What is Referral Marketing? Referral Marketing Definition
Referral marketing is a marketing initiative which incentivises happy customers to act as brand advocates in order to generate more sales and revenue for a business.
How Does Referral Marketing Work?
The way referral campaigns work is simple.
Companies offer incentives to existing customers to refer their family and friends.
To make referral campaigns more effective, incentives are not only offered to referrers but also to the referrals. This way, both parties are incentivised to participate.
Referral incentives can be in the form of discounts, store credits, freebies etc.
For example, a hotel could run a referral campaign that rewards their existing customers with a 15% discount on bookings for every referral. The people in return also get a 15% discount on their first booking.
In summary, it’s a win win situation for all parties involved. Companies get new customers, existing customers get incentives, and new customers get incentives as well.
The great part is that new customers can also join in the referral campaign which can spark a chain reaction.
Examples of Successful Referral Marketing Campaigns
There are a lot of companies that have achieved wild success with referral campaigns.
Some companies have used referral campaigns to attract millions of new users.
One of the first companies to achieve wild success with referral marketing on the internet was PayPal.
PayPal ran a referral campaign in the early days of their company. For their campaign, the electronic payments company paid new users $10 for joining the platform and existing customers $10 when they invite others.
This was real cash that people could spend right away. At first it seemed like a gamble but it paid off big time.
PayPal grew to 100 million users with referral playing a major role in this hyper growth.
Another one of the famous referral marketing campaigns is the Dropbox’s Referral Program.
Inspired by PayPal’s campaign, Dropbox gave existing customers 500MB extra space for every new user they referred. New users also got 500MB of bonus spaces.
The results of this program were astronomical. Dropbox grew from 100,000 users to 4,000,000 users in just 15 months.
More than 3 million direct referral invites were sent by users.
Referral Factory is a marketing software designed to help businesses increase their customer base through referrals.
This software has a list of over 1,000 templates spanning various business types and industries that you can easily customize and use to run a referral campaign.
It allows you to run unlimited campaigns, thereby giving you the opportunity to scale your business as much as possible.
Referral Factory also has a landing page builder, with which you can quickly build professional-looking landing pages without any knowledge of HTML or CSS.
The landing page builder allows you to add custom colors and fonts to match your brand’s aesthetic. You can also use the in-built forms to record referrer information, all of which are captured into your dashboard.
This software integrates natively with Salesforce, HubSpot, Intercom, and a collection of Zapier Zaps. For each integration, you’ll be able to sync a campaign with your CRM to import prospects from a referral program.
ReferralCandy is a marketing platform that helps businesses leverage word-of-mouth marketing and get their customers to refer their friends. This platform is intuitive and very easy to use.
All you have to do is connect the software to your e-commerce shop and you’re ready to launch your referral programs in little time.
While this platform has its own rewards programs, it allows you to create your own. You can do this by offering discounts, freebies and store credit. You can also choose your own payout methods and customize your landing page with your brand colors.
It also gives non-native English users the option to customize the interface with the language they are most familiar with.
After acquiring this tool, ReferralCandy will not leave you in the dark. Instead, they will assist you every time you encounter a problem or if you have any questions about features.
Rewardful is a platform that makes it easy for SaaS businesses to set up affiliate and referral programs with Stripe. This software is easy to set up and you are able to group customers, strategic partners, affiliates and others into different segments.
You are provided with flexible SEO links to any web page on your domain without third-party sub-domains or re-directs.
Rewardful provides you with flexible SEO links to any web page on your domain without third-party sub-domains or re-directs. You can also adjust referral commissions based on your contribution in the program.
There is also an analytics and reporting tool that allows you to see metrics like number of visitors, clicks, conversions, commissions and revenue, amongst others.
ShareASale is an efficient affiliate marketing network that helps merchants and affiliates boost their income locally and internationally. Apart from giving users access to thousands of affiliate products to promote, this network also has a very effective referral marketing solution for businesses.
With this network, you can easily create a referral program for your products and gain instant access to over 225,000 affiliates that can promote them for you.
This platform is equipped with a click-tracking monitor that allows you to track and monitor link clicks and sales data in real-time. This boosts productivity and keeps you aware of everything happening with your products.
ShareASale provides you with APIs that you can use to get specialized reports identifying critical points in your business.
Affiliates can also get reports that emphasize the areas they need to focus on to grow and become successful with affiliate marketing.