What Is Referral Marketing?

Referral marketing is a powerful marketing tactic and one of the most effective drivers for conversion and sales. However, your customers won’t simply go raving about your business just like that. There are an art and science behind the process of word-of-mouth marketing. This fascinating art/science is called referral marketing.

Did you know that 50% of all purchasing decisions are based on referrals? With that in mind, every business owner should strive to understand precisely what referral marketing is and how it works to promote business.


Referral Marketing Explained


“Referral marketing is a holistic marketing campaign.” Shopify

“A powerful, low-cost, widely-acclaimed implementation system that has taken center-stage in 2018.” CustomerThink


Referral marketing is as simple as promoting business by spreading the word about its products/services. At its core, referral marketing relies on word-of-mouth promotion whereby your customers tell other people about your business.

Nevertheless, with today’s boom in social media and the internet of things referral marketing has taken on a whole new form. Today, referral marketing is commonly done through online campaigns that are consumer-specific and highly effective.

Referral marketing essentially encourages your customers to share your ideas and products/services with other people. You consumers end up talking about you on such platforms as Twitter, Instagram, Facebook, etc. In the long run, it’s your customers who end up doing your business’ marketing for you. Incredible, isn’t it? However, referral marketing must be done right to make it successful.

Besides customers, there are various other referral marketing channels that a business could exploit. These channels provide referral sources that recommend you and your company to target consumers. Such sources include family and friends, Influencers, e.g. social media influencers and bloggers, business employees, referral partners, etc.

referral sources
Who are your referral sources?

The more channels a business uses in its referral campaign, the wider the reach and the better the results. However, irrespective of the channels used, referral marketing must be done right to make it successful.

What is Successful Referral Marketing

The Dollar Shave Club is a subscription-based grooming enterprise whose breakthrough came from an excellent referral marketing campaign. The company created and released a cheeky, humorous and original YouTube video Our Blades Are F***ing Great in 2012. The initial viewers of this video ad loved it so much that they told their friends about it. The friends also told their friends, and before long the video went viral. Two days after the video ad was released, the Dollar Shave Club had gotten over 12,000 new customers, and by the end of that week about 25,000 people had signed up for the company’s delivery service. Fast forward to 2017 and Unilever bought Dollar Shave Club for $1 billion! Now that’s successful referral marketing.

Many companies have made millions in revenue riding on the back of well-executed referral marketing campaigns. This is because unlike other marketing strategies, referral marketing flips the marketing funnel to initiate and direct business. However, the most successful referrals are those that convert and generate sales.

A successful referral is when the target consumer receives a referral and acts on it. When you implement a referral program in your business, you can expect any of the following outcomes.

  1. No referrals are made. I.e., your referral agents are silent, inactive and do not refer your business.
  2. Referrals are made, but target consumers ignore them.
  3. Referrals are made, target consumers receive them, but on checking them out, they decide that your business isn’t for them.
  4. Referrals are made, target consumers receive them, and on checking them out, they actually like your business. However, the target consumer still doesn’t do business with you because they feel that they are not yet ready to buy.
  5. Referrals are made, target consumers receive them, they like your business and also make a purchase from your business.
As you can see, out of the 5 possible outcomes of referral marketing, only one leads to instant sales. It should be every business owner’s goal to maximize on making this happen. So, how does one make that happen?

Making Referral Marketing work for uou

A deliberate, sustained and robust referral system is what you need to solicit and encourage referrals. Resels has developed a unique referral utility that’s capable of solving most problems that hinder optimal performance for most referral marketing campaigns.

Talk to us, and we’ll show you how our innovative and refreshing approach to referral marketing can transform your business today.


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3 min read
November 28, 2018
Category is marketing


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