Attracting potential customers and cold, warm, or hot leads can be a challenge for any business. From cold calling to Google Ads, finding qualifiable leads that will convert can be difficult for even the most seasoned professional.
What if instead of chasing cold leads, there was another way? Referral marketing is a strategy that helps you secure warm leads. They come directly to you based on recommendations from others, helping you convert prospective clients more easily and effectively and establish a reputation not based on your word but the word of others.
A modest investment of time and effort in referral marketing can enhance your pipeline of potential customer.
What Is Referral Marketing?
For many years, referral marketing was about attracting customers via recommendations from one person to another through word of mouth.
Nowadays, referral marketing includes both targeted and strategic marketing efforts and naturally occurring instances in which consumers are satisfied with a brand and share their recommendations on public platforms. Referral marketing is also referred to as word-of-mouth marketing.
Organic Word of Mouth and Amplified Word of Mouth
As a marketing strategy, referral marketing or word of mouth marketing can be split into two categories, they are:
- Organic word of mouth: This occurs when people are happy with a product and want to organically share their support and enthusiasm for the product or brand. This can be a conversation that happens between your client and their friends and family, a mention on social media, or even a review. This occurs through no prompting of a brand, organization, or marketing strategy.
- Amplified word of mouth: This occurs when marketers launch campaigns aimed at facilitating or accelerating word of mouth about a brand or organization in an existing or new audience. For example, launching a campaign to ask favorite clients to leave a review, generate testimonials, or encourage engagement on a social media platform. Generally amplified word of mouth includes advertising spends or additional investment.
Having a good referral marketing strategy can give a huge added boost to your organic referrals. On the flip side, if you already have a strong organic word of mouth for your brand, your next referral campaign could be even more successful at drumming up warm leads.
Benefits
The benefits of referral marketing are numerous for small business owners. Endorsements, referrals, and testimonials can help instill trust in your business, validate your expertise, or service. They also have positive impact on your digital presence and marketing – driving an increase in search traffic, increase conversions i.e. people who take action on your website, and can lead to an increase in revenue. Using customer testimonials regularly can generate approximately 62% more revenue. In fact:
- 74% of consumers say word of mouth is influential in their purchasing decisions.
- 92% of consumers trust recommendations from friends and family over any other form of advertising.
Making sure that you are delivering excellent customer service can go a long way in drumming up future business down the line, so make sure to strengthen your value and services to your current clients, and you will likely garner some great referral interest from others in their social circles.
How to Get Started
With the recent adoption of Advertising Rule regulations, Agents and advisors can ask customers for referrals, testimonials, and use those testimonials in advertising starting May 4, 2021. They will need to meet certain compliance measures including maintaining disclosures, reasonable bias, and disclosing any compensation for referrals, endorsements, or testimonials.
Explore the nuances of the Advertising Rule with our recent blog post explaining the regulation from the perspective of a Marketer.
How can you start to integrate referral marketing into your business development strategy?
- Make sure to always start by asking for referrals from your best clients.
- Select clients from your contacts that are most likely to make a referral or mentioned wanting to make one in the past.
- Make sure your referral marketing strategy is unique from what everyone else is doing in your market.
- Always thank your referrals! Online or offline—a simple thank you goes a long way.
Keeping track of qualified leads can be challenging without the proper tools and advice. At DMI Marketing we provide effective marketing strategies for our partner agents and advisors, to help you engage with your audience and build your community. Contact us to begin a unique, marketing strategy and start growing your client base today!
