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Carol Forden

Carol Forden Freelance Writer & Customer Experience Marketing

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Top 10 Ways to Use Referral Marketing to Generate New Leads

People love to share their experiences, whether it’s posting on Instagram about how great the sandwiches are at the new place on the corner, or tweeting about the fantastic customer service is at their car dealership. This is referral marketing.

In the age of sharing everything and anything on social media, in blog posts, or over a drink, it’s crucial for dealerships to do everything they can to create positive customer experiences. The reason: If your customers had a memorable experience — good or bad — you can be sure they’re talking about it.

According to Nielsen, 85% of customers report they either completely or partially trust recommendations and reviews from family, colleagues, and friends regarding products and services. This makes these types of reviews the highest-ranked source for trust and verifiability.

In short, people trust the opinions of products and services from the people they care about most.

Referral marketing is powerful for many reasons, but what sets it apart from other marketing strategies is that it can almost effortlessly lead to more customers and strengthen your existing customer base — that is if you’ve provided an experience worth raving about.

So how can you use referral marketing to your advantage? We’re breaking down how you can create and implement a referral marketing strategy that converts.

Many business owners focus on products too much.

From its appearance and the price to their website and how it looks.

But is it nearly enough? 

Because recognition is the most critical aspect which is often overlooked, who will buy your product without knowing about the customer experience offered by your dealership?

This is where Referral marketing comes in.

It is how people get to know your products and services and visit your website.

One of the easiest ways to generate more leads is through referral marketing.

Referral marketing is the technique used by brands like PayPal, Uber, and Airbnb to drive traffic to their site.

Take Uber, for instance.  The user gets rewarded with “Free Rides” if they refer the service to their friends and the success story is for all of us to see.

Uber referral marketing

 

Uber and various other companies that leverage referral marketing are spot on because 92% of respondents trusted referrals from people they knew.

92% is nothing to sneeze at; it's a huge deal.

As you can see, referral marketing is a reaally good way to generate new leads for your site.

Here are 10 ways to use referral marketing to generate new leads

1. Use Referral Marketing To Acquire Email Addresses 

Email addresses are like pure gold for marketing and sales professionals.

But like you need to mine hard to acquire regular gold, you have to go to great lengths to acquire email addresses.

email addresses gold-mine

But with referral marketing, the process of acquiring emails become decidedly easy.

In this system, you can ask your existing customers to refer people to your website and then persuade them to fill up an online form, thus acquiring plenty of email addresses or contact information.

Referral marketing forms aim to capture 3 emails or more. There are referral marketing forms that capture as much as 15 emails at once.  

This is one of the reasons why referral marketing helps you generate new leads.

It works by capturing the friends or connections of your customers.

In fact, referral marketing works because of the relationship between your customers and their referrals.

Since they are referring people that they know, the trust is already there. Because of this, they no longer need to convince their referrals to sign up or make a purchase. The referral himself may be willing to do it in his own free will because of his relationship with the referrer.

2. Encourage Referrals Through Rewards

Nothing valuable comes free in the industry.

Another reason why referral marketing is so attractive is the rewards.

You can’t just ask your customers to refer you to their family and friends without giving them something in return. If you do that, you’ll find that they will barely take any action.

If you want them to take action, you need to reward them and you can also automate this by using referral software.

In referral marketing, this is called as a referral incentive. It is what you give to your customers in return for referring their family and friends to your website.

Your reward can be of any form – discount coupon, gift card, extra dollars, and more.

reward referral marketing

Always remember that the reward you choose is of value to the client.

For example, you are giving a recent college grad a 10% discount on a product that targets relatively older strata of society. This idea is bound to fail big time. They are unlikely to take action.

So look at your sales and look at your most popular products.

Look at the purchasing behavior of your customers.

Look at the webpages that they visit the most. This will give you an idea of what type of reward will suit their tastes.

3. Reward both the parties 

Referral marketing doesn’t have to be exclusive to referrers. You can reward your leads as well.

Here’s the thing, if you only reserve rewards to referrers, your leads may not sign up or purchase from you.

It actually goes two ways.

This is what I am talking about. The referrer is giving someone $15 dollars off and getting the same in return. This means that neither party will be feeling left out, leading to a long chain of referrals.

Reward both parties in referral marketing

Put yourself in their shoes.

Suppose someone is referring a product to you (and the referrer is getting a proficient discount to do so), but what’s in it for you?

Yes, you now have more trust in the product because a friend or an acquaintance is suggesting the product.

But is it enough to compel you to buy it?

While you need to give referrers a reward to encourage them to promote you, your leads also need the same. So you should consider rewarding both the referrer and the person who is being referred to the product in your referral marketing program.

So how does this increase your leads?

Well, rewarding your leads can also generate more referrals.

Since they have something that they can get out of signing up, they have a higher likelihood of taking action.

The best part is that it doesn’t stop there. These referrals can also encourage other people to take the same action. If your referral program also rewards referrers, they are far more likely to promote your website to other people.

4. Give Rewards Based on Milestones 

Is giving rewards too expensive for your business?

There’s a way around this. Instead of giving a reward for every sign-up or purchase, you can give the reward based on several actions that your referrer has done.

This way your rewards won’t go in vain and you will be rewarding the one who generates the most profitable results.

Your referrer has to meet a certain requirement or milestone before he can be eligible to receive the reward. This system will limit the number of rewards that go out at a certain time helping you maintain your budget.

YouTubers are cashing on using this referral marketing strategy. However, what they call a giveaway, which is exactly what I'm talking about.

Let’s have a look:

Referral-Marketing-giveaway

Look at the shocking amount of engagement. No discount coupon could have garnered this much interest in the audience.

Many people giveaway valuable rewards in exchange for set tasks or milestones.

For example, you are expected to follow the account being promoted, share their content, and more on multiple social media channels.

But this can have its drawbacks.

While this may help you maintain your budget, you may find that some customers may ignore your referral program because it is too hard to get the reward.

This can only work if you already have a vast market for your products and services, and these people like your brand enough to promote it no matter what. Otherwise, they will not be so keen on promoting a site that will not reward them right away or with a big enough incentive as the reward.

This form of referral marketing can generate leads if you use it with top affiliate marketers or influencers. This is because these people have the capability to refer your site to lots of people at once. If your reward is attractive enough, marketers and influencers may be excited to be included in your leaderboard and win the prize.

5. Encourage Your Audience to Make At Least 3 Referrals

Did you know that you can control how many referrals your customers must do to earn the referral incentive?

Referral marketing forms are interesting because you can set the number of referrals through the number of blanks. The more blanks the form have, the more referrals your customers have to make to earn the reward.

But you don’t want to make the number too high that your customer loses motivation to promote you. The magic number for referrals is 3. This means that you have to ask each customer to refer at least 3 people to earn your reward.

This drive leads to your site by using the exponential power of referral marketing. Every person can refer at least 3 people to your site, and these 3 can then refer 3 more and so on. The more people participate in your referral program, the more leads you get.

6. You Can Ask Customers to write Reviews

Reviews are more than just for product feedback.

Reviews drive leads too. This is the power of social proof. As more people buy products from you, the more they can encourage other people to do the same.

And reviews are so powerful that 40% of consumers form an opinion by reading just one to three reviews. 

Reviews do more than just refer people to your website.

Reviews encourage people to buy.

So the result from reviews is more than just traffic. The result is in sales. Sales count more because this drives your business. Having a ton of traffic that doesn’t convert doesn’t mean anything. You need more sales and reviews can help you to get that.  

7. Leverage Influencer Marketing

Referral marketing can drive new leads to your site by allowing your customers to refer other people to your site.

But did you know that you can also ask influencers to do that too?

There’s always a high activity around brands like Under Armour and how they are paying millions to star athletes like Stephen Curry to endorse their brand. People see their favorite star, someone they look up to and naturally flock to the stores to buy their product.

But what about relatively smaller companies? These companies cannot afford A-list celebrities. But in this age of social media, nothing is elusive.

Social media websites like Instagram and more have given rise to hordes of social media influencers. And these influencers are no small deal either. They boast of a whopping number of followers and have a loyal medley of followers who are willing to buy the product they refer to.

The best part about these influencers is that they are relatable because they are normal low-key people. Naturally, if my favorite influencer is talking about a product, it would be instinctive for me to give the product a try at least.

Influencers referral marketing

Have a look at the number of followers some of these social media influencers enjoy:

Social-Media-Influencer

So how would you approach these social media influencers?

First, you need to approach them if they like to try your product or service. Ask them where you can send it, or if they'll stop in for a service and that you will give it to them for free.

Then, ask the influencer about his or her authentic feedback about the product.

Ask if he or she liked the product or service. If they do, ask if they can join your referral program and you are willing to give them an exclusive discount code that is in their name. This way, their followers can also try the product but at a discount.

Usually, the influencer will say ‘yes’ if he or she liked your product. He or she will feel excited to share it with his or her followers as well.

8. Follow-up with your Referral request

One of the problems with referral marketing is that it is often done once. It is as if auto dealerships and service departments are too timid to ask for referrals. When really, all it takes is one message and it doesn’t hurt one bit if they say ‘no.’

Even if your customers have already referred people to you in the past, it doesn’t hurt to ask for referrals again.

The social circle of your customers may have changed after a few months so they may have some new friends that they can promote to. So don’t be afraid to ask.

9. Start Referrals with Your Employees

Starting a referral program with no existing customers? It can be difficult if you don’t include your employees.

Even if you only have 10 employees, asking them to join your program and refer people to your site will help you get a jumpstart on your referral program.

PRO TIP: You can also use referral programs for hiring people. Many companies do this. They have an incentive for new sign-ups, and they ask their employees to refer more people to the company. It is the same as referral marketing, but the target is new employees.

10. You Can Give Free or Greatly Discounted Subscriptions Instead

The type of products and services have evolved over time. We now live in a sharing or subscription-based economy. Instead of selling retail products, you may be selling services.

For this, you can give 1-month subscriptions as rewards. This allows your customer to enjoy your services while also trying it and getting accustomed to it. When this becomes a habit, you encourage them to subscribe to your service in the future.

How can this drive leads?

Offer a car wash as a monthly subscription or oil changes every 3 months.

Well, this doesn’t cost you much. Unlike a freebie or a discount code that have an impact on your sales and budget, free or greatly discounted subscriptions are not that difficult to give away.

Time to Get Creative…

As you can see, there are so many different ways to drive leads to your website. You just need to be more creative.

Remember to put yourself in your customers’ shoes.

Try to answer these questions:

What products or services will they like?

What rewards will they most likely sign up for?

What is their pain?

Why do they need your products?

The answer to these questions will determine your referral incentive and the type of referral program that you should launch to generate more leads.

A referral program can help you get more leads to your site. So if you don’t have a referral program on your website, now is the time to start one. It will give your customers the power to promote your site for you.

Which referral marketing strategy are you using to generate leads? Do you think that referral marketing is worth giving a try?

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