A burgeoning appetite to share and recommend goods and services means your best customers will play key roles in your growth
For marketers yet to turn their attention to the extraordinary customer acquisition mechanic of earned growth, referral might be the last marketing channel to come to mind.
For those already giving their customers a participating role in their brand’s successes, it’s the last marketing channel they’d switch off.
This was literally true for the Head of UK Marketing at one of Europe’s largest online florists. She knew the customer lifetime value the business derived from referral marketing exceeded that of both paid search and paid social.
The business had so much confidence in its referral marketing programme as a growth driver that when it was forced to ‘turn off’ marketing in May 2020 after the COVID-19 pandemic prompted the first lockdown, referral marketing was the only channel it left running,
The florist grew its UK referrals by 800 per cent, despite promoting it at fewer points in the customer journey than previously.
But then, the florist had already racked up the kind of referral results across its eight country markets that gave it confidence in plumping for advocacy as the sole marketing channel to help navigate a new crisis.
The online florist has generated close to £17 million in sales through customer recommendations alone since launching a referral scheme in 2014.
The head of marketing, meanwhile, says her team tests constantly to learn how various markets and customer cohorts respond differently to messaging and incentives through referral campaigns.
Such success stories were once rare for a marketing channel that is now fast growing into its own skin and becoming comfortable with a more pivotal, strategic status in the marketing stack.
A recent Harvard Business Review article co-authored by Fred Reichheld, the creator of Net Promoter System, explores earned growth’s commercial benefits and the metrics that make it meaningful.
Regarding the advocacy that earned growth is built upon, it states: “Firms today undervalue referrals. They treat them as icing on the cake rather than an essential (perhaps the most essential) ingredient for sustainable growth.”
Traditional household brands and established retailers are now joining pure-play online businesses in approaching customer acquisition and experience with an ‘advocacy-first’ mindset.
This shift towards earned growth isn’t a replacement for anything. Comprehensive Referral Engineering programmes act as a valuable addition to, and amplifier of, existing marketing strategies.
A menswear brand put its first-party referral data to work across its paid social channels to target consumers that looked like its most valuable referrers. The experiment saw a 65 per cent increase in conversion rates, a 30 per cent jump in return on ad spend and a 12 per cent reduction in the cost of acquiring new customers.
The trend your customers won’t let you ignore
Crucially though, none of the above speaks to the single most important opportunity addressed by a move towards earned growth.
That is, that advocacy – and importantly, the level of participation it encourages in those we sell to – is slowly shifting the emphasis of marketing from the brand to the customer.
Referral is data-driven, but it’s absolutely customer-led.
Amplified in the past two years by the forced loss of so many day-to-day freedoms we once took for granted, consumers are hungry for autonomy and self-determination. They want a more direct role in the way they shop for, and engage with, the products and services with which they choose to identify.
Influencer marketing may be big business, with suggestions the industry was set to grow to $13.8 billion at the end of 2021, but our research finds almost 60 per cent of people are more likely to buy a product recommended by a friend or family member than by a celebrity or social media creator.
When it comes to influencing, it’s the people we know who have the real power as opposed to beautiful strangers with well-oiled content-creating machines.
Consumers want to participate: to interact, share and recommend. Your buyers’ e-commerce journeys don’t begin on screens. Increasingly they start with offline conversations – not about your brand or product but about their interests, their needs and their lives.
What does that mean for your brand? Well, it means your best marketing in 2022 will likely happen in the most ‘un-marketing’ moments.
It means your effective media channels will include everyday occasions in your customers’ lives: chats between parents at the school gates; picnics and pub nights; weekend walks and barbecues with friends; Sunday roasts with the family.
Their participation will become as crucial in delivering experiences that match your customers’ expectations as personalisation has been in recent years.
For while automation driven by big data transformed customer experience capability, the spreadsheets and numbers that dominate our customer experience conversations risk becoming somewhat divorced from the end-users they represent.
Abstract scores only tell us so much about our customers’ values, their beliefs, their versions of what a relationship with our brands should look like.
‘If you’re only leaning on data, you’re not taking into account human condition, experiences and feedback,’ said Denver-based organisational psychologist Melissa Doman.
New perspectives and a shared commitment to twinning first-party data with more innovative partnerships will get brand marketers closer to the customer stories that end-users would recognise, buy into and participate in.
Referral is a rare marketing discipline, carried out in the culture and language of consumers – normal people who don’t share the marketer’s vocabulary of ‘funnels’, ‘touchpoints’ and ‘conversions’.
Our businesses are drowning in third-party data (though perhaps not for much longer). Yet how much does this data really tell us about our customers? There’s an unfilled gap between the reported customer insight that much of our data promises and the legitimacy of customer participation. It’s a gap similar to that between reading sheet music and being in a live audience while witnessing a spine-tingling performance.
After thousands of years of retail, your customers still sell your stuff better than you do, without even trying. Now we have the expertise to understand the psychology of referral and the science to drive, track and measure it, you can give your best customers the power to grow your companies.
Visit mention-me.com to see how leading brands use Referral Engineering to acquire new, high-value customers while energising existing ones.
By Mark Choueke, Marketing Director at Mention Me