Consumers are inherently social beings. They have a pack mentality, crave community and base many of their decisions on the opinions of others. Referrals are an inherently social experience. Without word-of-mouth marketing or brand advocates, referral marketing would have a much smaller impact on consumers.
Yet, despite the very clear connections between referrals and consumers, not every referral marketing campaign gets the response brands are hoping for. So, what makes customers refer a brand? Sophia King, Head of Marketing at Mention Me, a referral-marketing platform for B2C brands, sat down with us to discuss the number one strategy needed for a successful referral campaign and the effect of brand advocates on customer acquisition.
High reward, low risk
According to King, referrals are the most important marketing channel. She says their personalized and targeted marketing makes them especially powerful.
“If I recommend a brand to you I’m putting my reputation on the line, and that’s a lot more powerful than me risking my friends thinking I don’t have good taste or their best interests at heart,” said King.
To paint a clearer picture of the mental game consumers have to play, King described the science as a balancing act between balloons and weights. The weight, she says, is the effort and social risk required. Will the referral make the consumer look bad? Is it difficult to recommend the brand? The balloons are more of an easier lift for consumers. These factors make it enticing for a consumer to refer a brand to friends and family.
The reason for this is social psychology. King says a referral program isn’t as simple as sticking a $5 incentive on your campaign and thinking it will work. You have to get the fundamentals right.
“A referral program has to have an incentive that’s better than anything else on the site. If you refer me to a brand and I can get 10% off if I enter your name at checkout, but then I go on the website and they’re already offering me 10% off as a new customer, I’m not going to enter your name because there’s essentially no point,” said King.
The customer making referrals isn’t the only one to consider in this scenario. As King mentioned, social capital and looking good in front of their friends are of major importance to your brand advocates, no matter how much they love you. There also needs to be a benefit for them.
King says incentives for everyone involved work best, but they have to be reflective of the brand.
“If it’s a clothing brand, I’m referring you, and I’m likely to make another purchase, then it makes sense that I get points on my account or a discount. Whereas if it’s a furniture brand and I’ve already bought my sofa, I’m not likely to buy another one in the near future so a discount isn’t that enticing,” said King.
Focusing on consumers already part of your base can significantly benefit you if you’re looking to boost customer acquisition rates. Customers who already have access to their friends and family (aka consumers you want to convert) will have an easier time explaining the value of your brand because they’re trusted by loved ones.
“With third-party cookies being phased out it’s getting harder and harder for brands to market to consumers in a targeted way. I can see an ad online and it’s irrelevant, but if a friend says to me, ‘I know you’re on the lookout for a new dress. Have you tried this brand?’ that’s much more likely to convert into a new customer for that brand,” said King.
There’s a science to social referrals. It starts with understanding consumer psychology and valuing brand advocates. Look to this blog for guidance on how to best support your customers while acquiring the referral rates you want.
