How your eCommerce website can profit from Referral Marketing Programs

by Hankly, New Delhi
23rd May, 2021 12:53pm

It was believed for a long time that media and corporate communication have an absolute effect on the audience. Whatever the media communicates is absolutely believed by the audience. However, Festinger with his Limited Effects Theory disproved this. He empirically established that customers and audiences consider the opinion and suggestions of their family, friend, and social circle before making any significant decision rather than being influenced by media alone.

This was later reinforced by Nielsen’s Harris Poll Online which found that 80% of Americans seek recommendations when making a purchase of any kind. This means that there is already an audience primed for referrals.

However, not many eCommerce businesses are making use of referral marketing. For one, there are no clear guidelines on how to make use of it effectively. Especially for small and medium scale businesses. This article aims to guide how you can make use of referral marketing to boost your eCommerce sales.

Referrals Convert More Than Regular Customers

A study found that a referred individual is more likely to make a purchase than a regular customer. The stats suggest that a referred person is 4 times more likely to take a favorable buying decision.

It for sure boosts eCommerce sales significantly. There are hundreds of proofs where it has worked like a charm when done right. For example, PayPal grew its customer base from zero to 100,000 just within a month by doing referral right. They however used a risky program with huge rewards. They offered $20 on each PayPal signup and another $20 if a referred friend signed up. And it worked out excellently for them.

Mechanics of Referral Marketing

Referral marketing works on the simple principle of incentivizing an individual to promote your service to other potential customers. It is a way of making hundreds of citizen ambassadors for your brand who are incentivized for bringing in more customers. Incentives can include direct cash, a coupon, discounts, bonus gifts, VIP access, etc.

Another example of a genius referral marketing program is Dropbox. They incentivized their users with extra free space for successful referrals. This increased their signups by 60% and offered an appropriate and relevant incentive to their users.

Straight to Business

We will take a non-complex four-step approach to create successful referral programs for your eCommerce website. Translate these steps to your own industry niche and by the end, you’ll have a brilliant referral marketing program for your online store.

1. Identify your goal and determine an appropriate incentive

The first step is to identify what you are trying to achieve through your referral program. To illustrate, you need to figure out if you are trying to boost your sales for specific products, increasing signups on your website, or gathering customer data through surveys.

If you have a core product/service, then perhaps directly boosting sales can be more beneficial to your business. If you cover a wide base of products/services then you might want to bring in more traffic to your website. Accordingly, identify your goal.

Moving on, you need to decide on an appropriate award for successful referrals. It is common for companies to go for cash-based incentives because it is relevant to most of the diffused audience, increases the scope for people to participate. You can also opt for coupons and discounts to your products, access to your exclusive content, or perhaps relevant perks related to your website. If you cannot provide your own coupons, you can tie up with third-party coupon providers as well.

A report found that 77% of Americans prefer a cash-based incentive on top of a swag, coupon, or discount. Your reward must be worth the effort. Otherwise, it won’t mobilize people to take part in your referral program.

2. Make referring easy

Your referral must be easy to share and take minimum effort. Do not add unnecessary steps like collecting user data or re-routing users while referring. Stats suggest that it should not take more than 3 clicks for users to share your referral. A one-click-share button is the best to go with if possible.

Sometimes complex sharing process weighs more than the incentive and customers choose to leave the program altogether. Take a multi-channel approach, which means that through a single source, your users can share the program on different devices and platforms. Include options of social media platforms like WhatsApp, Facebook, Instagram, Twitter, Emails, SMS, etc.

3. Promotion strategy

If you have come so far, you are halfway through. By now you must have arrived at a lucrative referral program for your customers. Now it is time to plan on how you are going to take it to them. This can be a determining factor for the success of your program. Various ways that you can make use of to promote your referral program are:

• Use your existing mailing list to send an email. Embed the information in your newsletters and add a separate CTA in the mailer.

• You can also create dedicated landing pages for your program. Promote them via targeted ads and social media campaigns.

• You can collaborate with influencers in your specific industry to promote your referral program. This has shown promising results in the years 2019, 2020, and 2021 so far.

• Add popups on your website so that visitors can get notified about the program.

• Use co-marketing tactics to promote your referral program. Co-marketing tactics are mutually beneficial strategies for companies that share their target audience.

4. Build in substance

Once the planning and strategizing are done, you need to build the program in substance. This would go live on your website soon. It requires a certain level of coding expertise to create the program. However, it’s not a bummer if you don’t know to code. There are excellent third-party platforms that allow you to create affiliate networks and referral programs for a small fee. These custom tools allow you to take full leverage in building, targeting, reaching out, and executing the program.

Affiliate networks like ShareASale are great if you really want to make a difference. The platform offers features like advanced fraud detection and automatic pay-outs.

Take Away!

We hope that we introduced you to the power of referral marketing and how eCommerce websites can especially benefit from it. There is already a primed audience that prefers referrals. It is time that you invest yourself in planning and strategizing your own move. If it looks too intimidating at first, do not worry. Give yourself time, put effort into more research, and listen to experts.

We have already equipped you with the necessary info and we also hope motivation to actually make your move.

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