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10 reasons why referral marketing is perfect for eCommerce

Wednesday, 21 March 2018
10 reasons why referral marketing is perfect for eCommerce

In this guest post, Megan Mosley walks us through the ins and outs of referral marketing and why eCommerce companies can benefit most from a referral marketing strategy.

Many eCommerce stores explore multiple channels to market their business but referral marketing is a particularly valuable option for eCommerce. Why?

As it turns out, people are 4 times more likely to buy from a business when referred by a friend. Every single day consumers use word of mouth to spread awareness of their favorite brands via social media, email, and natural conversation. When a business taps into their customer’s existing interactions and pairs it with their referral program, it can vastly improve customer acquisition at a lower cost than traditional marketing.


Many eCommerce stores are already exploring this market by using different social channels to promote their business. Since referral marketing also relies heavily on these channels, the two fit seamlessly together, increasing revenue, customer loyalty, and lowering customer churn rates.

So what is Referral Marketing?

The basic concept of referral marketing is to make it easy for customers and partners to refer your business. This concept taps into word of mouth as it encourages customers to talk about your brand.

The easiest way an eCommerce company can tap into this magic is by equipping customers with the necessary tools like referral marketing.

Here are 10 reasons referral marketing should be used by eCommerce stores.

1. Referral Marketing is Easy to Implement

The process of setting up a referral program has been made more efficient and easier because of referral marketing software. With the use of referral software, many eCommerce businesses are able to easily add a referral program to their site without worrying about coding or working from scratch.

The referral marketing process is perfect for eCommerce because most eCommerce stores are already tracking their customers. This means referral marketing software can easily be implemented into their existing process with less friction.

2. It Beefs Up Your Emails

Chances are your eCommerce company has already set up drip emails or trigger emails for certain actions and events. Many businesses choose to streamline this process to mention and promote their referral programs. Since customers are already viewing your emails, it's a great way to increase referral program engagement.

To turn it up a notch, businesses who use email receipts and confirmation emails have a better chance at promoting their referral program. This is because transactional emails have a higher rate at being opened by the consumer over other types of email.

Post-purchase emails are the perfect time to work on customer retention. Typically, customers are quite happy post-purchase. This makes it an excellent time to ask for a referral and get the customer to come back again.

Take a look at how Overtone uses this strategy with a simple ‘make you want to click’ image.

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3. It Gives A New Meaning to Coupons

Everyone loves coupons. They motivate people to take action. In referral marketing, incentives like gift cards are the way to go and eCommerce stores have the advantage of providing coupons and store discounts. Many eCommerce stores sell items that will keep customers coming back anyway. By combining referral marketing with return discounts, eCommerce companies have a better way of leveraging new business.

Give a coupon code in exchange for a new customer. It will motivate the customer and reward them for their efforts. In exchange, you have another sale from your existing customer and a new customer as well.

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Be sure the referral program isn’t competing with other store promotions. If your business usually has sales or active discounts, be sure the referral program incentives are ‘worth it’ for the customer. They might not refer if they can access discounts some other way.

For example, you can amp up the referral program incentive are by offering a higher discount or an exact dollar amount off the purchase. If you regularly offer 10% coupons, try using something like 25% off or $15 store credit for every referral. This way the incentive is more rewarding, justifying the extra effort a customer has to put in.

4. Referral Marketing is Social Media Friendly

Many eCommerce sites thrive by social media and referral marketing fits right in on this experience as well. Since most referral software offers easy social sharing buttons, it makes it incredibly simple for online stores to automate and track referrals.

Referral marketing for eCommerce also builds social proof. When your customer’s social audience see them sharing your business, they will feel more inclined to check out who you are. This simple action adds to your credibility. 84% of people trust the recommendations from friends and family, making this a proven way to market a business.

5. Referrals Provide Cost Effective Marketing

People like to brag about good experiences. That bragging is an easy way to get your business out there by using word of mouth marketing - a key component of referral marketing.

Businesses who use referral marketing definitely reap the benefits. Not only is it more cost effective than traditional advertisements, but its reach is pretty outstanding. Typically, customers refer their friends who they think will be interested in your company or likely to be in your target market. That means you don’t have to put forth the effort to find these people on your own.

If a referral becomes a customer they can then join your referral program. Then they will share your information with all their friends. You have essentially created a new community of customers, all because you used your existing customers to market for you.

6. It Leads to Good Reviews

People write reviews when a business makes them feel a certain way. Think about when you research a product or business. People like to praise, and people like to vent. This is one of the reasons people read reviews. They like to see the best and worst things about the business.

It’s a lot easier to get customers to provide feedback or leave a good review if they feel emotionally invested in your business. Referral marketing has a positive impact on your customer’s emotional response to your company.

Referral marketing acts as a primer for happy reviews. Many customers who participate in a referral program will provide a review if asked. Why? If they’ve become an advocate and are referring your company to others, they are more likely to be happy and willing to help you out.

People who refer essentially become brand advocates as soon as they vouch for your business, whether they realize it or not. Brand advocates are an essential part of your business’s growth. When they feel like they are a part of the team, they are more than willing to help whenever possible.

7. It Creates Return Shoppers

Referral marketing creates repeat customers. Especially if the incentive involved is a return discount. When someone refers a friend, it is a pretty clear indicator that they like your business and are more likely to buy from you again. When you offer a return incentive on top of that, creating return shoppers is pretty much a guarantee.

Referral marketing can help build the relationship between the business and the customer. It’s a mutually beneficial system, where both parties see the benefit of participating.

8. Referral Marketing Helps You Find Your Influencers

When someone is constantly sending you referrals it means they’re a huge fan. Good referral marketing will allow you to track your top referrers. This is important because these people could be your perfect influencers and advocates. Typically, influencers have a high social media following and have an easy time getting their followers to listen.

You may not have superpowers, but you can definitely make your top performing customers happy. Tracking referral patterns can help you narrow down your top referrers. If you have superstar referrers, you should figure out a way to reward them. Whether it be reaching out to personally, or providing an extra incentive. A little thank you and recognition can go a long way.

9. It Builds Trust Within Your Brand

It’s no secret, referrals are trustworthy. People prefer recommendations from their friends and influencers above traditional marketing tactics. This means an eCommerce company is more likely to receive a good lead if that person was referred. Good leads have a stronger sense of established trust in your business because someone they know has sent them to you.

Typically, when someone is referred, there is a higher chance of immediate purchase. This is mainly because people trust that their friends are not sending them to some doup of a business. Typically, your customers won’t refer you if they don’t think you’re good. Why? Because their reputation is on the line too. Because of referrals, your business is now fortified with trust.

10. It Makes Customization Easier

Plenty of eCommerce sites try to set up their own referral program. However, they quickly realize how many components are involved in the making of a referral program. This can lead to a lot of broken and poorly executed parts. It’s one thing to track referral codes, it’s another to track rewards, fraud detections, and statistics. You can see how this process can quickly become overwhelming.

Some eCommerce stores have given up on referral programs because of this. They spend hours working on a referral program trying to build the infrastructure themselves but don’t quite have the knowledge to get it running. This is why referral marketing software is so handy. A business can use software to create their referral program quickly and then simply embed their program on their site. This takes little effort and can be done in no time at all. Leaving them time to focus on what they do best.

Referral marketing is made for eCommerce
There is no better way to get new customers than by having someone personally recommend your business. If you take the time to provide customers with a great experience, there is no doubt they will share that experience with their friends.

If you’re already seeing recommendations come in, you should start implementing a formal referral program. Providing an easy way to refer your business can really boost what you’re already experiencing.

Referral marketing helps build social recognition and we all know social proof is one of the keys to marketing success.

To learn more about referral marketing and referral marketing software, visit Referral Rock. They believe every business has the potential to increase their word of mouth and they help unlock that potential by making it easy for customers to refer and businesses to operate. Check out their Facebook and Twitter page to learn more about Referral Rock.

To find our more about Trustpilot, read our free Complete Guide to Reviews here.


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