Your 7 biggest misconceptions about referral marketing – debunked

RETAIL Alternatives

20 April, 2022 | by The Retail Bulletin

What comes to mind when you listen to the text ‘referral marketing’? Probably you think about a primary refer-a-mate widget. Perhaps you consider back to a a lot less-than-effective in-property referral programme. Or probably not a large amount comes to brain at all. We’re not below to judge.

But we’re going to put ourselves out there and say it. No matter what you think you know (or really don’t know) about referral, there is a good opportunity you’re mistaken.

It’s not your fault. Many years of haphazard in-household programmes, ‘quick fix’ insert-ons and overly simplified methods have set referral in the shadows. 

And that is a true disgrace. Mainly because a precision-engineered referral channel might well be the missing hyperlink that sets off an unstoppable chain of growth for your manufacturer. 

So, let’s throw all those people misconceptions out the window at the time and for all.

Listed here are the most popular referral marketing myths – and the truth of the matter that lies powering them. 

Myth #1: referral = discount rates

If you have already dismissed referral on the basis that you are not a manufacturer that special discounts, hold up. Discounts are a high-executing referral incentive – but they are by no indicates the only solution. There are plenty of other incentives you can offer you buyers as a reward for sharing your brand name.

Cost-free presents, level of competition entries, 3rd-bash vouchers and charity donations are just some of the other means you can motivate your prospects to refer.

Pangaia features a tree-planting incentive as an eco-welcoming referral reward.

Our recommendation? A/B examination referral incentives by cohort. That will shortly convey to you what most successfully encourages your buyers to share your model with pals.

And who appreciates — the final results might surprise you. Pet insurance company Animal Pals, for example, uncovered that its consumers are most incentivised to refer when presented a charity donation. 

Myth #2: referral and luxurious brands don’t mix

With so several individuals viewing referral as nothing at all additional than a machine pumping out discount rates, we can not blame significant-end makes for assuming it’s not a great in shape for them.

In truth, a lot of luxurious manufacturers use referral to build a solid feeling of exclusivity and neighborhood among its aspirational buyers.

When a consumer decides to refer a brand to a friend, they’re creating a assertion: “I want to be affiliated with this brand”. 

The strong social funds that will come from aligning oneself with a higher-end brand name is a wonderful incentive to get shoppers sharing — devoid of a lower price.

Build up the air of exclusivity about your community of referrers by featuring early entry to new product or service launches, VIP gatherings, and anything else that tends to make them really feel distinctive.

“With less premium brand names giving a referral scheme, there is a wonderful option to stand out,” in accordance to Vervaunt. “Building a perception of group and exclusivity is critical for manufacturers, specially individuals positioned in the premium sphere. By giving special presents by way of referral, these brand names can create a society for buyers that tends to make them really feel valued.”

Before extended, your network of referrers will be a sought-after club that all your customers want to be on the guestlist for.

Myth #3: referral only functions for tiny companies… or big ones

Here’s some two-for-the-value-of-1 fantasy-busting for you.

Some brand names are led to believe that that referral just can’t get the job done for them mainly because of their sizing. And in lots of situations, that’s not the circumstance. At all.

You may possibly assume a referral channel is only an choice for mega manufacturers with a mega internet marketing group.

But referral shouldn’t involve all hands on deck. Our precision-engineered referral programmes are designed so you really do not need to do any of the significant lifting — our Referral Professionals are here to do it for you.

On the other hand, if you are a significant brand with an recognized title, you may not see what worth you could get from referral. 

The truth is that every single model with extensive-standing title recognition can benefit from a referral channel, as it engages your individuals in a particular way. That is why we work with retail juggernauts like ASOS, Puma and PrettyLittleThing.

Alternatively of seeing your name splashed throughout a billboard, referred customers get from your manufacturer because they have confidence in their friend’s advice. This would make them much more likely to interact with your model (and five occasions far more most likely to go on and refer someone else).

Never assume your model is the erroneous dimensions for referral to work – talk with our workforce to find out for absolutely sure. We’ll before long tell you if referral could be your new greatest growth-driver.

Fantasy #4: referral only suits retail manufacturers

Referral may perhaps be a advertising channel most commonly employed by stores, but that does not imply you need to count it out if you are in a diverse field.

Numerous non-retail brands count on private recommendations, these kinds of as banking institutions, insurance vendors and vacation businesses. This will make them obviously referrable.

Believe about it: would you instead put your dollars into the lender you’ve found marketed a million occasions on the tube, or the a person your very best friend tells you is saving them a fortune?

Yep, you will likely have faith in your most effective mate. And by the looks of it, so would most people: finance and insurance policies makes had the optimum conversion level for referrals of any sector very last yr.

If you’re not capitalising on your customers’ standard tips, you’re squandering a major chance to change model advocacy into growth.

Nutmeg encourages brand tips from its delighted clients through referral.

Myth #5: referral is a highly effective acquisition channel … but that is it

Buyer acquisition is a major purpose for most models who established up a referral channel. But even though it is an really powerful acquisition channel, it can also do so much additional.

Together with bringing in heaps of new clients, referral encourages loyalty from your existing customer base, re-engages disengaged customers, strengthens your branding…

Essentially, there are far too a lot of uses for referral to contain in this web site submit. The good news is, we’ve laid out 19 strategies you can use referral in our Huge Ebook of Referral Engineering® Programs. 

And the gains of referral prolong considerably outside of the channel alone. By feeding your initially-get together referral knowledge into your other advertising channels (like SPOKE did with paid out social), you are going to sense the seismic impact across your total method. 

Significantly over and above getting a uncomplicated software for consumer acquisition, the list of matters your brand can obtain with referral is just about as infinite as the growth it can drive for your manufacturer.

Myth #6: referral is less difficult to do in-property (and will get the very same effects)

At any time tried out to set up your very own referral channel in-household, only to come across your success still left a large amount to be preferred? You wouldn’t be the only 1.

Lots of models interested in referral check out their hand at location it up by themselves. What they do not know, nevertheless, is that functioning a referral channel in-house can take time, income, and threat.

Of class, this would all be worthy of it if your channel confirmed excellent effects. Unfortunately, that is not very how it performs.

In fact, Marketing will possibly rope in bad Bob the engineer to oversee a referral channel he understands nothing at all about, major to underwhelming success and a fairly miffed team. By outsourcing referral in its place, Bob can concentration on his day position (though Promoting report their glowing outcomes to a pretty pleased board). 

An in-residence referral programme will not enable you optimise your channel by means of A/B testing, which is essential for referral results. Not to point out, you won’t have an on-hand Referral Specialist to present valuable insights that acquire your programme to the future level.

(Our precision-engineered referral programmes give you equally of these… just saying). 

Don’t think us? Uncover out how Oddbox obtained 4x far more customers following switching from its in-home referral programme.

Oddbox accelerated referral performance following switching from an in-house referral programme.

Fantasy #7: referral does the exact same as a loyalty programme

Though referral drives loyalty, it’s not interchangeable with a loyalty programme. Actually.

At their main, referral and loyalty programmes have two diverse missions. Referral wants to bring you new prospects by participating current kinds loyalty needs to motivate your consumers to retain paying out their funds with you (relatively than your competition).

Their main objectives might differ, but did you know that a loyalty programme and referral can basically do the job collectively to push even better results?

Which is ideal. Neglect the notion that loyalty and referral are two internet marketing heavyweights fighting for a one spot in your technique.

The two channels can basically be employed facet by side to show off your customer-centric solution loud and proud, which is necessary for growth in 2022. 

“Being a mission-driven brand is more significant than at any time in advance of with the inescapable improve of levels of competition in the ecommerce place today”, in accordance to Hain, Marketing Director at Woolman, Europe’s foremost Shopify As well as Lover.

“Referrals and loyalty lead to your brand’s mission to advertise purchaser lifetime worth and brand name advocacy for sustainable progress.” 

Bloom & Wild highlights its customer concentrate by offering absolutely free flowers to referrers and their close friends.

Discover what referral can genuinely do for your organization

Hopefully, your misconceptions about referral have now been perfectly and really blown out of the h2o.

Maybe you are even reconsidering your preceding assumption that referral could not get the job done for your model. You have probably still got thoughts — listed here are 12 you should really be inquiring any probable referral company.

But it’s vital to bear in mind that not all referral programmes are designed equivalent. 

These myths may well perfectly ring accurate for some referral providers, but we’re self-confident that our precision-engineered programmes firmly put these rumours to mattress.

Want to come across out for you how referral can push 10x ROI? Get in contact. We’d like to present you what would make Referral Engineering® distinct from the relaxation.

Simply click here to examine the full report – Referral Engineering® Programs