Hank Barnes, A Research Director with Gartner recently shared some powerful insights in his blog “Will 2014 be the year of Advocate Marketing”. Hank’s belief is that advocate marketing will be the next big area of investment in marketing technologies.
“I strongly believe that Advocacy Marketing should be at the top of the priority list in terms of marketing investment” Hank Barnes, Research Director, Gartner.
So why such a bold statement? It’s the data and the success stories that are starting to show a major trend. There is a specific subset of advocacy marketing that is particularly interesting, it’s called Referral Marketing. Here are some statistics to start with.
-“65% of all new business for any business comes from referrals” – New York Times
-“People are 4 times more likely to buy when referred by a friend” – Nielsen
-“Life Time Value of a referral customer (LVC) is more than 16% higher than non-referred customers” Wharton School of Business
-“83% of consumers are WILLING to refer – yet only 29% actually do” Texas Tech University
I think most people inherently know the powerful of word of mouth marketing. But the big shift is the attitudes of consumers towards big brand advertising in general. Consumers feel that advertisers are misleading and they look at brands today with more caution and trepidation than ever before. So what’s the answer? This is where referral marketing makes its grand entrance. The solution is to have consumers themselves refer products/service to their friends and family.
Word of mouth is not new so why hasn’t this been a focal point until now? The big challenge with word of mouth or referral marketing has been creating something that is repeatable and measurable. How does one track “The Situation” referring a new tanning salon to “JWOW” and “Snooky”? How does one control the messaging that a customer “Jim Smith” will use to refer his friend ‘Bill Thomas”? There are a number of software companies trying to solve this problem and one company that’s quickly gaining traction is Forewards (http://forewardsapp.com)
Forewards is a fully automated customer referral engine that works with any e-store to drive traffic and new purchases. It essentially turns you customers into an army of sales reps by using powerful word-of-mouth.
Just Ask A Simple Question?
When was the last time you were asked to refer a friend/family the moment you made a purchase? Studies show that less than 1% are asked that question. But 83% of consumers are willing to refer to their family/friends. What happens when 8.5 folks out of 10 are willing to refer but they’re not asked to do so? Only 2.5 people out of 10 actually do.
Thus the premise behind Forewards is extremely simple and perhaps that is the reason behind its popularity. Forewards automatically asks the question to every single customer “If you like what you purchased, please help us grow our business by referring 5 friends/family or posting it on social media”. That simple act of asking can drive referral engagement by 200% and increase bottom line revenue by 15 to 20%.
A Successful Referral Campaign Starts With Simplicity
Keep is Simple and Stupid (KISS). Remember that as a consumer, being asked to refer their friend/family is not something they’re asked on a regular basis. It’s an inherent friction point and the key is to remove as many friction points as possible. Here are a few interesting facts that we’ve learned from running hundreds of referral campaigns.
1) Eliminate as many “decision points” as possible
Ask them to take action in a clear and concise manner. For example, don’t ask to refer as many friends as they can using email and social media. Ask them to refer 5 friends in this email that’s already crafted for you and send right now by clicking this red button. Decision points are friction points so make the call to action easy as pie.
2) Continuously Test Messages, Hero Images and Calls to Action
The chances are you won’t get the right the first time. Test continuously and measure incessantly. Over time, your referral rates and referral revenue will skyrocket
3) Ask more than once
Have you ever procrastinated on a decision to do something right at this moment in time? Sure you have, but don’t feel bad about it because almost everyone does. Studies have shown that you need to ask someone an average of 4 times before action is taken. The key is knowing when to ask and how often without being overly aggressive.
4) Use a $ figure instead of % off
This is a curious one, but time and time again we see that actual cash rebate works better than % discount. It’s the same thing really, any reasonable person should be able to calculate the % discount and derive a $ savings from it. But the human mind is a strange thing, it doesn’t want to do that calculation, it’s lazy. Giving someone the actual $ actually works better by a pretty sizable margin. Try it and measure it, it’ll give you some interesting insights
The idea of advocate or referral marketing online is not new (Dropbox is the most famous example). But it’s only recently that major technology research firms like Gartner have given it serious thought. At Forewards we’re seeing this trend real time. We anticipate word of mouth referral engine such as Forewards to be the next big growth trend in online marketing.
The post Next Big E-commerce Trend: Advocacy or Referral Marketing appeared first on Build a Better eCommerce Business | Forewards.
