Word of mouth is what helped Airbnb and Dropbox grow quickly into the well-known brands they are today and you should be doing it too.
As a potential client, you may ask your friends about their opinions on a specific product or place, and as an actual customer, you’ll probably give out a recommendation yourself. In the business world this is known as referral marketing, and it’s one of the best forms of marketing when it comes to making sales.What makes it especially successful is its accuracy in targeting specific audiences since people tend to know what their friends like.
Customers will always talk between themselves so it’s important to ask yourself one question when providing different services and products and that is “What do customers want?”. When clients receive a great product or consistently great customer service from your business, they are likely to spread the word about it and that increases your chances to grow your business. Thus, the foundation of building up a company is based on referrals. There are many benefits to referral marketing and they include:
Transferred trust and implied endorsement
The first thing needed is for a buyer to trust a seller. People don’t like risks so when someone refers you to a buyer there is immediate credibility since the person who referred you is someone the buyer already trusts. Your most loyal supporters are more likely to give positive recommendations to their friends so the potential risk for loss is lowered. An added bonus is spreading a good word about your company has a huge potential reach today since people are hyper-connected to others through social media, apps and blogs.
Cost-effective client acquisition
When customers refer you to their friends and family, you’re essentially getting a tailored message to a specific audience. Because people recognize what their friends like or are willing to spend money on, referral marketing has high success rates for target audiences. A HUGE plus is you’re not putting time or a dime into referral marketing like you would have to with cold calling when you’re starting out or SEO when you’re more established so it’s free advertising—cha-ching!
Reduced sale cycle and closing
With referrals, you don’t have to spend as much time selling yourself because the trust between you and your prospective client has already been established. As a result, you can focus your time on creating a customized solution for the potential client.
Incentive to spread the word through benefits
If you can come up with a valuable two-sided referral program that benefits current clients and prospective customers, it will encourage existing clients to share your business with others because there’s an incentive. Benefits make current customers happy while alleviating the risk for new clients, and that has a major impact on your conversion rate.
Referral marketing, especially in the beginning, is the foundation for many companies, and it’s what helps grow businesses into distinguished brands overtime. So whether you’re starting out or better established, jump on the referral marketing bandwagon. Customers who are naturally inclined to recommend your business to their friends are big opportunities for you to increase your sales rate.