... continued from Cover
Before I jump into the mechanics of building your own referral marketing flywheel, let’s look at the psychology 🧠 behind why investing in this marketing strategy is so important to long-term success and profits. The why all comes down to the numbers 📊 . Eighty-eight percent of people trust recommendations from friends and family more than any other type of advertising. The other 12% of people clearly don’t have good friends 👎 and hate their family. The transfer of trust from a friend or a family member to you increases the lead conversion rate by 30%. To put that another way, if you get 100 leads per month via other marketing channels and close 35% of those leads, you’ll have 35 new customers that month. If you got 100 leads that came in as referrals, you’d close 46 new customers that month. Over a 12-month period, the leads that come from referrals would generate an additional 132 new customers when compared to the leads generated via other traffic sources 🚀 . In addition to the extra 132 new customers, referred customers also spend over 200% more 💰 when compared to those acquired via other traffic sources. If we continue with our scenario, if you had a referral marketing campaign that generated 100 new leads per month, you’d have a 46% close rate, but those new customers would also spend double the amount of money. Isn’t that effectively the same amount of revenue as if you had generated 92 new customers from other traffic sources?
Building and Implementing Your Referral Program: Best Practices for Small Businesses In this article, I want to give you a starting point for building your referral program. This isn’t a stopping point 🚦 but a starting point. Use this information to create the foundation for your program and innovate from here. Basic Referral Program 🎁 How It Works: A referrer earns a reward after the person they refer makes a purchase. Often, both the referrer and the new customer receive incentives, which can vary. 🎉 1 Example: Give both the referrer and the referred customer a $50 credit toward their next purchase. Best Use Case: Ideal for businesses starting their first referral program or those seeking a simple and easy-to-track system. Why It Works: Reciprocity motivates participation, especially when both parties benefit. 🤝 It’s also straightforward, encouraging customers to refer to others without complex rules. Tiered Referral Program How It Works: Rewards grow as customers refer more people. Each tier provides greater incentives to encourage repeat referrals. 2
If you incorporate the right systems, processes, and out-of-the-box thinking 💡 in your business, you can create income certainty even if the business model norm for your industry doesn’t traditionally have recurring revenue.
This is why having a referral marketing system can have a massive impact on your business and profits. 🌟 In the rest of the newsletter, I’ll share what’s working on creating your referral marketing system. Next month, I’ll go over what’s working to market and promote your referral program. 🗓️
2
www.newsletterpro.com
Building Relationships to Help Small Businesses Succeed.
208.297.5700
Made with FlippingBook Ebook Creator