Boosting the acquisition of new customers through referrals is a ‘quick win’ for businesses, with 83% of consumers telling a Nielsen survey that they trust referrals from people they know. The same percentage of global respondents (83%) say they take action on these opinions at least some of the time but not enough businesses are capitalising on this potential.

It is worth spending a lot of time and effort on this sales channel yet many organisations seem to overlook it in the race to attract new customers. How can digital marketers make better use of this powerful sales channel? It is vital to break down any internal and external barriers to exploiting the benefits of customer referrals. The need to push a continuous sales funnel of brand-new leads, rather than ‘new leads from existing leads’, is more often than not a distraction from the referral marketing goldmine. Organisations need to monitor and optimise the balance between the two.

The effort that goes into the development of lead generation campaigns, both on the part of the digital marketers and the business development team, should target existing business just as much as new business. Instead, the team looking after existing clients tends to focus just on day-to-day servicing of the client – perhaps going as far as to request a testimonial, but never more than that. It is rare that organisations proactively ask satisfied clients to spend five minutes talking to potential new clients through triggered, behaviour-driven communications that respond to the actions of a typical brand advocate.

Capitalising on positive customer feedback

Brands commonly issue quick surveys asking consumers, “How likely are you to refer us to a friend?” Yet, many organisations do very little with the data from the responses to this question other than produce a net promotor score. A quick communication to the customer, at this stage, saying something along the lines of “we are pleased to hear that you enjoyed our product or service, would you mind just giving us a quick review on Checkatrade or Trustpilot?” can pay dividends, but very few organisations do this. If anything, they tend to be focused on addressing negative feedback only, rather than also capitalising on positive feedback.

It is important to go back to those customers who have actively said they would recommend you, to harness the power of these potential brand advocates and encourage positive online reviews and word of mouth lead generation. This need not be a difficult or expensive task. Most businesses have some form of customer incentives platform, and it is simply a matter of extending this out to incentivise referrals. This should not focus just on offering money off your product to anyone providing a review, but empower the consumer with a wide choice of low-cost rewards with a high perceived value relative to the simplicity of the action they are being asked to undertake. Here are some tips for digital marketers considering how best to embed suitable incentives for referrals into loyalty programmes:

1. Set targets for referrals

Organisations tend to set new business targets and targets for growing existing accounts – but they do not join the dots between the two. It is a good idea to set “new business from existing business” targets too, so that there is measurable impact from referrals incentives. It can be hard to measure word-of-mouth referrals. It is worth asking visitors to your website where they heard about you, but responses to this question are notoriously unreliable.

Specific, measurable methods such as “refer a friend” buttons on an email are preferable, backed by an incentive reward for customers offering information about potential new customers. Keep in mind the double opt-in requirement of data protection regulations, which will be tightened up further with the introduction of GDPR regulations next May.

2. Use every communications touchpoint

You may not actually communicate with satisfied customers that often. So, use every touchpoint as an opportunity for referral marketing. That might range from when a customer calls into the contact centre through to inviting them to refer a friend on the paperless billing portal.

3. Make the customer referral process super easy

Satisfied customers won't mind spending a couple of minutes or clicking two or three times to give you a high score or a good review. They will be less inclined to spend 10 minutes helping you out. Make sure the onus falls on the business to seal the deal with a new customer, not on the referrer. Prioritise your follow-up with customers that have come to you through referral, as these are very much warm leads.

4. Use your data

Maximise customer satisfaction survey data by acting on it as soon as it comes in to exploit any opportunities for customer referrals. A 10 out of 10 customer satisfaction score is no good buried in an internal survey – aim to convert that to something potential customers can see on the web, by incentivising the consumer to review you on a public site such as Trustpilot.

5. Offer a choice of incentives

Enable existing customers and new customers to choose something that appeals to them, for maximum engagement. For example, you might provide multi-retailer gift cards or points that may be redeemed for short breaks or experiences. Tactical rewards might be linked to your brand – for example, Sky has offered new televisions to people signing up for its service. You might look at offering occasional high-value rewards to keep people interested, but be sure to calculate the average lifetime value of a highly engaged, active customer before you spend a fortune.

Digital marketers are focused on digital incentives. However, many customers continue to recommend products and services to friends and colleagues in real life – at the pub or in the office. The challenge is to convert real-world brand advocacy into positive reviews on the web and to use incentives to build your online reputation as well as to generate individual referrals.

Independent review sites such as Trustpilot and Checkatrade act as valuable points of referral when a potential customer is not looking for or can't find a real-world referral from a friend – 66% of survey respondents indicate that they trust consumer opinions posted online1. Digital marketers who support their business development people in capitalising on customer referrals through incentives and better communications will find a goldmine of unexploited opportunities.

 

By Adam Whatling, global engagement and technology lead at Love2Shop Business Services

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