Referral marketing is the most powerful method for generating new customers. The most successful entrepreneurs will tell you: no other method of marketing produces more leads, customers and sales than referral marketing does. In fact most businesses get 90% of their new customer leads from referrals. Referral marketing easily outperforms traditional advertising, direct mail, internet marketing, joint ventures, public relations techniques, TV ads and any other marketing tool.
Referral marketing, also known as affiliate marketing, is the least expensive of all marketing methods. Sometimes referral marketing will cost you nothing at all. However, not all referral marketing techniques will work for your business. You need to develop a strategy based on your own needs.
What is referral marketing?Referral marketing is not a difficult concept to understand. When one of your current customers suggests to a friend that he or she should buy something from you. That's a referral. This is especially good if the referee has never bought from you before. When current customers send you new customers, you build your business and make more money
Now think about this: when a current customer sends a new person to buy from you, how much money did that new sale cost? Did you need to buy expensive advertisement to attract that new customer? Did you need to mail a brochure or sales letter? Did you have to make a live sales call?
No. None of the above.
The new, referred customer came to you effortlessly and for free. That almost means that what they bought from you was a sale made with a better profit margin.
So sales that result from referrals are higher profit-margin sales than those you make with other marketing methods. That's an important fact to keep in mind. It's why you should be highly motivated to bolster your referral rates. Referred sales are high profit-margin sales.
Here is another key aspect or referrals: they tend to be more powerful and persuasive than other kinds of marketing. Why? Because referrals are made from one person to another. Referrals happen between people who already know each other, and who probably trust each other. Can the same thing be said about, say, a radio ad, or a print ad? The fact is, most people don't trust ads, even ads that sound very good and which are highly persuasive. We are all trained to be constantly on guard. From a very early age we are taught not to believe everything we need.
This goes double for advertising. Everyone simply assumes that ads are stretching the truth, at least a little, if not a lot. We all know that most ads contain hype and exaggerated claims. That's just the way it is. Also we don't know the people who create the ads we see every day. When we read an ad, we are reading the communicated message of a total stranger. Certainly, the people still read ads, sometimes respond to them, and even enjoy them, but they do so with caution and hesitation, and for obvious reasons.
With referrals, all of the negatives associated with ads are removed. When a friend refers a friend to a certain business or product, it's more than just a referral, but also a kind of endorsement. It's an endorsement that comes from a known and trusted source. The referee thinks: "Hey, if my friend John says his product is good, it probably is!" When a prospect comes to you by way of referral - as opposed to a paid-for marketing tool - they are dozens or even hundreds of times more likely to buy.
Referrals are not only free, but once made, they bring in higher quality customers who are more likely to buy.There's yet another basic referral aspect to consider. When a current customer refers a first-time buyer to your business, guess what? You not only have a new customer, but another new referral source! This is why referral marketing is so powerful. It builds upon itself. Each new customer can turn around and make more referrals, creating new customers, and then more referral agents for your business! The referral process and pattern can manifest itself in a geometric or even exponential pattern. Or call it a "snowball effect"? if you prefer. But you get the idea. A proactive well-directed referral program can quickly lead to truly spectacular new customer numbers for any business.
For more information on how to generate lead referrals, contact iQuantum today.
