Referral Marketing | Article by Heather Robertson

Adapting Marketing Tools To The New Medium

Marketing is marketing. Sure they are now talking about Web 3.0 and indeed we are learning some really interesting ways of doing business. But, the old standby marketing tools that worked 20 years ago, and continue to work now, can be adapted to online advertising. Everything old can be new again.

Referral marketing, the neglected little brother of the so much more interesting and sexy direct marketing is a good candidate for online opportunities, involving very little effort.

Referral marketing is best described as the original word-of-mouth (WOM). It’s certainly cost-effective and doesn’t require a large layout or investment. Research indicates that referred customers are loyal, pay their bills, and are more likely to refer other prospects.

So if referral marketing is simple and provides the best and least expensive type of customer acquisition, is your business using referral marketing to the maximum? Are you missing out on any potential online opportunities?

A morphed type of referral marketing called affiliate marketing which was perfected by Amazon, first started to appear on the internet in the early ‘90s. Unlike referral marketing, which is based on trust and reliability, affiliate marketing is a business relationship whereby one business rewards another business for an action, whether it’s a sale, an e-mail address or click-thru.

Affiliate marketing works best where businesses are related or appear to have some kind of connection and consumables that can be quantified. Think tangible (maps) and intangible (e-mail addresses, leads, traffic) items. In the recreational marine industry the boat licensing franchises have cracked the affilitate market. The business relationship works because the boat licensing company gains the new customer, while the ‘affiliate’ possibly a bit of cash but also provides a portal – service for their own customers. It’s win-win.

While affiliate marketing can be lucrative, it’s also hard work. If you want to sell a product, choosing affiliates with high traffic and the right fit is not as easy as it sounds. And the site has to be trustworthy and with a readership that is receptive to buying. If you decide to enter the affiliate business and make some money, keep in mind that your affiliate is most likely going to take an lackadaisical approach to marketing your product, this still lies firmly in your hands.

There is a grey area in affiliate marketing in the arena of blogs, online communities and social media sites. Bloggers with large followings are logical for product reviews, but it can get touchy when it comes to endorsements, particularly if the blogger is an affiliate. Full disclosure can set the tone for a review, providing the customer with some perspective. While it might suggest a bias if a blogger is getting paid doing a product review, it doesn’t necessarily preclude dishonesty.

What other ways can you enhance your referral business online?

Start with your own customer base and ask for a referral. There are businesses that ask for a referral as a condition of doing business, creating a type of elitism. The best referrals aren’t necessarily the ones that are unsolicited, reminding your customer that you do a good job and that he can help build your business by referring you to someone, just makes good sense, and protects your customer’s interest.

And there’s nothing wrong with providing some kind of incentive for asking your customer to solicit on your behalf. After all, time is money and you are asking your current customer to take the time and do something for you.

One example, of building more business through referrals using the web as an incentive belongs to Dropbox, a cloud based computer files storage facility. It was 1999, Dropbox was overwhelmed with the booming market in cloud computing and overrun by their competitors and so they looked to their customer base. Any current Dropbox user who referred a customer received additional space along with the referred customer who received more space than a regular signee. In April 2010, Dropbox estimated that their users had sent 2.8 million direct referral invites to their friends. Not only did Dropbox increase their customer space but they knocked the socks off their competitors.

Many businesses have ‘links’ pages, which dates back to the Web 1.0. It was important then to have both outgoing and reciprocal links to improve your page rank. But times have changed and having links to your site is more important to links to other sites.  Besides, it’s really no longer necessary to have a link to the weather site when everyone has it as an ‘app’ on the mobile.

Consider transforming the old style links page into a ‘Where to get the following types of services’ page.  Fill it with businesses you know will interest and service your customer.  Creative icons and snappy, informative copy will go a long way to making the page look great. With a small piece of computer code you can tag those icons with a counter, so you track the kind of traffic you drive to these other businesses. You might not generate enough click-thrus to and from each other’s businesses to warrant creating an invoice.  However, having a strong online relationship with these businesses is valuable in itself.

There’s been an explosion of online referral marketing companies. Just like your social media campaign you can outsource your entire referral marketing campaign but it might be something that can be creatively incorporated into your business model.

Today, there are businesses coming together to create their own independent referral marketing program. Perfect for niche businesses or niche locations, the businesses hammer out a detailed referral program for both online and off line properties. Businesses find a way to work together and decide on basic principles and value. A small marina could provide online advertising for a local restaurant, who would provide advertising for the marina in their restaurant menus. The ideas are endless.

And of course, Facebook, Twitter YouTube and your other social marketing tools are a great source for referral marketing. This is the latest and greatest WOM. Get your customers to tell their stories, make recommendations or talk about staff- that’s referral marketing at its best.

The web is not a tool it’s a medium. Each business needs to develop the best way to use the web to its maximum. And it’s not necessary to always have to create something new. In fact, sometimes, realigning the tried and true methods better apply to the web.

– Heather

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