How Referral Programs Can Encourage Customers To Do Marketing For You

February 19, 2019 2:00 pm Published by Leave your thoughts

Running an e-commerce business sure is hard work. Though when done right, it can reap massive rewards way into the future.

If you have created an online store, you’ll know how much effort and how many hours (and at times sleepless nights) you’ve spent preparing, planning and strategizing to make it work. From finding an idea to sourcing products, creating a webstore to looking for customers, there are many components that you need to work on.

As is the reality with any business, providing quality products and good customer service will get you a lot of wins. But at the end of the day, it won’t matter much if you don’t market your brand and products well.


Challenges of marketing for e-commerce

Marketing almost always costs a lot of money. You’ll need to set aside a monthly budget to run ads, pay influencers, and other marketing efforts to keep getting new customers.

In the long run, you’ll find that it’ll be hard to scale your business. Not to mention, to keep finding customers that will eventually convert.

After running a series of marketing and ad campaigns over a period of time, you’ll also find that different channels and platforms convert better (or worse). Some ad channels might give you a larger pool of prospects, but with low conversion rates. While other ad channels may result in fewer customers, but higher lifetime values (LTV).


Referrals, one of the best methods for customer acquisition

Among the many types of marketing channels, referral marketing is often the most effective. The difference between managing ad campaigns on Facebook or Google as opposed to referral marketing is that with the former you’ll need to manage the campaigns yourself. But with referrals, your customers do the marketing for you.

There’s only so much you can spend on ad budget every month and managing multiple ad campaigns can take up a lot of your valuable time. This is why referral marketing is the preferred choice by smaller webstores to acquire new customers.

Referral marketing is also incredibly easy to do. It’s usually in the format of a discount coupon, where the referrer and the referee receive a certain amount benefit. It can be in cash value or discounts.

The reason why it works so well is for two main reasons. Firstly, referral marketing works just like word-of-mouth marketing. A person is more likely to trust a brand or product that’s recommended by a friend, co-worker or relative, as opposed to ads by the business. Secondly, there is an incentive for both parties to partake in the referral bonus, since they will both benefit from the transaction.

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This post was written by Nina