How Referral Marketing is Essential for the Success of your eCommerce Business

Mitchel White
February 24, 2021
Marketing

The best customers come from the people who know and trust you. These are people who have tried your products and services, and they can vouch that you are the real deal – You deliver what you promise, and your products and services are worth the money.

Referral marketing is the only form of marketing that leverages these people. It organises it into a system where your customers and website visitors can promote your website for you. But they don’t need to be a marketing expert to encourage you. They can promote you to their family and friends, and that will be enough.

This form of marketing works because it is one of the few marketing methods based on trust, unlike other forms of marketing that focus on numbers. This one focuses on personal relationships. This makes it much more effective in driving sales even to a new business. New business owners in Drum Set Lab and Hunting Bow Lab found a positive movement in their sales when implementing a referral program. It is truly one of the answers to ‘how to promote a Shopify store?’ or ‘how to grow an eCommerce business?’.

Why do you need a referral program?

Now that you know how effective referral marketing is in driving traffic and sales to your business, you may be wondering why you need a program. After all, referral marketing can be done even without a system on your site. You can ask your current customers to promote your business to other people.

Well, there are several benefits to having a referral program.

First, having it there will remind your customers to do it.

According to a Texas Tech study, 80+% of customers are happy with products, but only less than 30% recommend the products to other people.

That is low, considering that these people are already motivated to promote your products and services. According to Nielsen, these people are four times more likely to buy because someone that they know recommended the product or service.

Second, it is more comfortable. Having a program is better for eCommerce businesses who like to automate everything; with a plan, they have a system that can capture the details of potential referrers and record all the contact details of the referrals in one convenient area. Payment is also more manageable, for it can be done in one convenient dashboard.

Third, it is easier to promote something that exists. If you have a referral program, you’ll have a go-to link that you can copy and paste as you promote your business to other people. It may be suitable for influencer promotions as well. It will help you have something that influencers can share when advertising your products and services to their followers.

What is Referral Marketing?

It’s easy to assume that referral marketing and affiliate marketing are the same. But it is different. While both entails promoting a product or service to other people, the level of relationship is often different. For affiliate marketing, promotions are done in hopes of getting a sale. This is usually a percentage of the profits. In referral marketing, it is different. The rewards can come in various forms. It can be a discount code, a freebie, or even some cash. But promotions are only done with people who the referrer personally knows. These are people who are in his circle.

How does Referral Marketing work for eCommerce?

Many people would associate referral systems with Airbnb or Uber. But it can be used in eCommerce. The proof is in how online shops are using it right now. It works because it is one of the best ways to sell products online.

Benefits of eCommerce Referral Marketing

Referral marketing is a fantastic tool once you harness it fully. Here are some of its key benefits.

Low-Cost Marketing

With referral marketing, you no longer need to spend a hefty amount of money on your advertising. Referral marketing is a one-time thing you need to launch. You need to set up your website, and you are ready to go. With it, you can encourage your customers and website visitors to promote your business, and it will not be as costly. This cost-effectiveness makes it a great strategy to have with you in your eCommerce business.

Easy Incremental Growth

The great thing about referral marketing is it doesn’t stop with one promotion. When a referrer finds a new referral, that referral also can promote your business. This approach allows the word about your business to spread. And it can help your business experience comfortable incremental growth.

High Customer Lifetime Value

You’ll love about referral marketing the preexisting relationship between the referrer and the friend. Since they are often close to each other, the level of trust is usually higher. This results in customers who already know and trust your business before they even buy from you. It often translates to customer loyalty or higher lifetime value. These customers tend to buy from a company again and again.

Easy Rewards

You don’t need a fancy referral incentive to attract people to your referral program. In eCommerce, you can give away a discount code for your products and services. This is often enough to motivate people to sign up. With this, you no longer need to give away some cash or a freebie. Just set up code in your online store, and you are good to go.

Referral marketing can help your eCommerce business get off the ground. It doesn’t matter if you are new or old; it can still infuse your business with modern traffic and sales. Referral marketing is a promotion based on trust, and it will not stop working in the future. It is a form of authentic marketing, and it can work in building your business and getting more customers who are genuinely interested in your products and services.

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