How to grow your business with referral marketing

Jan 12, 2018 by
How to grow your business with referral marketing

In a study undertaken by Google, 74% of consumers have said that word-of-mouth plays a significant role in their buying decisions.

It’s amazing that marketers put so much time and effort into PPC advertising and content marketing, yet they neglect one of the most powerful assets they have: their existing customers. If you have a great product or service and your customers keep coming back, it makes sense to get them to do your marketing for you.

As Richard Lazazzera writes:

Simply put, referral marketing, sometimes also called word-of-mouth marketing, is just people purchasing products based on someone else’s opinion or influence. It’s a powerful marketing channel because people trust the opinions of other people in their lives and people they respect, whether that be family, friends, social media influencers or big stars.”

Here are some steps you can take to leverage the power of referral marketing today.

Go above and beyond expectations

If you’re not aware who your highest value customers are, you should definitely find out. The customers that keep returning to your brand and purchasing from you already have a proven positive impression of you, so they’re ideal for promoting your business.

But before you ask for something from them, it’s strategic to deliver value first. This could be in the form of a discount, a free gift or a personalised thank you letter for their loyalty. When you’ve solidified the relationship, you can then ask if they have any friends or associates who may also benefit from your products and services.

This tactic works wonders for niche ecommerce businesses. Whether your customers are purchasing fishing equipment, mixed martial arts apparel or vegan food you can be they’ll have friends who have similar interests.

Formal incentives

Your best customers will want to promote your services because they like your brand and enjoy recommending something of value to their friends. However, some direct incentivisation can help ensure customers who may be hesitant to do so.

At your checkout, you may wish to offer your customers store credits or loyalty points for recommending a friend to your brand. This is better than a direct cash payment since it encourages them to purchase from you again and strengthens the bond they have with your brand.

Paypal’s legendary referral system helped to drive extreme growth in the brand’s formative years. First, Paypal offered $20 for opening an account and an additional $20 for referring a friend. This was lowered to $10, and then $5, and it was eventually removed, but by that time the brand had grown massively, in thanks partly to this strategy.

Leverage influencers

Instagram on phonePeople give great weight to the opinions of those that they love and admire. For better or worse, in this celebrity culture, those who are respected in their niche have the ability to strongly influence buying decisions.

Instagram is one of the most rapidly growing social media channels, with over 800 million monthly active users. With resources like Ifluenz, you can find Instagram influencers in the niche of your choice – and then pay them a modest fee to advertise your product or service on their page. If you haven’t tried influencer marketing, you might be pleasantly surprised by the ROI compared to other channels.


As with most facets of marketing, the key to winning at referral marketing is to provide value to your audience. Once you’re serving your existing customers excellently, they’ll be more than happy to promote you to their friends if you provide the right opportunity for them to do so.