Are you ready to use referral marketing to grow your business?
You’re probably sick of spending money on paid ads that don’t convert. And maybe also exhausted from creating endless social media content that gets Likes but no sales.
Referral marketing can help!
Referrals are some of the most valuable leads you can get. Referral leads typically cost less to acquire and can have greater lifetime value than other types of leads.
In this article, we’ll walk you through how to get started with referral marketing. By the end, you’ll understand how to build your referral marketing strategy and which tools to use for your referral programs.
Here’s a table of contents to help you find your way:
- What Is Referral Marketing?
- How Effective Are Referrals?
- 3 Easy Steps to Start Referral Marketing
- How to Pick The Best Referral Marketing Strategy
- Top 10 Creative Referral Marketing Ideas
- Our Favorite Referral Marketing Tools
What Is Referral Marketing?
Let’s start by reviewing the referral marketing definition.
Referral marketing is when you encourage your existing customers to recommend your business to new potential customers.
In other words, you reward your biggest fans for spreading the word about your brand. Turning your customers into brand advocates is one of the easiest ways to increase brand awareness and sales.
How Effective Are Referrals?
Referrals can supercharge your lead generation and conversion rates.
How do we know? Let’s look at the numbers.
Referral customers have 37% higher retention rate than customers from other channels. This means a referral customer is more likely to stick with your brand.
As a result, the lifetime value (LTV) of referred customers is 16% higher than other customer types.
When it comes to B2B brands, referrals have a 70% higher conversion rate than other leads.
Putting all these statistics together, it’s no surprise that referrals account for the majority of new business in many industries.
3 Easy Steps to Start Referral Marketing
Don’t get scared by the term “referral marketing.” That’s simply a fancy name for something people have always done: telling others about something they like.
Here’s how to get started with referral marketing in 3 easy steps.
Step 1: Create a Strategy
Pick one of our creative referral marketing ideas from the list below.
Raffles are an especially easy way to start referral marketing. With a tool like RafflePress, you can have your referral giveaway contest running in minutes.
Step 2: Track Referral Traffic
Remember: referral programs are only effective if you have a way to track your sources of referral traffic. You can’t improve what you don’t track!
That’s why a WordPress analytics plugin like MonsterInsights is so important.
With MonsterInsights, you can see your top referring websites directly inside WordPress. That gives you the opportunity to reach out to potential new referral sources, or follow up with current referrers to better support them.
You can also use Urchin Tracking Modules (UTMs) to track your website traffic even more precisely.
Besides website traffic, you can also track referrals to your website forms and see which referrals send the most highly qualified leads.
Step 3: Welcome and Convert Referral Traffic
Of course, bringing in new traffic is only half the battle. You still have to convert those visitors to subscribers or customers. That’s when you need a tool like OptinMonster.
With its powerful referrer detection and the best targeting and trigger features in the industry, OptinMonster can detect referred or returning visitors and show them personalized content.
For example, if you’re guest posting on multiple sites or you have other referral partners mentioning you on their sites, you can welcome people with a floating bar campaign like this:
OptinMonster can use the smart tag to replace the blog name automatically so that HubSpot readers see this…
…while Social Media Examiner readers see this…
These customized campaigns are more likely to generate results than non-personalized campaigns.
How to Pick The Best Referral Marketing Strategy
To build a referral marketing strategy for your business, first do some customer research.
Talk to customers and hear how they describe your product or service. What words do they use? What emotions do they express? How has your business impacted their life positively? You can use many of the same questions you would ask when writing a case study.
Next, decide how you’re going to reach out to potential referral sources. Ask your referrers what might motivate them to talk about your business.
People make recommendations for a variety of reasons. They may want to:
- Look smart and influential to others
- Share what’s top-of-mind
- Express strong emotions associated with your product or service like excitement or relief
- Provide practical value to their communities
- Be seen as a trendsetter or leader
Your referral promotion and your incentive should both reflect the motivations of your referral sources.
Finally, choose an incentive. The incentive depends on your product or service, your customers’ behavior, and your own business goals.
For example, discounts and store credit make more sense for customers who are likely to make repeat purchases. On the other hand, if repeat purchases are unlikely or impossible, a simple cash reward is more motivating.
Social enterprise customers may be more motivated by a charity incentive than B2B customers. Preorder customers who have yet to receive the product may appreciate a cash discount on their preorder more than additional unvetted products.
Don’t be afraid to experiment with referral marketing ideas! Different referral marketing strategies make sense for different stages of business. Just always remember your customer’s motivations and interests.
Top 10 Creative Referral Marketing Ideas
Now let’s look at some specific referral marketing ideas.
First, we’ll go over ideas for promoting your referral program. Then we’ll cover some unique referral program incentives. Finally, we’ll share our favorite referral marketing tools in the next section.
The good news is that you can use any of these ideas right away, or mix and match multiple ideas across many industries.
1. Referrer Detection
One powerful way to convert more referrals is to show personalized content to visitors coming in through referrals.
If your referrers are sharing about your business on their own websites, you can use OptinMonster’s Referrer Detection feature to roll out a customized welcome mat.
These popups can direct referral traffic to landing pages, giveaways, and other promotions specifically for them.
Speaking of giveaways…
2. Raffle Giveaways
Everyone loves to win! Giveaways are a fun, simple way to generate referrals.
RafflePress makes it easy for customers to earn entries by sharing the giveaway on social and email. The plugin automatically generates referral links and tallies entries generated by referrals.
You may choose to make your giveaway open to all visitors, not just paying customers. If you do, be aware that your lead quality may be lower since not every referral will come from an actual customer.
3. Social Content Contests
User-generated content like photos and reviews are a powerful form of word-of-mouth marketing. You can combine this strategy with referral marketing in a social content contest.
First, invite customers to take a photo or write a post about your product or service. Then ask them to tag friends who might also be interested. When the contest ends, you pick a customer and one of their tagged friends to win a prize.
You can even display contest entries on your website to encourage more participation. Smash Balloon is the easiest way to create a social media feed on your website.
4. Word-of-Mouth Popup
One of the simplest ways to tell customers about your referral program is with a word-of-mouth popup.
This is a lightbox popup that appears across your site and lets your audience know about your referral program.
To get started, check out these detailed instructions for how to create a refer-a-friend popup.
5. Referral Email
We love email marketing for its direct connection to your ideal customer and incredible ROI. So it makes perfect sense to promote your referral program through email.
As with all referral marketing ideas, be strategic. Don’t ask your entire email list for referrals.
Instead, add a referral email to an automated post-purchase series. This catches new customers at the peak of excitement about your product.
Or try promoting your referral program in an abandoned cart series. This works especially well if price was the main objection. Referrals give potential customers the chance to earn discounts on the products they already want.
One of the most common referral incentives is to offer a discount for referring customers. These incentives can be 1-sided or 2-sided. 1-sided incentives only reward either the referring customer or the new customer, while 2-sided incentives reward both. 2-sided incentives tend to be more attractive and effective.
Discounts can either be a flat amount, like $10 off for every referral, or a percentage, like 10% off for every referral.
7. Cash or Cash Back
In other circumstances, it makes more sense to reward referrals directly with cash or other gifts. For example, a past client may no longer need your services, but can still refer others to you. Rather than give them discounts on services they don’t need, you could send them a referral fee or a gift they can use.
Affiliate programs are a specific way to manage cash incentives. You recruit affiliates to promote your business using special links and codes. When a sale is made through an affiliate link, the affiliate receives a payment. That payment can be a flat fee or a percentage of the sale.
8. Store Credit
Store credit falls somewhere between giving a discount and giving cash as a referral reward. Your customers can earn gift cards or store credits to use for future purchases with you. Store credit works well for consumable products like makeup or ongoing services like lawn care.
9. Extensions or Upgrades
If you have a subscription product or service, you can thank your customers for referrals by giving them an extension or upgrade of their subscription.
For example, maybe you offer a free month or a higher tier service plan for every referral who signs up for a 6-month package. This encourages customer loyalty and retention. They also might like the upgrade enough to continue paying for it or earning the upgrade with more referrals.
10. Charity Donation
Some customers may feel more motivated to earn a reward for someone else than for themselves. Your referral incentive could be a donation given in honor of the referring and new customers.
It’s easy to create a referral form with WPForms with a field indicating which charity they’d like to donate their referral bonus to.
Our Favorite Referral Marketing Tools
Before we wrap up this referral marketing guide, we’d like to share some of our favorite tools for referral marketing. You saw some of these in the referral marketing ideas earlier, and we’ve added a few more to round out your referral marketing toolkit.
1. OptinMonster: Best Referral Popup Maker
OptinMonster is the best lead generation solution that makes it super easy to promote your referral program
With its drag and drop builder, you can create eye-catching popup referral forms and other lead generation forms that are optimized to deliver the highest conversion rates.
OptinMonster also has powerful targeting rules including referrer detection. This allows you to show special campaigns to visitors brought in by referrals. Personalized content always converts better than generic content.
RafflePress is a WordPress giveaway plugin that lets you grow your email list, website traffic, and social media followers with viral giveaways and contests.
It offers an easy drag-and-drop giveaway builder that enables you to create any giveaway and see a live preview in real-time.
RafflePress has a Refer-a-Friend viral sharing feature that automatically generates referral links. Visitors can share the link and earn additional entries when other people enter using their link.
Smash Balloon is an easy, fast, and reliable social display plugin that lets you display your social media content beautifully every time.
If you’re running a referral program based on user-generated content, you can use Smash Balloon to display social media feeds filtered by hashtags, mentions, and more.
The feeds are easy to create without any coding yet fully customizable to fit your brand.
WPForms is the best drag and drop form builder for creating referral and other forms on your website.
In seconds, you can create inline and popup forms that customers can use to refer your business to their friends and acquaintances.
WPForms is completely responsive which means your referral forms will look great on mobile, tablet, or desktop.
AffiliateWP is the best self-hosted WordPress affiliate program plugin to generate affiliate referrals.
AffiliateWP features simple setup, advanced affiliate management, fraud detection, and more for you as the business owner.
A custom affiliate dashboard, affiliate growth tools, and 1-click payouts keep your affiliates happy and sending you those referrals.
SeedProd is the best landing page builder for WordPress. With over 1 million active installs, it’s the easiest way to create a referral landing page without any code.
It’s also fast, lightweight, and features over 150 templates and 80 pro design blocks ready for you to customize.
MonsterInsights is the best WordPress analytics plugin and the easiest way to keep track of referral traffic directly in WordPress.
You can see which websites sent you the most traffic. If some of these referring websites aren’t official referring partners yet, you can reach out to them to see if they’d like to join your referral program.
And that’s everything you need to know to get started with referral marketing.
Whether you’re an established business or just starting out, referral marketing is a great way to generate more and better leads.
In case you’re curious, we have a similar beginner’s guide to affiliate marketing.