Referral Marketing: Indeed, referral marketing is an excellent way to obtain better results when prospecting customers.
The best part: this is a highly democratic strategy, that is, it can be easily implemented in any business model, for any type of customer, and for any product or service.
Continue reading and learn more about what it is and how to prospect customers with referral marketing!
What is referral marketing?
Referral marketing is a marketing strategy that aims to transform customers into promoters of a brand, recommending its products and services to its suppliers, partners, customers, friends, or family. Unlike word-of-mouth marketing, which happens spontaneously, referral marketing requires an effort from the marketing team to encourage referrals in exchange for rewards.
In this sense, referral marketing encompasses different tactics that are used to turn customers into a sales channel for the company, as they can promote the business and, in addition, act as a social proof trigger, showing their network of contacts that your products or services are approved by them.
Reflect: do you trust more in approaching salespeople or in recommendations from your closest friends?
Do you notice how a recommendation inevitably has greater weight when it comes from someone we trust?
Knowing this, a customer will not go around promoting their products and services without seeing value in it. After all, his credibility will be at stake.
Therefore, the customer must already have a good experience and exchange interactions with the company. In other words, customer engagement and satisfaction levels must be optimal.
What are the benefits of referral marketing?
The benefits of referral marketing include everything from better prospecting results to higher loyalty rates and reduced customer acquisition costs. Understand more details about the advantages of this strategy:
Lower customer acquisition cost (CAC)
Later in the article, we will introduce four referral marketing strategies. In general, they have lower implementation costs compared to traditional advertising practices and digital marketing strategies, which makes referral marketing CAC much more interesting, as the efforts to generate demand are smaller and involve less spending.
Shorter sales cycle and higher conversion rates
When receiving a referral, the sales team deals with a lead with high qualification potential, because whoever referred them tends to know their business model and knows how their solution could be positioned within the reality of this lead.
Furthermore, the social proof trigger, which we mentioned previously, helps to break down various barriers and objections during prospecting, which can further accelerate the sales cycle of indicated leads and improve conversion rates.
According to research from McKinsey, 63% of Gen Z consumers say recommendations from friends are their most trusted source for learning about products and brands.
Therefore, when your audience speaks well about your business and promotes it to more companies in this sector, your name grows, your credibility is strengthened and your positioning in the market improves.
Most profitable opportunities
A study by the Wharton School of Business highlights that referred customers have a 16% higher LTV (Lifetime Value) than average customers.
In other words, referral customers contribute greater revenue during the time they have a relationship with it, which makes them more profitable than customers who are attracted to the organization through other channels.
How to prospect customers with referral marketing?
Ready to learn how to prospect customers with referral marketing? See below 3 methods that can be used:
Referral programs are one of the most well-known and practiced referral marketing strategies on the market.
It basically works like this: your company encourages your customers to recommend your products and services in exchange for rewards. These rewards can be discounts, gifts, and even prizes.
So that nominations are not made just for awards, create basic criteria for customers to nominate your organization. This is essential, especially for B2B business models.
As a result, salespeople will have a warm list of customers to prospect. Therefore, it is necessary to insert these contacts into the CRM, define the source channel of these leads for, in future, measure the results, adjust your sales approaches, and start prospecting.
The ambassador program is a way of building a community of customers who are highly engaged with your company and who promote your products and services because they identify with it.
To do this, you need to reward customer loyalty not only with discounts and prizes but by inviting them to be part of your brand, as a business partner.
In B2B, ambassadors are also customers who can be nominated by the company that created the program. With this, there is a mutual indication, which tends to further strengthen the relationship between the parties.
Ambassadors are professionals who are very engaged and satisfied with your brand, so expect qualified and warm leads to prospect!
Finally, to close our list of referral marketing strategies that you can use to prospect more qualified leads, we mention success stories.
Success stories are content complete with testimonials where customers report the results they obtained with your solution, their purchasing experience, and their level of satisfaction with customer service.
This content can be published on your website or on your social networks, and is an excellent way to show potential customers in similar segments that your company is already a reference for the competition, and that it generates positive impacts on their operations.