Importance of Referral Channel in Customer Acquisition
A Brief Understanding of the Importance of Referral Channel in Customer Acquisition
The success of your business lies in the number and satisfaction of your customers. That is why companies spend a lot of time and effort on customer acquisition. Over time, referrals have been recognized as one of the most effective methods of customer acquisition.
A referral is when an existing customer shares a positive recommendation about your brand, product, or service with his circle of known persons. This leads to increased leads and prospects that are likely to be converted into brand loyalists.
However, while referrals are highly effective, their organic growth can be time consuming. Hence, companies focus on referral marketing, or the process of taking active efforts to evoke such action from customers. A referral program is planned and strategized referral marketing.
What is a Referral Program?
A referral program is a targeted referral marketing plan that includes technological automation, social media channels, email, and other similar media. The aim of this program is to provide customers with convenient means to share their experiences. This, thereby, makes it easier and quicker for them to share their positive experience with their circle of known persons.
Referrals in the digital age
While referrals were primarily made through word-of-mouth advertising, the digital age has made that media almost redundant. Today, referrals, like most communication, are done through technological devices. Hence, today’s referral programs focus on social media sharing, email communication, and digital rewards as opposed to simple word of the mouth advertising. The experience that customers have with your brand is also optimized for digital devices. Furthermore, various methods are used to ensure that customers can share any and every aspect of their experience, for effective and meaningful referrals.
Benefits of Referral Marketing
1. Targeted reach – Satisfied customers will make a referral only to those known persons of their social group who they believe will find your brand and product interesting.
2. More trust – Prospective customers are more likely to consider a brand or product when they receive referrals for it from a known source.
3. Extended reach – Referrals through online media provide an extended reach as compared to word-of-mouth, especially when a referral marketing plan includes multiple social media platforms.
Successful referral marketing begins with satisfied customers. The next step involves making it easy and interesting for these happy clients to make referrals. Keeping this in mind, NextBee developed a methodology that aims to improve referral programs. The application of this methodology is to ensure that every participant is approached in a way that leads to increased conversion of referrals and leads. Known as the PACE methodology, it covers the following aspects:
1. Personal: Building personal relationships through active collaboration for increased positivity in responses.
2. Adaptive: Adaptive to the needs and expectations of individual customers and target groups.
3. Controlled: Strategy and design that incorporates analyzed data to promote effective response.
4. Exciting: Ensuring that the customers find your program interesting and exciting, so as to reduce monotony and improve response.
Want to know more?
Want to know more about referral programs, the PACE methodology, and customer acquisition? Then check out the detailed lesson posted on our blog.