What is Referral Marketing ?

Referral Marketing is a marketing tactic that uses word of mouth and referrals to develop a company's customer base through the networks of its existing customers. Sponsorship marketing can take many forms, but it's essentially a way to get your biggest fans to help raise awareness of your brand.

Referral marketing involves spreading the word about a product or service to a company's existing customers, rather than traditional advertising.


Referral Marketing has the same effect, but is started and run by a company. Typically, some form of incentive or reward is offered to customers for referring others. For example, DIRECTV customers who refer a friend who subscribes to your service receive a $ 100 bill credit and the new recommended customer also receives a $ 100 credit.


Why does referral marketing work ?

Laser targeting

If your best friend, who knows you, recommends a product, you will probably try it and you will like it too. Otherwise I wouldn't have recommended it in the first place. So as a marketing manager, once you've identified your top-performing demographic, you'll want to find others like them, like your friends. The same works for influencers: if you respect an influencer's style and feel connected to them, you're likely trying a product that they recommend (if you're in the market) product), and you'll probably like it.



Studies show that customers almost always trust "real people" opinions in generic ads and brand sales pitches. If you know and love a person, you are likely to trust their opinions, especially regarding a commission seller. Take TripAdvisor as an example. Even if you don't know the person who rates a hotel or restaurant, you're more likely to trust their opinion than on the company's website or a billboard promoting it. deal.



Twenty years ago, the average person's reach was relatively small; For the most part, referrals were made face-to-face or by phone. Today, with social media and review websites, the average audience for a person is huge. They can reach hundreds, even thousands of friends and acquaintances in minutes with a simple Facebook post, Yelp review, or other public notice.


What types of companies should be interested in referral marketing ?

Fashion eCommerce

Large customer bases. Social monitoring started. High customer lifetime values. It all adds up to organic word of mouth, an interest in referrals, and plenty of room to get creative with incentive structures (more on that later).


B2B SaaS

Gmail, Evernote, Dropbox, and Trello have generated exponential growth from the start by harnessing the power of referrals. With these companies, brand ambassadors can be rewarded for referrals with premium features or a reduction in recurring revenue for the referred client.


“Referral marketing is a natural choice in an industry where your biggest fans, customers, partners, and influencers are already talking about your brand (or your competitors)”.


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