How to Build a Winning Referral Marketing Strategy for E-commerce

For one, it’s more cost-effective compared to traditional advertising. E-commerce referral marketing also brings in high-quality leads, as people are more likely to trust recommendations from friends and family than advertisements. And hear this one out: building trust and nurturing long-term customer relationships in a competitive market can be difficult, but referrals come to your company with an element of trust already established. 

Now, you most likely want to know how to build a winning referral marketing strategy ecommerce business. If that’s the case, read on for the details.

Referral Marketing Strategy for Ecommerce

Set Objectives

Your first port of call in developing solid referral marketing strategies is setting clear objectives. If you don’t have well-defined goals, it’ll be difficult to gauge the program’s success. Ask yourself what you’d want to achieve through the referral marketing program. 

Typical objectives include increasing customer acquisition, improving sales volumes, boosting brand awareness, and expanding your customer base. Then, set realistic and measurable goals that you can track. For instance, you can aim at ‘acquiring 500 new customers through referrals within the next three months.’ Such focus will help you evaluate the progress and success of the e-commerce referral program.

E-commerce marketing agencies like Perth SEO Studio can help your company in this initial stage of the referral process. Their professional services can’t be dismissed when it comes to strategizing programs that reach the right people and rake in profits.

Choose an Incentive

Clients referring your company to their family and friends will often expect some reward for their efforts. So, choose suitable referral incentives that’ll make your customers feel appreciated.

Referral rewards can take many forms, as outlined below:

• Monetary incentives: You can offer a fixed amount of money or a percentage of the referee’s purchase value. To note, you don’t have to spend a lot of money to motivate people. Amounts as little as USD$10 are enough to prod people to take action. To note, cash rewards may not incentivize customers to make repeat purchases at your store.
• Points: Suppose you already run a points-based customer loyalty program. In this case, you can offer customers additional points when they refer new clients. Points are typically redeemed for discounts or purchases.
• Discounts: You can slash some amount of the purchase price for referees when they make orders. The best referral programs offer two-sided discounts, where both the referrer and the referee get discounts. This may motivate shoppers to check out faster because their friends is counting on their purchase.
• Gifts and gift cards: You can give customers samples of new products or goods they’ve not tried before. This exposes them to new items, and if satisfied, they can buy more of the same later.
• Experiences: These go a long way in proving to your customers how much you cherish them. For instance, if you run a gym or fitness studio, you can offer referrers a free personalized fitness class. If you run a winery, you can offer an exclusive wine-tasting session featuring rare or limited-edition wine.

The list of referral marketing ideas and incentives doesn’t end here. Think beyond the box and come up with any incentive you think your customers will like. 

Determine When to Introduce the Program

A successful referral program is introduced at the most appropriate time to maximize leads. If your products have a short buying cycle, like personal care products, pet supplies, and house cleaning products, consider introducing your referral program immediately after a customer buys products. The rewards they earn motivate them to make another purchase. 

Suppose you deal with products with a longer buying cycle, like mattresses, automobiles, furniture, and real estate. In that case, you may want to offer referral programs to would-be customers who’ve already expressed an interest in your product but haven’t hit the “Buy” button. This will motivate them to buy and also encourage them to recommend your business to others. 

Track Your Results

Once your referral program is up and running, you must monitor your data using an appropriate referral marketing tool to determine its efficacy. Below are some key metrics to track:

• Customer participation rate: Determine how many customers take part in your referral program.
• Referral rate: Measure the number of successful referrals made by each participant.
• Impression rate: Measure the number of views for your referral landing page.
• Response rate:  Measure how many people took action after visiting your referral page.
• Conversion: Measure how many referrals finally made a purchase.
• Traffic: Measure how many people visited your e-commerce website after getting a unique referral link.
• Total sales: Measure the number of sales arising from the referral program.

There’s referral marketing software you can use to track all these metrics. Beyond that, referral program software helps streamline communication, automate processes like enrollment and reward disbursement, and enhance your branding efforts. 

Conclusion

Referral marketing is beneficial in many ways. It can help you set up a successful e-commerce business and reach your revenue goals. Beyond setting up the program, find ways to promote it so customers are aware of its existence. This could be through time-proven marketing tactics like email marketing, social media referral campaigns, influencer marketing, or PPC ads. Consulting professionals through all these stages is crucial to succeeding.