Elton Kuah, marketing director for Enrich Social Media, shares key steps on how to make referral marketing effective on social media.
Referral marketing is a systematic way to maximize word of mouth recommendations through customers and fans. Companies usually reward customers and contacts – what we call word of mouth marketing – to spread the word about the benefits of their products and/or services as much as possible.
WIN-WIN for ALL
This word of mouth marketing strategy is indeed a WIN-WIN situation for ALL, the companies, the marketers and the customers:
- Companies and businesses will get more customers which they will not be able to get on their own
- Word of mouth marketers get rewarded with a percentage of the sale as a thank you or referral fee
- Customers get to use a good product or service which they may not even know about on their own
Wikipedia.org provides a classic example of how referral or word of mouth marketing has helped Dropbox, a well-known company offering online storage space, skyrocket their customer base:
“Dropbox – In 2009, Dropbox implemented a referral program to encourage their users to tell their friends about Dropbox. Their referral program had a two-sided incentive for sharing: the person who a sign up for Dropbox through a referral link gets more space than through a normal sign up, and the referrer gets additional space as well. According to Drew Houston, the Co-founder and CEO of Dropbox, at the Startup Lessons Learnt Conference on 23 April 2010, the referral program was inspired by the Paypal Sign up Bonus program. The referral program permanently increased their signups by 60%. Referrals account for roughly 35% of their daily signups (as of April 2010)”
So, how does referral marketing take place?
Referral marketing takes word of mouth from the spontaneous situation where one is engaged in a casual conversation with their friends to one where maximum referrals are generated on a deliberate basis. In either case, word of mouth referrals is built upon trust which is built upon social capital.
Now, let’s ask ourselves this question:
“Do we like strangers trying to sell us something?”
I don’t know about you but I’m capable of just hanging up the phone when I receive a cold call in the midst of doing something. Am I being rude? Well, in my humble opinion, I do not trust them and I felt I do not owe the caller anything and that I am not obliged to listen to what they have to offer if I’m not in the mood.
Effectively, when there is no trust, there is no business. And trust is built upon relationships which also known as your social capital.
So, in order to build a successful referral marketing business, word of mouth marketers need to spend enough time to build their social capital by:
- Participating in networking activities to widen their contacts, whether online or offline
- Building their relationships with their network on an ongoing basis to help each other mutually
Without a deliberate effort to build a sizable social network, a word of mouth marketer’s reach is naturally limited to a small circle of family and close friends or co-workers and colleagues and the results will be insignificant.
Here’s how social media changes the medium from ‘1 to 1 marketing’ in traditional method to ‘1 to many’ to increase referral marketing opportunity.
Here’s the 5 step method which startup entrepreneur to build their referral marketing. LinkedIn is being used to illustrate the examples but the principle can be applied in other social media platform such as Facebook and Twitter.
Step 1 – Optimize your social media profile. In about you section, it is recommended to write of what you do, who you help and the results you help them create. You can also include a catchy tagline of a business hook that resonates with your customer to your business.
An example of good profile as per below;
My premium SMS system helps small and medium business owner to increase their brand awareness regularly in customer minds for them to remember you regularly and automatically, which the results can lead to increased sales opportunity up to 200% using our system.
Step 2 – Support with your recommendation or social proof (For example in LinkedIn, this is supported by recommendation by your peers. In social media profile you have, the key points are to mention the specific benefit of how the clients have benefitted from using your service. This specificity can be mentioned in terms of time saved, specific task done and result of work.
Step 3 – Connect with potential leverage partner – for example, if you are a speaker, you will work with companies doing event management, sales person, internet marketer and media agencies to increase your exposure and reach. If you are doing a traditional business, your referral partner could even come from your suppliers.
In business terms, this is called as contact sphere and you can use keywords in Face book Search and LinkedIn to find and connect with such partners.
Step 4 – Building relationships with your online network on a regular basis to help each other mutually. This can be done via valuable e- newsletter updates, articles to educate your targeted audience, and even have a small meet up event to engage your online audience if possible to enhance the social capital connection and possible business opportunity.
Mentioning of loyal customer online that engages with your business is important to make your customer realize that you do care for them and as proof for other potential customers online to connect and engage with yourself.
Step 5 - Once a business deal is secured, you may want to reward incentives to your loyal customer to refer more of the clients to you. This can be done via referral apps such as ‘Refer Friends and Win iPad 2″ for illustration purpose.
About the author
Elton is the marketing director for Enrich Social Media, an online advertising company specializing in internet marketing services, online coaching, consultancy platform and hotel booking solutions. He is currently an International E-Coach of Youth Employment Network (YEN), a partnership of the United Nations, International Labour Organization, and World Bank and in his social media industry, a certified member of Social Media Summit USA by Social Media Examiner. Elton has also published a co-authored book called ‘Are You Ready To Be Next Entrepreneur’ which his story has been reviewed by world known personalities worldwide. He can be contacted at Linkedin and Facebook at linkedin.com/eltonkuah or facebook.com/eltonkuah
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