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4 ways to turn your customers into referral powerhouses

Regardless of your business size, type or industry, customer referrals are the most powerful marketing channels out there. According to KISSmetrics, a marketing analytics software company, word-of-mouth marketing can increase conversion rates by 400 percent. Today, digital marketers have multiple resources and customer data points at their disposal to create compelling and personalized customer referral campaigns. Here are a few strategies marketing experts recommend:

1. Ask at the right moment.

“The number-one way to get referrals is to simply ask for them,” say Jay Conrad Levinson and Al Lautenslager, authors of "Guerrilla Marketing in 30 Days." But while asking at any time is better than not asking at all, Levinson and Lautenslager recommend asking for referrals when your customer is at the “peak of their enthusiasm.” When your company has exceeded expectations or the customer has just made a sizable purchase, it’s reasonable to assume they’re in a positive frame of mind about your brand, the optimal time to jump on the opportunity. Levinson and Lautenslager say, “Ask right then and there who else they know who could benefit from your products or services.”

2. Tap into your customer’s sense of community.

It’s a fact: people like to give referrals. Online and offline, people like to appear knowledgeable and help others when they can. Psychologist and marketing expert Ernest Dichter's groundbreaking, 50-year-old study on word-of-mouth marketing found that “24 percent of shares came from a customer’s motivation to appear as an expert on a topic or product.” According to Ryan Hoffman, director of retail solutions at Oracle Responsys, it’s crucial that marketers take advantage of this powerful marketing strategy. “A customer who has purchased from a particular retailer is likely to be connected via social media with other like-minded consumers who also will be interested in that retailer’s products,” Hoffman says.

3. Narrow that community down to just a few.

Now that you've got their attention, try to narrow down who your customer should reach out to in their network. When asked a broad question like, “Who do you know that could benefit from our services?” customers often draw a blank and may put off making a referral while they think about it. Alternatively, Levinson and Lautenslager recommend asking a more specific question such as, "Who do you golf with on Sundays that might be interested in my products or services?" Levinson and Lautenslager explain that what you are doing here is asking someone to think of four or a dozen people in their community who are more likely to become a customer than just a random sampling of the customer’s entire network. Levinson and Lautenslager ask, “Would you rather have one out of 12 as a good referral or zero out of 250?”

4. Offer something in exchange.

One company that has seen an enormous amount of success with their customer referral program is the cloud storage company Dropbox. Dropbox was able to turn 100,000 registered users to 4 million in 15 months (a 3900 percent growth rate) through their customer referral program. How did they do this? One tactic that Dropbox used was to offer customers 500 MB of free storage for every person that they referred who installed the service. Customers who do this are able to earn a maximum of 16 GB of free storage, which is eight times the amount that they can get for free.

Brands that engage with their advocates and reward them for referring their products and services can benefit massively from having a loyal, vocal customer base. How have you encouraged customers to share your products with their community?

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