Tips for Successful Referral Marketing

Tips for Successful Referral Marketing – The Best Advertising Comes from your Customer

Enthusiastic customers are often more effective than any marketing measure: They recommend products and services – and companies benefit. The following situation is familiar to nearly everyone: if you are looking for something new, like a toaster, you can click through the variety of offers online or visit the specialist retail stores in order to find a suitable model. Often you are completely overwhelmed by the many articles and the large selection. Markets are becoming increasingly complex and potential customers are facing a variety of products to choose from. The agony of choice – but what do you choose? Usually, the choice is made based on the market leader, the cheapest item, the best offer, or the product that has been recommended by friends or acquaintances.

The figures speak for themselves – according to a Bitkom study, 65% of customers inform themselves before buying, reading customer reviews, and using them as a decision-making aid. 34% also give a rating themselves. If the reviews are negative, companies can lose potential customers even before they get in touch. The worst thing is that in most cases, this goes unnoticed. Many companies think these recommendations are a stroke of luck, but there are several ways to help get this “lucky break” started.

What is Referral Marketing?

The basis of this concept is that of “word-of-mouth advertising”, which has been used successfully by humans for centuries. This means holding a brand-specific and opinion-forming consumer dialogue, with an exchange of experiences regarding services or products. This process also includes an evaluation. In short: Acquaintances or friends make sustainable calls for action based on their own experiences. “Promoters” like to bring their favorite articles, services, and products out of conviction into the conversation and recommend them voluntarily. If companies succeed in supporting recommendations in a targeted manner, Recommendation Marketing is one of the most effective measures for attracting new customers.

Recommendation Marketing ensures…

  • increased existing customer turnover,
  • increased customer loyalty and
  • free new customer acquisition.

As Customer, you Don’t See the Forest for the Trees

As a result of the growing variety of products and today’s complex markets, customers find products and suppliers increasingly interchangeable. Consumers usually have a little overview of the range on offer and therefore tend to rely heavily on the recommendation of friends and family. If they find out about a product or service through a recommendation from a friend, they are more likely to plump for that particular offering. The effect of traditional advertising is thus constantly decreasing, as customers can hardly differentiate one provider from another in the daily flood of advertising messages. The oversupply of products and services increases the fear of bad decisions when buying, which reinforces the tendency towards recommendations.

Skilled Recommendation Marketing Boosts both Reputation and Revenue

Referral Marketing is much more than a simple “recommend us further” or a blunt and indiscriminate over-sharing of discount coupons. The main goal of companies using recommendation marketing is to increase the proportion of customers gained on the basis of recommendations of others. In principle, many different areas can be defined in which recommendations are made.

  • The private environment: Friends, acquaintances, and family
  • Existing and former customers
  • Permanent employees, freelancers, and former employees
  • Online-based networks such as Google, Facebook or XING
  • Extended environment: Neighbors, or contact via professions or hobbies

In most cases, services that stand out from the norm and which are most captivating are recommended. The recommender has to trust the company, after all, he stands for it with his good name when he does so. Companies often benefit from this bonus of trust because enthusiastic customers are more credible than advertising promises. The personal recommendation of people whose opinions one appreciates and trusts usually carries more weight than anything else and is therefore often much more effective than elaborate marketing and advertising measures. This explains why more than 1,000 very good hotel reviews are called into question as soon as a friend or acquaintance gives only one negative verdict.

  • Recommendations are effective advertising
  • Recommendations sell successfully and cost-effectively
  • Recommendations transport enthusiasm and emotions

Trust is Priceless

Satisfied, long-term customers are fans and thus ambassadors, advocates, and multipliers. Especially online, customers can be influenced by product reviews, reviews, and recommendations. But there is also a lot of potential for companies in the private environment of customers. Whether the favorite restaurant “with the best pizza in town,” the particularly powerful lawnmower “which makes mowing the lawn fun” or the beautiful hotel in Spain “with the great water slide and the delicious buffet” – recommendations usually depend on especially positive experiences and trust in a product, service or specific offer. Emotionally touched customers are usually more communicative and encourage others to buy with great passion and persuasion – after all, you only want the best for your friends! Therefore, only trust and enthusiasm, coupled with top performances, lead to recommendation success.

Existing Customers Should Not Be Neglected

An important basis for Recommendation Marketing is therefore Customer Loyalty. But many companies make the mistake of enveloping the customer only as long as they are a new customer. Existing customers often don’t get nearly as much attention. Those who neglect these loyal customers will not receive recommendations. But that’s not all: it has been shown that customers feel even more connected to a company after making a recommendation. In addition, a recommendation even has a positive effect on one’s own repurchase intention. Therefore, it is all the more important to recognize this enormous sales potential and to sustainably promote it with Recommendation Marketing. If companies do not take this factor into account, a lot of potential is wasted.

How Should you Generate Recommendations?

In order to receive recommendations, a basis must, of course, be established in advance. After all, customers only recommend a product or service if they are satisfied with an increased extent. As a provider, you have to go the extra mile in order to stand out from the competition in the market and to retain consumers.

  • The range of services must be second to none
  • Customers’ expectations should be regularly exceeded
  • Personal contact with customers needs to be the norm
  • Employees are experts and can advise customers in the best possible way

Of course, it is not enough for customers to be satisfied if they do not make a recommendation to friends and acquaintances. Therefore, companies should always ask themselves the question: How to trigger recommendations? In the service industry, customer-employee interaction is essential. Small attentions and new service ideas make the difference to the competition and remain in the minds of customers for longer.

As already mentioned, the best way to trigger recommendations is to set yourself up to stand out from the competition. Factors that trigger enthusiasm usually stem not from what is done, but from how it is carried out.

  • Speed: Customers who have to wait do not feel as well treated like anyone who is served quickly and attentively.
  • Be Personal: the direct, personal contact gives the customer the feeling of experiencing special appreciation
  • Flexibility: if companies succeed in accepting and implementing individual customer wishes, this has a positive effect
  • Additional Service: Content in the form of technical articles or blog articles, which are made available online and free of charge, offers readers added value in the company’s product world. Since good content is often shared and recommended by users on social media platforms, new prospects can also be generated.

Determining Customer Satisfaction and Recommendation Readiness

In principle, it is important to determine the willingness of customers to make recommendations. At zenloop, we use the Net Promoter Score® to examine this likelihood. NPS can be used to measure the probability of a customer recommending a product or a company. In this way, it is possible to capture the status quo and to see how strong the willingness of a recommendation would be. This analysis helps to develop effective Recommendation Marketing and appropriate measures.

If you Don’t Ask, you Won’t Know!

Sometimes it’s so simple: the most effective way to get recommendations is to simply ask customers for recommendations. This is by no means a sign of desperation, it is more like how convinced you are of your own products and services. Whether in the order confirmation, the newsletter, or in the personal sales interview, experienced marketing experts always find an unobtrusive way to accommodate a question about recommendations.

Using Social Media to Build Relationships

Whether it’s a personal message, a like, or a reaction to a comment, if you pay attention to the customer, you feel valued. If you are present on many social media platforms, there is now a chance to actively ask for recommendations. Whether via Facebook, XING, or newsletter – customers are usually most willing to give feedback immediately after purchase. An optimal start to this process is to obtain reviews under Google’s “My Business”. Industry-specific assessment platforms can also be a good way to generate recommendations.

Google My Business Profile Checklist

  • Address
  • Opening hours
  • Contact
  • Brief description of the company profile
  • Authentic photos

Helpful Tips – How to Drive Recommendations

Attentive dealings with customers are the key to efficient Recommendation Marketing. Therefore, in order to generate as many recommendations as possible, it should be made as easy as possible for the customer to produce them. For this purpose, the consumer can be offered various options:

  • Your own Website – customer voices with picture and name
  • Facebook – to gather feedback from customers, you need a company page. In addition, a “tab” must be added to make rating possible
  • LinkedIn – if you are directly connected to the customers here, you can also ask them for a recommendation

1. Creating Customer Motivation

Generating written recommendations translate to work for the customer. Therefore, it is advisable to find incentives for consumers to give feedback in an easier way. Sweepstakes or discount promotions for the next booking /purchase have proven themselves especially in the area of social media. A win-win situation, after all, has advantages for both sides.

2. Choosing the Right Time

Of course, the customer must first try out the product before they can submit a review. However, it is important to choose a healthy distance between the purchase and the recommendation, as not too much time should pass.

3. Recommendations Can also Be Negative

Unfulfilled advertising promises, poor service or quality – negative references spread rapidly, especially on the Internet. Should this happen, it is important to kindly acknowledge the criticism and feedback and to make it clear in the reply that the problem will be fixed. The aim is to convey to the customer that their feedback is valued and taken to heart.

4. Honesty Lasts Longest

Especially due to the currently relevant topic of fake news, it is not advisable to manipulate testimonials, even if the temptation may be great. Because most of the time it is noticeable to the customers and this rather discourages the purchase.

Influencer Marketing as Recommendation Marketing 2.0

The influence of Instagram influencers and the like is arguably the most popular variant of recommendations of our time. In recent years, so-called influencer-marketing has firmly established itself in the advertising and marketing landscape. More friends than a celebrity – these bloggers and Instagrammers enjoy a high level of trust among their followers and thus influence the purchasing decisions of thousands every day. When a video is intensively talked about the great holiday in a very specific hotel or a favorite shampoo is held out for the camera, the followers trust the influencers’ opinion. The result? On the basis of the recommendation, the drugstore market is highly likely to use the product mentioned.

These “opinion makers” distinguish themselves in different ways:

  • Mega-Influencer
    TV stars or celebrities are highly known. A large following and a wide reach characterize these mega-influencers. As idols or role models, they have a great influence on the opinion of their followers.
  • Macro-Influencer
    They, too, are characterized by a high reach due to their notoriety. However, the impact on purchase intentions is not as high as with the mega-influencers.
  • Micro-Influence
    These opinion-makers have a short reach and usually have “only” a few thousand followers.

Due to their popularity and the high influence on their followers, mega- and macro-influencers are particularly popular with companies. The mention of a brand by these opinion makers can have a huge impact on the sales and image of a product. Younger generations of consumers in particular have strong confidence in the recommendations of influencers. Thus, this form of marketing is very attractive to companies.

Customer Acquisition in Today’s Market with Referral Marketing

Positive feedback warms the entrepreneur’s heart. It is even better if customers pass this on to other potential customers and make a recommendation.

Recommendations are usually much more valuable than advertising promises, as customers place great trust in the words of friends, family, and bloggers. Companies that recognize this enormous potential and develop appropriate measures for this type of marketing can increase their reputation and revenue – without much effort and marketing budget. After all, the best advertising is still made by our own customers.


Susan Pfundt

Senior Content Marketing Specialist