Referral marketing is a surefire way to grant your business more conversions and sales because it leverages the power of networks. Instead of the old way of marketing, referral marketing is done through word-of-mouth. Since people make referrals to their closest friends and family, the chance of conversions is often high, as people tend to trust the recommendations of people who are close to them.

So if you are looking to create a referral program for your business, here are six easy steps.

STEP 1: Understand How a Referral Campaign Works

Before you can create an effective referral campaign, you need to know what referral marketing is and how it can work for you. Only in understanding this can you create a successful campaign. Fortunately, referral marketing is quite easy to understand.

Let us begin by defining referral marketing. Referral marketing is a system that you can create on your website where you can allow your customers to promote your business to other people. They will be able to do this by logging in to the names of people who are closest to them in the contact information form. This form contains details such as the target’s email address or phone number. It all depends on the features that your business needs. From here, you can then begin rewarding the referrer. You can pay them for every referral or after he has made a certain number of referrals.

Referral marketing is useful because it is based on the idea that people act on recommendations based on trust. Marketing is always thought to be done in a single-line process where the marketer is the message source, and the audience is the receiver. However, the audience is not free from their own opinions. Seeing how customers respond to products and services through reviews, you can see how well they can share their message with other people. Using this to your advantage, you can get them to promote your website for you. You need to reward them in return.

There are several reasons why referral marketing continues to be the primary form of marketing for wise marketers. Here are some reasons why it is powerful.

1 - Laser-Targeted Promotions

Targeting has always been relevant to businesses. Aside from finding their ideal customers, they make sure to create ads and content that will target them. ‘Targeting’ means that the material is designed to elicit a response from the ideal customer. Referral marketing allows you to do this, even without content.

In the single-line process approach, the marketer is in charge of all marketing messages. Because of this, he needs to create an online store, a sales page, a welcoming home page, and some content that is designed to elicit a response from the target market. But with a referral program, you don’t need all of that.

You can entice your customers with a reward, and they will promote you. And the best part is that they will look for people in their inner circle that have the highest probability of acting on their suggestion. Since the customer can only get the reward once the referral signs up, they choose people who can respond to their promotion. They want people who have a higher likelihood to sign up.

The result of this is hyper-targeted targeting. You get customers who will look for specific people who have a higher likelihood to respond to your promotions. This is far better than creating and tweaking your ads constantly in hopes of hitting your target market. With referral marketing, you have a system where customers are promoting to other potential customers on a continuous basis.

2 - Increased Trust Factor

One of the reasons why referral marketing is so effective is trust. As mentioned, promotions are often done in tightly-knit inner circles. This can include the customer’s close family members or friends because of which they have the highest chance to respond to the promotion. Also, the relationship between the referrer and the referral plays a vital role. Since they already have a close relationship, the chance of conversion (which can be exhibited in the act of signing up or buying) is higher.

But trust doesn’t end in the relationship between the referrer and the referral. It can also work in increasing the social proof of your business. Social proof plays a vital role in winning customers. Modern customers now use the power of search when they buy products. They are far more likely to buy from sellers who have good reviews than those who don’t have any. Referral marketing can help you in getting more reviews for your business.

As your customers promote your products and services to other people, they will use more than word of mouth. They can also use written content such as blog posts or written reviews or video content such as video reviews and testimonials. You can use this to your advantage by utilizing them as social proof for your business.

3 - Incremental Reach

You’ll also love referral marketing because of its incremental reach. It can be promoted one-time, and the effect is lasting. If you manage to get one customer to encourage you, it will not end there. Your referrals are just as capable of driving more referrals to your business. This is the reason why companies like Uber and Airbnb have thrived. The power of word-of-mouth spreads like wildfire. As more people know about the business, the more people they can recruit to the referral program.

Now that you see the value of referral marketing, it is time to create your campaign. The next steps will help you do that.

STEP 2: Select Your Reward

Before you can create your campaign, you have to select your reward carefully. There are many types of bonuses that you can give away, and what you choose will affect the success of your campaign. It is essential to take a step back to look at what your customers are buying from your website. This will give you an idea of the types of rewards that will motivate your referrers to take action. Here are the types of bonuses that you should consider.

Cash Rewards

The first type of reward is cash. After all, who will not want to take action if they can earn some extra money? This will work if you have a membership program, and you need some initial members. It also works exceptionally well for service businesses. This is the type of reward that PayPal offers, and it worked exceptionally well in getting its first users.

Non-Cash Rewards

Non-cash rewards can come in different forms.

The most popular is the discount code, which is often used in eCommerce websites. Discount codes are great because they are easy to create. You add a new discount code in your eCommerce panel, and you can have it available immediately. However, it can also not be enough to motivate users. The amount is also a different topic. You have to consider how big the discount will be. Feel free to experiment on different numbers to see which ones will work best for you.

Another form of non-cash reward can come as prizes. This is where you run a contest and give away special awards to anyone that signs up. However, not everyone is rewarded through this model, but they have a chance to get an elite reward if they sign up. This works well if you work with influencers or other websites in your niche. You can ask them to announce your contest for you. If your reward is attractive, they will most likely do that for you.

You can also give away tangible items such as branded merchandise as rewards. This is effective if you have some additional items in your inventory that you have to dispose of. You can turn them into limited rewards that are ‘available while it lasts.’ You can add them as bonuses for new orders. This way, you get guaranteed sales for every freebie.

STEP 3: Select Your Receiver

Next, you have to consider who will have a higher likelihood of promoting your program. Again, this requires you to move away from your business and take a closer look at your customers. Take a look at their behavior, this will help you determine if they will take action on your referral campaign.

An excellent way to acknowledge your receivers is to reward them. This is where single and double-sided rewards play a role. When you create your referral campaign, you have a choice on whether you will pay your referrer or the friend. But you can choose to reward both. Double-sided rewards are created to reward both the referrer and the friend.

It is the most desired model as it eliminates friction in your referral campaign, making it more desirable to your target market. Single-sided rewards are also great if your business is saving some money. But if you choose this route, it is essential to choose the right actor to reward. You may want to pay the referrer or the friend. You can only choose one. Be sure to choose the actor that has the most impact on your business.

STEP 4: Structure Your Program

Now that you have most of the details that you need for your program, It is time to structure it. You should now have your reward and the actors that you choose to reward. From here, you should look for referral software that you can use to create your program. You should choose your software depending on your website platform. If you are running your website on WordPress, then select a WooCommerce affiliate plugin. If it is on Shopify, then choose a Shopify app. It is crucial to consider the structure of your current website and select a model that fits your business. For example, Best Drums Set Labs chose a classic referral program because of its eCommerce structure.

STEP 5: Promote Your Program

Creating your referral campaign is one thing, but promoting it is a different beast altogether. You need to inform your customers that it exists. You can do so by including it in your email marketing plan, and you can also add it to your website homepage. You need to ensure that your customers know that it exists, and they can get some extra rewards as long as they refer to other people.

A great way to promote your referral marketing campaign is through influencer marketing. It is no longer sufficient to create a program and wait for people to come themselves. You need to advertise it. But unlike the traditional way of promotion, you can now leverage the power of influencers to promote your business. Influencers can be your best brand ambassadors. When they talk positively about your business, you can encourage more people to sign up and buy from you. Plus, you can reduce less desirable metrics such as shopping cart abandonment. So it is a win for your business.

STEP 6: Measure Your Results

Once you have created and promoted your referral campaign, you should not stop there. You should ensure that your system has analytics in place to track campaign performance. You need to have a way to track people who are coming and acting on your campaign. You need to know who is signing up and who is getting the rewards. You also need to know how many people they are referring to and where they are coming from. Therefore, it is essential to not only rely on the internal analytics of your referral software. You should also use other tools such as marketing and traffic analyzers to supplement the report of your referral software. Add: ''track links'' and posts to analyze their performance and modify your strategy accordingly.

As you can see, creating a referral campaign is not that hard. You need to understand how it works and look at other brands that managed to utilize it effectively. From here, you can create a referral system for your business. Remember that referral marketing is powerful. It helps you get more traffic and sales to your company due to the power of trust. Use that to your benefit by having your program.