable. Open Graph promotes integration between Facebook and other websites and gives you a degree of control when a page is liked or shared. Add your logo and referral program to your Open Graph image alongside an enticing description that encourages prospects to click, purchase, and share.

Not Spreading the Word Properly

Like many captains of ecommerce who give up too easily on their basic word-of-mouth internet referrals, you are probably running your referral program in isolation. With so many platforms to connect through – social media, mobile phones, email campaigns – you should optimize your online referral incentives with a loyalty program that incentivizes members to share, review, and promote in addition to referring friends. A study from the Wharton School of Business showed that referred customers are between 16% and 24% more loyal on average, and repeat customers are known to spend three to five times more than new clients. It’s crucial to present the referral opportunity wherever customers interact with your brand; it’s most effective to ask for a referral at the “wow” moment when you’ve just provided a great product or service – so seize the moment!

Not Spreading the Word Properly

Disregarding the Power of Video

According to social media advisor Lindsay Stilborn, more than half of all marketing professionals named video as the type of content with the best ROI. That’s understandable when you consider that more than 500 million hours of video are watched on YouTube every day, and when videos make information easier to digest. Email offers rarely go viral, and drop-down boxes never do, but videos have a way of getting around and tugging at people’s heartstrings. Video clips are quick and effective, and you should find a creative way to include videos at each stage of referral marketing.

Failing to Differentiate Your Referral Program

On the surface, all internet referral marketing programs seem more or less the same. And when you look closer, many still look the same, which is exactly why you must differentiate your program. Get creative but keep it simple throughout the referral process, from sending an email, completing a form or sharing an online post. Come up with clever names for your referral program and rewards currency, and get customers enthused about collecting and redeeming rewards points.

Once you realize how valuable a solid internet referral marketing strategy can be, stay the course. Don’t give up. Referral marketing is the future of advertising, and you must make it work for your business

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