How to Build an Effective Referral Marketing Funnel
Getting customers who believe in your brand enough to purchase your products is never an easy task. This issue is one of the significant challenges that new businesses face. For any company involved in selling products, success comes from continuous turnover. After the first set of customers make purchases, there is still the question of keeping the customers coming. It is not enough to render exceptional services or sell great products to your customers. Even while providing top-notch customer experience, how do you ensure that they return for more and help you achieve a stream of more purchases and turnover?
Word of mouth advertisement has proven time after time to be more effective than you think. People would instead opt for products and services recommended to them than go for entirely new products. It is all a question of trust; humans prefer and feel safe with familiar things instead of new things.
You might be thinking that all you need do is provide excellent customer experience, and recommendations from satisfied customers would automatically cause more customers to fall into your lap. But it never works this way. Research shows that while more than eighty percent of happy customers are willing to recommend the products they enjoy, less than thirty percent do. Here is where referral marketing funnels come in; how do you utilize your existing customer base to ensure that more customers come. It all lies in the referral marketing strategy you choose to adopt.
What is a Referral Marketing Funnel?
Referral marketing funnels refer to the channels which you, as a business owner, choose to adopt to influence your customers to recommend your products or services to others. It is merely that. Knowing that your customers may forget to refer others to your business, it is necessary to create the structure that reminds them and incentivizes them when they do it.
Why You Need Referral Marketing Funnels
The benefits of referral marketing are such that one cannot ignore it. It is the most cost-effective form of advertisement. It saves you the time and energy used to plan extensive marketing campaigns. Also, the resources required for referral marketing are not as excessive as what more traditional forms of advertisement require. This alternative marketing channel is literally at the tips of anyone’s fingertips, waiting to get into play. All you need to do is engage your customers to get it done.
Also, the value of a referral is more than you know. It is approximately the lifetime value of a regular customer plus customer acquisition cost in simple terms. This fact shows that you cannot ignore how essential a referral marketing funnel is to your business
How to Create a Referral Marketing Program:
- Set a standard for exceptional customer experience: The truth is, no matter how much effort and resources you commit to your referral marketing funnel, it would be of no use if customers are not happy enough to give good recommendations. It is vital that you first provide exceptional services with which your customers are satisfied, as this is a substantial prerequisite for getting your referral funnel in place.
- Set targets: Every concrete goal has to come with achievable targets to direct your course of action. You have to take time out to consider what you aim to achieve. Is it customer retention, revenue, or market power? Be able to justify that your referral funnel is capable of bringing the desired objectives to life. This planning stage should also include identifying possible customer referral sources. Consider not just direct customers, but vendors who facilitate your business, as well as companies you conduct B2B trades with. It is a wealth of referrals waiting to be taken.
- Identify the types of rewards: Certainly, you have a plan to reward customers who actively refer customers, but the problem is the “what.” What serves as a good incentive? Many factors must be considered here as it is perhaps, the most crucial aspect of creating a referral marketing funnel. First, how can you tell that a customer would be satisfied with the reward structure you choose? Also, there is the question of what counts as a good reward. To do this, you must place yourself in your customer’s position before deciding what is befitting.
You must be careful not to make mistakes with this. For instance, if you sell products that last a lifetime, say a television, it makes no sense to set an incentive for something such as discounts off on the next purchase. Because frankly, you never can tell if it is something that your customer would ever need.
In such a case, a reward as simple as a voucher would suffice. The former reward choice (discounts) would be an option if you offer services that require repeats, say a body therapy session. It would be great to note that incentives could go both ways, that is, for the customer who refers and the customer who gets referred. This sort of strengthens the referred to take the action of actually making a purchase.
- Organize the referral structure: How do your customers get aware and involved with the referral program you have put in place? You can fill them in using newsletters, product updates, or blog posts. But timing is also essential; you do not want to ask too early and seem too eager, or too late and seem calm.
You want to request a referral when there is still the ”high” that comes from a purchase. The idea is to keep the structure simple; let it be accessible and easy to use. You could utilize software that allows customers to fill in the details of the people they have referred to. This helps to keep track of leads, conversion rates, referrals, and rewards.
Whatever reward structure or incentive you choose, all that matters is that it is convenient for you and satisfies the customers. It also needs to be in line with your set targets, such that it is consistent, as well as persistent in the course of your getting referrals and a broader customer base.