October 10, 2022
How to Boost Your Bottom Line with Referral Marketing

Referral marketing has a complex setup process. But with Influence.io. incredible solution, manage and test your referral strategy with ease of mind. Brands with loyalty rewards, help customers trust it far more than any form of brand marketing, boosting your reputation and assisting further with a cost-effective acquisition.

Cutting costs and increasing revenue. It’s the magic formula for business growth. And in the world of eCommerce there’s one strategy that ticks both boxes - referral marketing. It’s the cost effective way to grow your customer base, ramp up its value and ultimately boost your bottom line.

So what exactly is referral marketing? In a nutshell, it’s incentivised word of mouth. 

Existing customers are encouraged to recommend your brand, with a reward given if the referred party converts. That reward can be offered to the referrer alone, or as is more common in eCommerce, to both parties.

And since 84% of us trust recommendations from family and friends more than any other type of marketing, it’s a highly effective way to engage a new audience. It also brings multiple growth driving benefits. 

The Benefits of Referral Marketing

1. Lower Acquisition Costs

Compared to paid advertising, referral marketing is a relatively low cost way to acquire new customers, and with a better performance rate to boot. In fact, referred leads have a 30% higher conversion rate than leads generated through other marketing channels.

2. Increase Lifetime Value and Retention

Not only do they drive down acquisition costs, referrals also lead to longer, higher value relationships. The average LTV of a referred customer is 16% higher and their retention rate 37% higher than a non-referred customer. 

3. Extends Your Market Reach

New privacy regulations and a general desire among consumers to take control of their data is restricting the reach of paid advertising. These restrictions do not exist with referral marketing. A single brand advocate can connect you with a large group of people with a common, high intent interest in your products.

4. Promotes Brand Authenticity 

To thrive in today’s eCommerce landscape it’s not enough to just offer a great product and great customer service. Customers want an experience, and they want it to be authentic. Referrals contribute by driving conversations around your brand and creating a sense of community.

5. Gives You Valuable Data

If you’re smart with your referral campaigns, you can use them to collect valuable zero-party data. This is the data a customer offers freely, usually in return for some sort of benefit. At a basic level you might collect emails and grow your subscriber list. With a more advanced approach you can build detailed customer profiles that allow for personalization.

How to Set Up a Referral Campaign

Given the extent and financial value of its benefits, you’d expect referral marketing to have a complex set up process. But it’s incredibly simple with a solution like Influence.io.

All you really need to do is decide on your rewards and communicate your campaign.

Referral rewards: first you’ll need to decide whether to reward the existing customer, the new customer, or both. In eCommerce, campaigns with mutual benefits usually work best.

The reward you give could be a cash amount or percentage discount on their next purchase, other perks like free shipping, or if you’re running a loyalty program, points added to their balance.

Consider your customer base and the incentive they’d find most appealing. If you’re going for a reward of monetary value, our advice is to set this at 20% of your AOV.

Communicate your campaign: with your referral system in place, you need to let your customers know about it. 

To advertise the campaign on site, you can choose between our full page or floating widget. These offer no-code installation and integrate seamlessly with Shopify and Shopify Plus.

Learn more about setting up and advertising a referral campaign with our support guide to getting started with Influence.io. To boost your bottom line with referral marketing, check out our affordable price plans or contact our loyalty experts for more information on our scalable solution.

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