Increase Customers: With Referral Marketing You Can
Increase customers base is more crucial today than ever before. In an increasingly competitive world, having a solid and growing customer base is essential to ensure the survival and success of your business.
Attracting new customers may seem like a daunting task, but there are many effective strategies that can be
used to achieve this goal such as advertising, quality content creation or referral marketing.
In this article, we at Made would like to take a closer look at the latter strategy for acquiring new customers and retaining existing ones.
Let us start by saying that Referral Marketing is one of the most effective marketing strategies for increasing sales and customer loyalty. It is based on the idea of encouraging existing customers to tell their friends and acquaintances about your brand; thus creating a virtuous circle of recommendations.
Referral Marketing is also known as Word of Mouth or simply as Referral. It is not a new strategy in marketing, but with the rise of social networking and the internet, it has become even more relevant. Indeed, consumers are increasingly influenced by the reviews and recommendations of their friends and acquaintances online.
This Marketing Strategy is based on the principles of persuasion identified by the famous psychologist and author Robert Cialdini.
Increase Customers: Cialdini’s Principles for Creating a Winning Referral Marketing Strategy
Robert Cialdini is an American social psychologist and author, known for his studies on persuasion. He is considered one of the world’s leading experts in this field and his book ‘Influence: The Psychology of Persuasion’. Describes the 6 principles of persuasion. These are still widely used in marketing, sales and negotiation.
“We are obliged to give back to others the form of behaviour they first gave us. Essentially, you must not take without giving in return.”
The principle of reciprocity is one of the most powerful persuasion principles used in Referral Marketing. According to Robert Cialdini, people have a natural tendency to reciprocate favours received, as demonstrated by sociologist Phillip Kunz’s experiment.
The latter sent 600 Christmas cards to perfect strangers of whom 200 reciprocated by replying with very positive messages. Why would strangers feel compelled to reciprocate an unsolicited gift? Simple, the rule of reciprocity applies. We are conditioned to follow the rule of ‘give and take’.
In referral marketing, this principle can be used by offering an incentive or reward to the person who makes a recommendation, thus creating an exchange relationship.
For example, suppose you have a clothing company, you can offer exclusive discounts, personalised gifts or early access to new collections for customers who have made the most purchases over time. In this way you are showing that you appreciate the loyalty of your customers and inviting them to reciprocate this attention by buying even more. This encourages customers to make recommendations as they feel rewarded for helping the company and at the same time have a benefit from the recommendation made.
2)Authority or Authoritativeness
“The principle of authority is simple and powerful. Essentially, it makes us do what people who seem authoritative or knowledgeable tell us to do.”
Cialdini’s authority principle is based on the idea that people tend to follow the example of respected authority figures in society.
This principle can be used in referral marketing in different ways. Again assuming you have a clothing brand, you can exploit this principle by using famous testimonials to promote your products. You could also create collaborations with world-famous designers. This would create a sense of authority and prestige in customers as they would see that your brand is associated with another successful brand.
“People look to the actions of others to determine what is correct to do in a particular situation.”
This quote highlights how people often follow the example of others to determine what is considered acceptable or appropriate in a specific situation, rather than relying on their own opinion.
Cialdini’s principle of social proof is based on the idea that people tend to do what others do, because they see others as a valid source of information for behaving appropriately in a given situation.
In referral marketing, this principle can be used by showing that many other customers have already made recommendations to friends and acquaintances; it is a way of demonstrating that it is the right thing to do.
An example of how this can be done is by showing a recommendation counter on a website or in a referral email. This way, customers see how many other people have already made a recommendation and are more likely to do the same.
“People want to give back to causes and people they love and respect.”
This principle holds that people tend to be more willing to do a favour or provide support to someone they find sympathetic or with whom they feel comfortable.
In Referral Marketing, this principle can be used to increase the likelihood that people will agree to make a recommendation to a friend or acquaintance.
An example of application would be to use personalisation in communication with customers. Creating an image of familiarity and friendliness to increase the likelihood that customers will feel inclined to make a recommendation.
In addition, a referral programme could be used in which customers who make a recommendation are rewarded with discounts or gifts, creating a sense of gratitude and sympathy towards the brand.
You could utilise this principle by using a marketing campaign that shows the human side of your clothing company. You could, for example, place attention on details and care for sustainability, thus creating a sense of empathy and affinity with customers.
“Scarcity is a powerful incentive. When resources are limited, they become more valuable.”
The principle of scarcity holds that individuals value something they perceive as rare or limited more highly than something that is abundant.
In Referral Marketing, this principle can be used by creating a sense of urgency or limitation in the availability of an offer or reward for customers who make a referral.
An example of how this principle can be applied in referral marketing could be by offering an exclusive prize for the first 10 customers. Who make a recommendation, or by creating an expiry date for a special offer only for customers who have received a recommendation. This creates a sense of urgency and limitation that can motivate customers to make a recommendation before the offer or prize is no longer available.
6)Commitment and Consistency
“The principle of consistency states that once we have made a choice or taken a position, we will face personal and interpersonal pressures to behave in a manner consistent with that commitment.”
Cialdini’s commitment and consistency principle is based on the idea that once we a person publicly commits to a behaviour or idea, they become more likely to continue to support and defend that behaviour or idea.
In a Referral Marketing context, this principle can be used to increase the likelihood that a satisfied customer will make a recommendation to a friend or acquaintance.
A practical example for your clothing brand would be to use a marketing campaign where customers are invited to publicly commit to wearing your clothing; perhaps by creating a hashtag on social media where customers can share their photos and use the hashtag to show their commitment to the brand. This would create a sense of consistency in customers, as they will feel motivated to continue wearing your clothes to maintain consistency with their public engagement.
In general, this principle can be used to increase the propensity of customers to share their commitment to a company with friends and families, creating a positive knock-on effect for the company.
Increasing Customers with Referral Marketing: Conclusions
In conclusion, Referral Marketing is an effective strategy to increase customers, improve sales but also customer loyalty and retention.
To create a successful referral marketing strategy, it is important to define objectives. Identify the most satisfied customers, create a referral programme, create effective communication, monitor and analyse results and continue to incentivise referrals.
In summary, referral marketing is an effective strategy to attract new customers and increase sales, but it requires planning, effective communication and constant monitoring to achieve results. By using Cialdini’s persuasive principles and following these steps, companies can create a successful referral programme and increase their customer base.
If you too are thinking of implementing Cialdini’s principles to increase your customer base, just get in touch with our experienced marketers.