Psychologist Robert Cialdini introduced social proof theory to describe how individuals imitate behaviors when confronted with an unfamiliar situation. As humans, the opinions and actions of others heavily influence the way we live our lives - from the friends we choose to the products and services we use.
A referral marketing program is the cornerstone element any business needs to grow its client base and capitalize on the principles of social proof theory. In a Nielsen Company global survey, 83% of respondents concurred that they would make a buying decision based on the recommendations of trusted parties such as friends, family, and acquaintances.
But, building an effective referral marketing program requires more than displaying client testimonials on your website and landing pages. You must put a standardized process in place for incentivizing and rewarding your most loyal of clients to reap the real benefits of referral marketing.
To establish and implement a program for increasing your clientele through referrals, follow the following 5 steps:
You’ll want to take stock of current client base and target those who are not only loyal to your company, but that are also satisfied and profitable (meaning they book frequently or utilize a variety of your services).
Whether a prospect is booking a ride with your company or a client is signing up for your referral program, the registration process should be quick and easy. The more steps involved and the more disjointed the workflow, the less likely it is that your program will be successful. Your referral marketing should include:
Think of your referral program as a gift exchange. Your clients are giving you a truly generous gift. They’re providing an opportunity for you to WOW another rider and gain another client without any effort on your end. No cold calling at all. So, show a bit of Southern hospitality and return the favor. Deliver a gift or several of real and perceived value to your loyal clients.
The goal here is to create equilibrium between value to the client and cost to your business. You may not be financially capable of doling out cash rewards, and that’s okay. For example, Dropbox (a file hosting service) offers extra online storage space in exchange for referrals. Tesla ties their referral to broader brand initiatives - giving out additional entries into promotional competitions for joining its referral program.
Ask yourself a couple, quick questions to pinpoint the most valuable hook for your referral marketing program:
Create a point system for every new referral. Once a client reaches a certain point threshold, give them a discount on your services.
Partner with a local retail business or restaurant and position your referral program as an access point to local deals.
Once you have a formal referral program in place, you can market it like crazy!
Even after you’ve secured a referral program member, you should produce a reward trajectory to encourage increased word-of-mouth results. Figure out at which points in the communication process with clients you can engage them to take action. From an individual’s referral registration to his or her’s first successful referral sign-up, there are 5 core touchpoints for business owners to add more value to their brand experience:
Segment out your client list to include a set of referral program clients only and continue sending personalized, relevant information and exclusive deals to them.