Currently, with the explosion of social media (Facebook, Twitter, LinkedIn, Google +, Pinterest, etc) in the age of information, people share more and every day online. Sharing is not new, it is part of human nature (POS 2014). We share to: bring valuable and entertaining content to others; to define ourselves to others; to grow and nourish our relationships; for personal fulfillment; to spread the word about causes and brands. What has changed are the means and the conditions in which we share, every day we share more using more networks, more people, more often and faster.
This unique situation allows companies to turn their customers into advocates of their products through social media. Implementing a referral program is the ideal channel for this purpose. It is known that the conversion rate of customers acquired through referrals is 3 to 5 times higher than the one in customers acquired by other channels (AMA). Furthermore, the average value of a referred customer is 16% greater than that of a non referred customer.
Social media are playing an important role in this new space, because people are not only sharing information using traditional channels, but each day they share more with friends online using these platforms. Companies now have the opportunity to identify customers, employees and partners with high fidelity and turn them into social advocates. These are going to start promoting their products spontaneously in social media to get a bonus after a valid referral. The way advocates recommend your products or services is sending their fellow recommendations by e-mail, instant messages, personal URLs, tweets, posts, shares, etc. and the way a referral is generated is by monitoring and linking the referred customer with his referrer.
Why Do I need a Referral Marketing Program For My Business?
There are several reasons why every business should implement referral programs to convert its customers, employees and partners into products or services advocates.
- 92% of people rely more on recommendations made by friends and family than those made by any other form of marketing.
- The average value of a referred customer is 16% higher than that of a nonreferred customer (AMA).
- Customers can easily share promotional content on Facebook, Twitter, Google +, LinkedIn, Pinterest, via Email, Chat, print media, etc.
- Referred customers have higher retention rate and this difference persists over time (AMA).
- 43% of people are likely to buy a product when they have researched the product on social media (Nielsen).
- Referral programs and affiliate partners can improve your business relationships.
- 81% of U.S. online consumers’ purchase decisions are influenced by their friends’ social media publications.
- Referral marketing programs help increase content generation in social media, which helps to improve the position of your website in search engines (SERP). Search engines like Google and Bing