One of the strongest and undervalued tools in the marketing ecosystem is the power of a simple referral. A business owner can try putting oodles of capital into cracking into a potential customer’s mind yet it can be a waste of resources if it is not trustworthy.
Regardless of the size of the organization, the power of referral marketing is unparalleled. A bad review can break an organization’s morale, affect its sales. The opposite of it can be a huge blessing in disguise. Many companies neglect referral marketing without realizing what it can do to their businesses. Here is why you should not be making the same mistake!
What Is referral marketing?
Imagine this scenario, you are looking to buy a new mobile accessory and feel overwhelmed with the number of options in the market. You have tried speaking to your friends and acquaintances but the alternatives have only confused you even more.
One day you get to know that your best friend has purchased a mobile accessory and is cheerleading for how mind-blowing the product is. Chances are you would consider buying the same product. Imagine your best friend doing this for people in his network who view him/her/them as a trustworthy source.
That is how referral marketing operates. A simple word of mouth for a product or service can generate sales much beyond an anticipated number.
Why do I need a referral marketing program?
We are now going to imagine another scenario for you to understand this. For this, imagine yourself to be the seller of that mobile accessory. You had listed the product online and remembered selling it to one buyer in X month. Suddenly there is a rage in demand for the particular mobile accessory and this time it is for all the colors available on your website.
Imagine scaling this up just a bit by having a formalized referral marketing program in place. Wharton School of Business conducted a study and found that formalized referral programs experience 86% more revenue growth. Not only is it cost-effective but also helps build brand loyalty. Are you able to see the future of your business hitting milestones? We sure can.
How to begin?
Let us assume you have considered the possibilities of formalizing your referral marketing setup. How do you go about it? Here are some pointers for you to keep in mind when starting out.
What are you as a business owner looking to achieve? Is there a target that you need to accomplish? Think hard about this and set your goals accordingly. That will give you the motivation to work towards achieving that target.
Strong Customer Service
Customers recommend brands and products if they feel satisfied with their experience. A strong customer service team will ensure that your target audience and stakeholders feel valued. That is equally important during crisis management.
What does your customer get in return when they refer your product or service to someone else? A solid incentive generates motivation that generates value for you and your business.
What referral marketing strategy should you adopt?
This scenario is dependent on the kind of product, service, or brand you are. Does your product fall under recurring purchases? Is it a one-time investment where customers are unlikely to keep coming back to purchase it again and again?
Different strokes for different folks. As a business owner, you need to be mindful of the kind of incentive attached to your referral strategy. You would be surprised to learn how often things go south for businesses that do not plan long term and end up wasting resources.
There are ideally three types of scenarios; frequently purchased resources, subscription-based resources, and one-time investment resources. Here is a suggested breakdown for you to categorize your referral program. Based on this, you may take a call for what suits your business the best.
- Frequently Purchased Resource: Why? If your customer finds value in your product and wants to use it again, they are bound to return to you especially when they have an added bonus. You can decide the percentage for yourself and package it accordingly. If someone refers your product or service to someone, they get a discount on their purchase.
- Subscription-based Resource: First 30 to 45 days free; why? Most subscription-based models focus on creating a customer experience. If a potential buyer signs up for a free trial, chances are they have motivation towards becoming full-time users. To solidify this, they need to experience a trial period that lets them assess their long-term investment. In this case, if someone refers to your product or services, they can get a discount on their next renewal.
- One-time Investment Resource: In this instance, a user likely needs to build trust and familiarity with your product or service. Referral marketing is ideal in this scenario. There can be various methods that can be utilized to make the buyer feel safe about their purchase. A one-time investment will 8 out of 10 times be a costly affair and the buyer needs to feel assured about it. In this case, they can be presented with gift cards to a brand of their liking or even cash rewards for referring it to someone.
However, one does not need to become a consumer to earn referral awards. Businesses allow the generation of passive income for individuals who can market various products and services in their circle of network. This helps generate revenue from other sources and builds self credibility. Opinion leaders are highly valuable assets.
These are suggestions that can work for various businesses but it is always advisable to customize your strategy to fit best with your offering. For example, we have an affiliate marketing partner program that allows partners to earn by becoming resellers, aggregate partners, or platform partners.
The Razorpay Partner Program is designed to help Indian entrepreneurs, merchants, SMEs, startups, and enterprises become third-party partners to refer Razorpay’s payment solutions to their customers.
Any business, ranging from an enterprise to an individual, with customers that need online payment solutions, can become a part of our program, and it’s free for any individual or business to join as well.
Why should anyone become a Razorpay partner?
Well, if you are a freelancer/blogger, becoming a Razorpay partner is a great way to monetize your projects and to quickly start earning through your brand. If you are a business owner, Razorpay Partner Program provides a safe, flexible, and cost-effective way to augment your revenue while providing your customers with India’s best payments solution.