Before we answer the question of what we can do better with referral marketing, we need to first understand the present state of the programs. I spent an afternoon reading dozens of articles that have been published over the past few years.
At a broader level, word-of-mouth marketing has many elements, as Amity Kapadia explains:
Referral Marketing: Exactly what it sounds like — a strategy for encouraging passionate customers and advocates to directly refer their network to your business.
Affiliate Marketing: A transaction between a company and an entity where the business receives customers (or leads) in exchange for a financial incentive.
Influencer Marketing: In many ways influencer marketing is a modern take on traditional affiliate marketing. Instead of a network of smaller affiliates driving traffic, however, influencer marketing targets specific people who have large, captive followings.
Partner Marketing: Very simply, partner marketing is a strategy that aims to connect two brands to share one or both brands with the other’s networks. Primarily used in B2B marketing plans, this strategy strives to raise and improve brand awareness amongst similar audiences.
We will focus on referral marketing in this series. There is a good overview of referral marketing from Wikipedia:
Referral marketing is a process to encourage and significantly increase referrals from word of mouth, perhaps the oldest and most trusted marketing strategy. This can be accomplished by encouraging and rewarding customers, and a wide variety of other contacts, to recommend products and services from consumer and B2B brands, both online and offline.
Online referral marketing is the internet-based, or Software as a Service (SaaS) approach, to traditional referral marketing. By tracking customer behavior online through the use of web browser cookies and similar technology, online referral marketing can potentially increase brand awareness, referrals and, ultimately, revenue. Many platforms allow organizations to see their referral marketing return on investment (ROI), and to optimize their campaigns to improve results. Many of the newest systems provide users with the same experience whether they are on a desktop or mobile device. Offline referral marketers sometimes use trackable business cards. Trackable business cards typically contain QR codes linking them to online content for sale while providing a way to track that sale back to the person whose card was scanned.
Online referral marketing focuses on interactions between customers. The Internet is a common channel for referral-based marketing. It delivers abundant outlets for customers to share their opinions, product favourites, and experiences, including the company’s website and through social media such as LinkedIn, Facebook, Twitter, and Google. The marketers can encourage the referring parties by providing pre-scripted messages. Advocates can provide their family members and friends with personalised links including unique referral codes and advertisement information through e-mails, blogs and instant messages. The company can give rewards to advocates when their family members and friends buy through the link.
Tomorrow: Rethinking Referral Marketing (Part 5)