Wondering why you should have a referral marketing program on your website? Here are some reasons.

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1. Warm Leads Convert Better

There are three types of leads: cold, warm and hot. 

Cold leads are those people who do not know you and haven’t heard about you. These people have the lowest chance of converting to a sale. This is because promotions are often unwelcomed by this target market. 

Warm leads, on the other hand, may not know about your brand or your business, But they know the promoter personally. This pertains to family members and friends who have a higher chance of converting into a sale. They may be undecided, but they are far more likely to buy than cold leads. 

Hot leads are buyers. These people are already on the verge of buying, and they are just waiting for that final push that will tip them over to buy. Every business owner aims to get these leads but it can only happen if you have already primed them up to buy.

Referral marketing gives your business a pool of warm leads. When your customers promote your brand for you, they will usually send it to their family and friends. This will give your business some warm leads to work with.

2. It Helps You Get More Customers

In an eCommerce business, you’ll often want to increase the number of customers in your business. This is because the profitability of your business highly depends on the number of customers. However, getting customers using traditional promotion has lost its effectiveness. While many businesses still resort to traditional marketing, it is no longer as effective as it used to be. Since the dawn of the Internet, customers can now search for products and services online before buying them. This will validate the product before they take out their wallets and buy. 

A referral program can help you get more customers because it utilizes the customer’s inner circle. These are people who the customer has a mutually trusting relationship with. Because of this, promotions from the customer are often well received by their prospects. This is because prospects have a perception that people in their inner circle are less likely to deceive them. In fact, they are far more likely to take action on the promotion because it came from a person that they know and like. According to Nielsen, over 90% of consumers are inclined to believe people who are in their inner circle. This has resulted in over 50% of purchasing decisions. This goes to show how trust can get more customers in your business.

3. More Brand Exposure

Every online store wants to be the first choice of customers when they are on the verge of buying. But you can only do this if you have enough brand exposure. Referral marketing grants your business tons of brand exposure. 

There are two reasons for this. First, referral programs are always designed to be shared on social media. Social media platforms are powerful when it comes to driving sales. 71% of customers buy items simply because they are promoted on social media. And that’s not all. It seems that posting reviews are also quite common. It is common for a customer to post a review of a product on social media. Because of this, the brand name spreads like wildfire. Another reason is the incremental nature of referral programs. You see, referral programs give you the ability to refer people to your inner circle. This shows that the nature of this form of marketing is incremental. This means that as more people join the program, the ability to promote the program to more people also increases. As your name spreads, your brand also gains more exposure. 

4. A Referral Program Can Get More People to Trust You

When someone refers your business to their family and friends, you gain instant trust with the target prospects. This is because every referral acts like a solid social proof for your business. And that’s not all. These reviews can also be posted on social media granting the business more exposure.

Usually, when a prospect is on the verge of buying, he will evaluate the pros and cons of working with you. If you have a referral program, you don’t have to sell yourself alone. Your prospects will do the selling for you. The good thing about this is it will be more effective. This is because other people are promoting you. Prospects are already so used to businesses promoting their businesses to them. It is a breath of fresh air to see other people do the promotion for you. 

5. Referral Marketing Reminds Customers That They Made the Right Decision

When customers buy from you, the decision-making process doesn’t end. They also need to decide whether they like the product or service that they have bought from you. They also need to decide whether they will buy from you again. Having a referral program reminds your customers that they made the right decision when they chose to buy from you. This is because every referral acts like social proof that shows that the purchase was the right decision. What can this do for your business? Well, it can result to an influx of repeat orders. With this, remarketing will not be too hard for you for your products or services will sell themselves through referral marketing.

6. Referral Programs Create Community

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Creating a brand for the goal of selling rarely works. Brands are now better for community building. Referral programs are great because it gives the customer a sense of belonging. Instead of being just buyers, customers also act like fans and promoters of your company. They can also be called as brand advocates for they will stand by your brand as they promote it to other people. 

Another reason why referral programs form communities is the reward and the relationship of the referrer to the referral. When someone promotes a program in exchange for a reward, it gives them a reason to sign up. More than that, the relationship also increases the likelihood that this decision will be made in your favor. 

7. A Referral Marketing Program Gives Your Customer some Promotion Opportunities

Some customers may love your products to the point that they want to share it with their family and friends. The problem is that it is quite hard to do if you don’t give them a reason to do this, and they don’t know how to do it. Referral marketing programs break through these barriers by creating a system that allows customers to promote your business for you. This is formalized because each customer gets a dedicated link that they can promote to their family and friends. Plus, they will be able to get a reward if they did their promotion well. 

8. Increased Customer Lifetime Value

Did you know that referral programs can also increase your customer’s lifetime value? This pertains to how long a customer becomes profitable to your business. When a customer buys from you, he or she gives your business some initial profit. But if they don’t like your product, they will not likely transact with you again. Here’s the problem. Getting a brand new customer is significantly harder than retaining an existing customer. So if you focus on retaining a customer, it will be more beneficial to your business in the long run. 

Referral programs can help your business by increasing your customer lifetime value. This is because every referral acts like a testimonial for your business. It reminds your customers that it is suitable for them to work with you continuously. This is not to mention that it also incrementally promotes your brand. This grants you more brand exposure and gives your business some new customers. 

9. It Shows Your Customers That Your Business is Doing Well

Everybody wants to buy from a winner. This is the reason why brands are willing to pay for certifications and awards. But more than that, customers care more about how your business is serving its customers. Referrals show customers how your business is doing. As more people promote your business, it shows that more people are buying from you. This creates trust in your online store, and your prospects will be more willing to buy from you. 

10. It Helps You To Automate Your Marketing

Referral marketing is also great for marketing automation. Marketing can be one of the most daunting tasks that you have to do in your business. Not only do you need to do it everyday, it can also leave you thinking that nothing is working. And if you decide to take the paid route, you’ll find that the moment you stop your paid promotions, your sales will stop coming as well. 

The good thing with referral marketing is the promotion is automatic. You only need to reward your prospects for promoting you, and they will do it for you at will. It is quite similar to an affiliate program where you enlist the power of other people to promote your business. Since different people will do the work for you, you can view it as automatic. 

11. You Use Referral Marketing to Boost Paid Advertising

When a brand new business promotes something on social media, it is often ignored. That is until it has some social proof. So if you plan to promote your business through paid advertisements, it will really help to have a referral marketing program in place. This shows your customers that you are not the only one talking about your business. Other people are talking about it as well. So what can this do for your paid ads? It can lead to more engagement. This means that your prospects for it will not ignore your ads has social support.

Once your ads gain more support, you’ll also get more data in your social media pixel than before. This is because your ads will gain more traffic and conversions. And it will result to more targeted ads. Pixel allows you to search for similar audiences. This will drive your ad spend while increasing overall sales and conversions.  

12. Referral Marketing is Easy to Implement

If there is one reason why you should use referral marketing in your e-commerce website, it is because it is straightforward to implement. While the process may seem complicated, setting it up is as easy as creating using referral marketing software. With this software, you can set up your referral program in a single click. Brands like Best Hunting Bow Labs have done this and it helped their business gain more traffic and sales. 

The best part is that it easily integrates with your chosen e-commerce platform. Many platforms are used for online selling. There’s Shopify, BigCommerce, and WooCommerce. Fortunately, there is a referral software for each platform. It is a matter of choosing the software that is compatible with your existing platform.

From here, you can start promoting your program to existing customers and subscribers. You can show them that they can get a reward for simply referring their family and friends to your website. You can announce this on your website through an announcement bar or pop up, or you can send an email to your subscribers. You have nothing to lose. So why not implement one in your e-commerce website?

Takeaway

If you want more traffic and sales to your online store and you don’t want to spend a fortune, referral marketing is perfect for you. It works because it leverages the capability of people to promote products and services to each other. Because of this, your business grows. It is like word of mouth marketing but done online. Now that you have 12 reasons to use it, it is time to implement your referral program. What reason convinced you the most? Tell us all about it below.


Arlen Robinson

Arlen Robinson is the co-founder and VP of Business Development at OSI Affiliate Software He is also the host of The Ecommerce Marketing Podcast where he discusses marketing strategies with experts from all over the world.

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