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Word of mouth marketing is increasingly important as more and more people are becoming wary of advertisements. People turn to their friends and family for recommendations.
How many times have you asked your friends if they have tried a product before purchasing it? Think of how often sleazy marketing techniques have fooled you.
Your customers are your best assets. They’re the ones who will provide social proof for your marketing, and they’re the ones who will vouch for the quality of our products. With that being said, if you play your cards right when it comes to customer experience, your customers can turn into your marketing team.
Having customers as part of your marketing team is extremely effective. Referrals convert at 3-5 times a higher rate than other marketing methods. They are more loyal as well. Referred customers have higher lifetime values, are more loyal and have higher margins each year that other customers.
Customers also trust their friend’s recommendations over advertisements. According to Nielsen, 92% of consumers trust recommendations from friends compared to 33% trusting online ads.
In a hurry? Jump into a specific section:
- The importance of customer retention
- How to email your customers asking for referrals
- How to set up the right referral structure
- How to motivate customers to generate brand-related content
- Social media contest case study: McCormick’s online cookoff
- How to set up your own online contests
The importance of customer retention
It is more expensive to take a customer through the entire customer acquisition and sales funnel process than it is to keep loyal customers.
“Acquiring a new customer is between 5 to 25 timesmore expensive than retaining an existing one.”
Loyal customers also will spend more money and have a longer life cycle than brand new customers. Therefore, focusing in on customer retention is a great investment of your time and money.
Repeat customers require less advertising to get them back to your store. It may be as simple as sending an email and they will be enticed to come back for their favorite products.
Remember, loyal customers already know, like and trust you. They don’t have to be convinced of your product’s quality.
According to research by Frederick Reichheld of Bain and Company, increasing customer retention rates by 5% has the potential to increase profits by 25% to 95%.
Once customers have experience with your brand and become loyal, they will often advocate for you. They will start to share their customer journey with their friends and family.
How to email your customers asking for referrals
When sending emails to your customers asking for referrals, you want to make sure that you get a few things right. Otherwise, the email may be ignored and deleted without even being read. No one wants that.
1. Create a great subject line
First and foremost, focus on creating a great subject line. Answer their burning question of “What’s in it for me?” in the subject line. This will increase your open rate.
- Be clear, not clever. Get to the point quickly
- Be personal. Speak directly to your customers as though they’re friends.
2. Keep it simple
Keep the email simple with an impossible to ignore the call to action. No one has time for lengthy explanations of why to give referrals. They likely won’t read them either. But make sure that your call to action is clear and easy to understand.
“Give $20, Get $20!”
This works well. Simple and easy to understand.
3. Emphasize the rewards
Make sure that you emphasize the motivation for referring the friends. This can be done with a picture as we see in the Oola Tea example.
The photo emphasizes the benefit of both the friend and the advocate. Oola Tea entices their customers to create referrals by offering them $10 when their friends make a purchase. This turns their loyal customers into part of their marketing team.
Referral programs are most effective when there is a benefit for the referrer and the friend.
4. Include additional conditions
Finally, you’ll want to include any additional details or steps for the reader to take. For example, your friend has to make a purchase for you to receive the referral reward.
Email marketing is extremely helpful when it comes to referral marketing. Often people are very busy and need multiple reminders before making a referral. An email marketing campaign focused on triggering referrals can gently remind your customers at regular intervals that they’ll benefit from referring friends.
How to set up the right referral structure
There is no perfect referral structure for every business. Figuring out the right referral structure will take some time and getting to know your customers. Discover what motivates them.
There are some best practices for setting up referral rewards. For example, if the items that you sell are usually one time purchases, it is better to reward the referrers with cash. Some examples would be mattresses or computers.
Follow these steps as you set up your referral rewards:
- It is best to offer at least a ten percent discount as a bonus. Less than that may not motivate anyone to refer their friends and family.
- Custom rewards can also be given for referrals and should be used if that is what your customers respond to best.
- Test out different rewards.
- Remind customers regularly to refer their friends.
How to motivate customers to generate brand-related content
Customers will trust their peers 83 percent more than they trust branded advertisements. Therefore, it is essential that you focus on getting their peers talking about your brand.
This is actually not as difficult as it may sound. Sharing purchases on social media is becoming commonplace. Most people have smartphones with cameras to take pictures.
Many people take to social media and ask their friends for recommendations before making a purchase.
What can you do to inspire your customers to create user-generated content?
- Start sharing some examples and encourage them in social media posts to do the same.
- Create a social media contest for your customers.
- Create catchy hashtags for customers to discover your posts.
- Include brand images with your photos.
- Give away loyalty points for customers who create content for you.
Social media contest case study: McCormick’s online cookoff
A good example is when McCormick wanted to launch a new line of Filipino spices. They knew they were entering a crowded market. Through research, they identified an untapped market of Filipino-Canadians.
(Image source: Life on Manitoulin)
McCormick targeted the younger generation of Filipinos with a technologically savvy online cook-off contest. They encouraged customers to share their best Filipino recipes with photos.
Contestants submitted recipes and photos that were shared in an online gallery, and viewers voted for their favorites. This created a nice social media buzz around McCormick’s new Filipino spice blends.
(Image source: Pinterest)
The campaign created over 25,000 views and 20,000 votes within 3 months. It increased McCormick’s sales by 37 percent from the previous year.
When brands inspire their customers to create content and form online communities, they can see an average of 20 percent more visits to their sites according to Wendell Landsford in his Marketingland article. On average, they’ll receive 25 percent more email subscribers and a 50% lift in social engagements.
How to set up your own online contests
Setting up an online contest is easier than you might think, and here’s a step-by-step guide to prove it.
1. Choose a contest software
First of all, select a software to run the contest. Strutta and Rafflecopter allow you to run online contests with minimal effort. Contest software can facilitate the collection of entries and will integrate with Facebook and other social networks. They can also randomly select winners for you.
2. Pick a reward or prize
You’ll want to discover what motivates your customers. There are a few ways to do this:
- Create an online poll and share it on social media. You can use Facebook Polls.
- Select your most popular product to give away.
- Give away a gift card or cash prize.
3. Set the rules
After you have a giveaway for the contest, you need to create the rules. When you set up your online contest, ensure that it is engaging. Some great rules for the contest to ensure engagement could be:
- Share a photo of yourself with the product.
- Create a video contest.
- Like the contest page.
- Share the contest with your friends and family.
Make sure you read up on the rules for contests. Each social media site has different rules and you don’t want to have your contest shut down because you didn’t follow them.
- Facebook contest rules
- Twitter contest rules
- Instagram contest rules
- Pinterest contest rules
4. Choose a winner
Finally, select a winner. There are a number of different ways to determine winners of online contests.
- Use a survey and have people vote on the best photo.
- Randomly select the photo.
- Select the post with the most engagement.
5. Publicize the results
Announce the winner online. Make sure that you share the announcement on all the social media platforms. Thank everyone who entered the contest.
When the contest is over, run analytics and determine if you met your goals. Did you generate buzz? What worked well? What didn’t work? Where can you improve next time?
Engaging contests make your brand more fun and exciting. People will come back, again and again, to see what type of content their friends created.
It’s time to turn customers into brand ambassadors
Customer acquisition is one thing, but customer retention, and better yet, customer loyalty, is a whole new level of success.
Contests, in particular, are a great way to bolster engagement and customer satisfaction, both of which instill brand loyalty. Similarly, referrals are a great way to spread the love and build a marketing team made of your customers.
Finally, encouraging user-generated will help your customers become more engaged with your brand, leading to further contest participation and more referrals.