Buyers love to talk about their shopping experience. They talk about the products, the cost, their excitement in using the product, and probably about the BRAND they have bought from.
And, that’s what opens up the possibility of eCommerce referral marketing!
The concept of referral marketing isn’t anything new. But, what makes referral marketing so important and interesting in the present eCommerce world are the new smart ways of doing it.
For example, the points and rewards method;
Leveraging this, store owners can reward points to their customers who perform certain definite actions, referral is one of those actions.
Others include coupons code, in which the buyer sends a code to their friends and when the recommended person uses that coupon code, they both get benefited in certain ways.
Similarly, several other methods of referral marketing exist in the present-day eCommerce business, which includes contest based referral programs, events based referral programs, giveaways, etc.
In this article, we will discuss all such referral programs that can help eCommerce business owners to boost their sales.
Note: Organic referral and strategic referral are two separate things.
Organic referral or simply referral is when the consumers talk about a certain product to their family or friends motivated by the pleasure or pain they have got from the product.
Whereas, in strategic referrals, retailers use some promotional tricks or strategies to motivate the buyers to share or recommend their products with their friends or relatives. A strategic referral is what we call as referral marketing.
Thus, we can define referral marketing as;
A tactical way of spreading promotional messages or sale-encouraging messages by the customer’s words of mouth or through other digital sharing methods. And, rewarding them or promising them with lucky rewards in return for those referrals.
Table of Content
- How & Why Referral Marketing Works?
- The Referral Program That I Recently Participated
- Ways to Implement Referral Marketing in eCommerce
- Tips for Effective Referral Marketing
Let’s now dive into the working mechanism of referral marketing.
How & Why Referral Marketing Works?
According to Jonah Berger, brands get word of mouth for 6 reasons, which have been summarized as STEPPS.
STEPPS stands for:
Social Currency: Social reputation, value, and respect all count as a social currency. People want to look smart and cool in the eyes of others. If by sharing about your product, they earn social currency, they would keep doing it.
Trigger: Triggering the mind of the customer in a certain way about the product will urge them to share your products. This is where marketers use rewards, prizes, cashback, etc., and trigger the customer’s mind.
Emotions: A product that wins the heart of your customer and gets emotionally attached to them will automatically get more words of mouth.
Public: Any product or event that is among the public will get more word of mouth.
Practical Value: How practical your products are to the consumers decides how many words of mouth it would get.
Stories: People don’t talk much about the products but they talk about stories. And, if you give them a story about your products, they will definitely include them in their regular conversations.
Therefore, if your referral program gives any one or more of these reasons to the consumers, then the possibility of word of mouth would be higher. These 6 points are the core reasons behind the working of referral marketing.
On the other hand, every individual referral concept works on set goals, targeted audiences, and mechanisms. However, the reason for word of mouth remains one of the STEPPS or more.
For example, a coupon referral program.
The core concept is the same, but it is distinguished from other referral programs with its specific set goals, mode of making the referral, incentives, and rewards, etc.
This video explains the complete working of the coupon referral program for WooCommerce.
Referral marketing is found to be a very effective form of marketing method. Several companies used referral marketing and transformed themselves as a well-known brand in a short time. For example, PayPal, Dropbox, Uber, etc.
Why Does Referral Marketing Work So Well?
The first and foremost reason is the trust factor. According to Nielson, 83% of people trust a recommendation from a friend.
Therefore from the trust point of view, recommendations from friends or relatives beat all ads. and other marketing campaigns.
Some customers who experience dopamine thrill with the product when triggered a little become an active resource for referral marketing programs.
The Referral Program That I Recently Participated
SEMrush celebrated its 12th anniversary and they set up a referral contest program.
I too participated in it.
SEMrush was awarding “Premium SEMrush Swag Kit” to the winner which includes charging cables, pens, fox plush toys, socks, etc. I had really worked hard and collected 1400 points for this.
I referred two of my friends for 200 points, followed SEMrush on Twitter and LinkedIn for 50 points each, and shared several posts of SEMrush on various social media which awarded me 250 for each share. With all these, I had managed to climb up to 1400 points.
I was 100% sure that I will not WIN, yet I was busy sharing them. Some kind of hope was pulling me along.
This was just my role in the SEMrush marketing campaign. There were thousands of others all over the world, who shared SEMrush on their social media platforms, followed SEMrush, and referred their friends for the same digital points.
60 winners were announced, each was above 100,000 points. Each of those points was earned like mine; with so many hard efforts for SEMrush.
https://twitter.com/AmitHPanchal/status/1304083947312226304?ref_src=twsrc%5Etfw” target=”_blank” rel=”noopener nofollow noreferrer
That’s the power of referral marketing. It spreads like a web and engulfs all the potential customers.
With such a high benefiting nature, you too would be fascinated to start one of such referral programs in your eCommerce business.
Let’s see some ways how you can set up referral programs for your business.
Ways to Implement Referral Marketing in eCommerce
With rising eCommerce and tracking technology, easy and effective referral marketing concepts were born.
In this section, we will see some of the top working eCommerce referral marketing ways. These methods have the potential to upsurge your sales and revenue by many folds, and therefore underestimating them can be a big mistake for your business.
And, if you succeed in implementing any of these; your sales and revenue graph will rise by a noticeable factor.
1. Coupon Code Offers and Discounts
This is the easiest and most popular method for eCommerce referral marketing.
In this method, a coupon code is generated for a customer which they can share with their friends and relatives. And, when the referred person uses that code for signup or for purchasing the products, they both get rewarded.
The reward can come in multiple forms — discount, offers, free plan, free delivery, and others as per the merchant’s choice.
For WooCommerce stores, the Coupon Referral Program plugin can prove to be an ultimate solution.
2. Convert Your Loyal Customer Into Loyal Referrals
Loyal customers are a great opportunity for every online store owner. With proper strategies, these loyal customers can easily be converted into loyal referrals.
As we learned in the above section that organic referrals are simply the natural referrals that pass their true opinion of the brands to their friends or relatives which can be negative or positive, depending on the pleasure or pain that the customer has experienced.
Loyal customers are among those that have positive opinions for your brands, and thus with little nurturing, merchants can motivate these loyal customers to pass on these positive opinions in their surroundings.
To do that, first, identify your loyal customers through customer loyalty programs. Then find out those loyal customers who can be your loyal referrals. Leverage those customers with special rewards and they will turn into a great referral resource for your brand.
3. Organize Contests and Award for Referral
Contest referral programs are a great way to increase the email list, promote the brand, and increase sales.
People have a natural tendency to win contests or quizzes, no matter how irrelevant the contest is. Marketers can smartly use this natural tendency and transform those participants into buyers or referrals.
For example,
4. Cashback and Cash Reward
Cashback or cash-reward are different names to the same equation.
In such a program, the buyers get immediate cash-back or cash-reward on each referral.
Many stores extend this to a new level by offering really alluring cash-back that normal people may find hard to refuse.
Consider the example of CashKaro online store; it gives cashback on referring as well as on every purchase of the referred person.
5. Event-Based Referral Program
Organize events that people love to talk about. They talk, they refer to it indirectly.
The events can be anything — summit, gathering, talks, discussion, conference, etc. Participants can be invited under different categories in the events.
For example, CommerceNext. It is a two days event organized by CommerceNext that brings top eCommerce brands together and they discuss various topics. This event gives reason to customers to talk about CommerceNext.
Tips for Effective Referral Marketing
Now that you know the top trending ways of doing referral marketing, how to start it becomes the frontline question.
Starting referral marketing without any strategic planning can hit your business at a loss.
For that, here are some tips that you must take care of when starting referral marketing for your eCommerce business.
1. Make it a Win-Win Program
Your customers will recommend your product to their friends for some reason. Give them that reason. Be it some incentives or rewards, make sure the customer is benefitted. Similarly, the recommended person will show interest in the referred product for some reason as well.
Therefore, making the referral program a win-win program for both the referring and the referred person makes the program mutually convincing for both ends.
2. Make Your Referral Program Noticeable
After launching your referral marketing program, don’t keep it in the dark corner of your online store.
Market your referral program at every social media platform as well as through your email list. Emphasize on the offers and the benefits of referring. Clearly state the methods of making referrals at the most noticeable place in your store for visitors.
Using flash buttons, or pop-up notification can make your referral programs more noticeable.
3. Promote your Referral Program on Social Media
Launching a referral program for eCommerce goals isn’t enough. You need to bring more of your customers to actively take part in it.
What else can be better than various social media platforms to spread the awareness of your referral program?
Therefore, promote your referral program on every social media such as Twitter, Facebook, Instagram, Pinterest, etc.
Consider the example of Outlaw. They actively use Twitter to promote their referral program among possible customers on Twitter.
https://twitter.com/getoutlaw_/status/1316751325636460544?ref_src=twsrc%5Etfw” target=”_blank” rel=”noopener nofollow noreferrer
4. Personalize the Program
Personalization is a great way to increase the engagement of the customers.
About 79% of customers are more likely to engage with a personalized message or offer. Thus, personalized messages increase the chances of turning customers into referral.
Further, the rate of response of the referred person also increases if the invitation message is well personalized.
5. Smoothen the Referral Channel
eCommerce referral marketing is no longer limited to word of mouth.
Other digital sharing methods such as email, Facebook, Twitter, Whatsapp, are now common referral channels for referring friends and relatives. Thus, involve clear sharing buttons of these channels at the place of referral coupon code.
Provide one-to-one sharing options, as not everyone wishes to recommend publicly.
6. Research Well
Plan your moves. Making your referral marking a hit and trial can harm your business.
All-around research will strengthen the base of your referral marketing program which would help you in taking the right decision for your program.
You can take surveys to know and predict the possibility of a customer’s referring opinion. Plan out the budget you are going to put in. Examine your competitor’s referral program if any, etc.
7. Ask for Referral at the Right Time
Asking your customers to refer to your product is critical.
Even if you have prominently depicted your referral program at the homepage of your online store, asking for a referral is a decent marketing strategy as long as you properly plan the timing.
For some programs which are strategically organized, the pre-order referral is also possible. For example;
But, for most of the referral programs, the right time to ask buyers to refer is after the purchase of the product.
8. Timely Measure the ROI of Your Referral Program
Taking timely measurements of marketing campaigns is important to find out the effectiveness of the campaign.
And, referral marketing campaigns are no different.
Return On Investment (ROI) is the most popular metric to measure the success of the marketing campaign.
When all the input investment is lower than the total profit earned from the campaign then it is said to have a positive ROI. Such ROI is important for the growth of the business.
Conversely, negative ROI is when the investment input is more than what is earned from the campaign. Negative ROI is not favorable to businesses. Immediate steps must be taken to convert those negative ROI to positive.
Conclusion
Referral marketing is effective, requires low-cost per acquisition, and a more trusted form of marketing.
It can quickly boost sales, increase traffic, and there are lots of successful examples of referral marketing in history. All of these make it appealing to try.
There are multiple ways to do referral marketing in eCommerce. These include coupon code referral programs, contest referral programs, event referral programs, cashback, etc. You can start with any of these for your next big marketing campaign,
And, with the tips that I have shared in the article above will help you run a successful eCommerce referral program.
If there is any other way I can help you, please write to me that in the comment section.