The great benefits of referral programs

We already know that referral programs, or marketing from mouth to mouth, are one of the most effective strategies for many years. From Tesla to Dropbox passing through Airbnb or PayPal, companies that use this strategy are countless in search of increasing sales and the number of customers, as well as their loyalty. It is not surprising. In the case of Dropbox, for example, the company increased its conversion rates by 3900% in just fifteen months. In addition, one of the most juicy characteristics of referral programs is that they do not imply a large investment, in fact it is a highly profitable strategy and whose costs are minimal compared to others. That is why it is precisely ideal for both brands, and those mentioned, as for smaller ones who want to take off.

Here, where you have to focus and effort is to have customers happy. We seek to turn them into brand defenders, so their experience must be more than favorable. With regard to the reward, depending on the budget of the company in question, it may be more or less ambitious. That is, we can be talking about discounts, free products, bonds or access to certain premium products. Also, according to the sector, some rewards are more common than others. For example, the betting bonds They are the order of the day in sports betting houses, while free shipping or discounts in upcoming purchases are very common. That is, each brand depending on the sector in which it operates and its budget, can opt for a reward or another. As long as, of course, this reward will be really valued by the client.

Beyond this flexibility in the initial investment, other of the great advantages of the referral programs are that they achieve the collection of new clients with less effort involved in other strategies. According to the Survey ‘Global Trust in Advertising and Brand Messages’, conducted by Nielsen, 92% of people show more confidence in their friends and family than in other forms of advertising. Of course, this plays for or against the brand is a decision nothing more and nothing less than the brand itself. Since the creation of the Buyer Person to know the pain of the potential customer to the creation of a product that really meets their expectations, going through detail care at contact points or coherence in brand values: every part of the process plays a crucial role in customer satisfaction.

As if that were not enough, the same rewards will also help improve the relationship, increasing retention. In fact, potential customers who arrive on recommendation convert up to 30% more than those from other channels and, in addition, they have a useful Vita value of 16% higher.

The question here when choosing the reward (beyond the budget that is counted) is to try to make the most of the strategy. For example, the points systems are very common in the hotel sector, instead of direct discounts. Thus, every time a customer refers to a new one, he gains points that, later, can redeem. The quid of the matter here is that these points are not exchangeable until a minimum of them is reached, therefore, in addition to getting new customers, you are driving the initial client to stay active and loyal to the brand to continue accumulating points. Another tactic that also gives very good results is to reward both, that is, both the client he refers and the referral. For example, we could be talking about a discount for the first in your next purchase and a bonus for a free product for the second.

As we said, the decision will depend not only on the brand’s resources, but on its ideal client. Therefore, everything begins by defining the latter. With this, not only will it be able to find the appropriate reward, but also facilitate the work to the current client. It is not the same to say “invites a friend to receive a 20% discount on his first purchase” that “do you have friends who can’t live without good coffee? GOVERN € 15 discount on your first order ». Because we already know that talking to who really matters, always gives better results.