Have you tried referral marketing? Marketing is the key to success for every business. If you are not promoting your business, it might not make any progress. Sometimes you may even be doing enough marketing but getting little or no results at a high cost.
A lot of businesses are struggling to win customers. Some even have good products but not enough customers to patronize them. If you are a startup, you probably experiences challenges in attracting more customers to your business.
However, the real problem with marketing is not the failure of marketing – but wrong marketing; especially if you have limited marketing funds. Your best marketing should be the one that wins you more customers at the least possible cost – or no cost at all.
So, what you need is a marketing strategy that’s both cost effective and result oriented. Let’s even look at one model that has proven to be the best solution for cost-free marketing.
✅ Understanding Referral Marketing for Beginners
Marketing for beginners can be complicated. They try to do so many different things that are either unproductive or causing them to struggle to sell. They end up wasting money and time. One of the key reasons many organizations are successful in marketing is because they can afford to hire the best marketers.
But for a small business, you probably can’t afford that. This lack on your part is what’s killing your business and not really the bad economy. The problem with the economy can mean low sales but not poor sales.
No matter how bad an economy is, people will always buy things. What changes is the strength of their purchasing power – or the more people that can afford your product or service frequently.
If your business is having poor sales you are about to get closed. It’s all a matter of time before you shut down. However, if it’s a problem of low sales, it’s a result of economic situation and you can sustain your business with low sales by cutting down on costs of transaction.
Low sales means you have the existing customer and the market to make more sales if the economic situations are alright. While poor sales shows you are doing everything wrong and haven’t gotten your marketing right. That’s to mean, you aren’t reaching the right customers for your business.
✅ Cost of Customer Acquisition
Another major problem with marketing is CAC. What’s your customer acquisition cost (CAC)? If you have been in retail business for a while you should be able to know how much it cost for you to win over a customer to your business. That’s if you have been using advertising.
CAC is the cost expended in the process of gaining new customers for your business. To get this calculation, divide your total marketing cost by the number of customers you have gained through marketing. The result is the cost of one customer in your business.
With this number in your head, how do you reduce CAC in your business? If cost of customer acquisition is high, it will increase the cost of your product, which may affect how many customers that can afford to patronize your business.
So, to gain more customers, your CAC must be the lowest possible. The less you can spend to win a customer the better.
✅ Why Marketing Is Challenging?
A lot of people are afraid of starting a business because they don’t know how to carry out effective marketing. And those who have businesses are constantly struggling over poor marketing results.
It’s either they are not doing it well, or the amount of capital they are investing in their marketing is not enough to create the kind of impact that would drive their marketing success.
Marketing requires huge funds, especially for startups. If well known brands still spend hundreds of millions in marketing annually, then a startup can’t survive without effective marketing.
You either market or die. But if you can’t afford to let your business die, I suggest you learn how to implement the best kind of marketing that works.
Here are key reasons why marketing is challenging:
- If you are not a good marketer
- If you don’t have the right marketing fund
- If you don’t know the right marketing strategy for your business
- If you don’t know the best platform to market your business
✅ What’s Referral Marketing?
Referral means reference – and it’s a method of recommending someone to another person or business. It’s another way of using networking. By referencing or recommending a business, or its products and services to others you are doing referral marketing.
However, people often do this for free, without any payments for their referral efforts. And people can do it even without anyone asking them. The news media has been doing Referral for businesses as they publish news relating to those business.
As a business there are several ways you can tap into referral marketing. To tap into Referral marketing you will need to define the following:
- Who can refer my business?
- How do I get them to refer my business?
- Who are those in their network?
- What’s the size of their network?
- How much would it cost me per referral?
Starting a referral marketing could change the way you keep winning new customers to your business. It also changes the way you spend on advertising.
✅ How Referral Marketing Works
You haven’t understood Referral marketing until you understand how it really works. It actually takes several shades of marketing models. In Referral marketing you have network marketing, direct marketing, word of mouth marketing, content marketing, and viral marketing.
When you use referral marketing you are unleashing one of the most powerful marketing combination in one. It’s a marketing tool box that’s all encompassing. You cannot control how or what marketing mix your referrers might want to use in achieving their targets.
To refer customers, a referrer would require his network, engage with them directly or indirectly, share the message as content (audio, video, or images), and it goes from one person to another as the referrer reaches more people and those reached might also join the referral to refer others as well.
This kind of chain reaction is what makes referral marketing effective. You can have a thousand, hundreds of thousands, or even millions of self engaged marketers promoting and selling your business at no cost to you.
✅ Why Referral Marketing Works
The biggest advantage of Referral marketing is that you pay only when a customer successful patronized your business. That completely eliminates the need for marketing funds. And you can start Referral marketing anytime without delay.
Here are inexhaustible lists of reasons why Referral marketing always works:
- You can hire the best marketers at no cost to you
- No upfront marketing funds required
- Anyone anywhere can join your marketing team
- There’s no limit to how many marketers you can hire
- Your customers are the ones paying the cost of marketing to them
In Referral marketing it’s a do it for me marketing. You don’t have to be a good marketer yourself. The real power of Referral marketing is multiplying your marketing efforts using large number of people to reach those around them. And each customer gets to pay for the marketing that helped them purchase your product.
✅ How to Use Referral Marketing
The good news about Referral marketing is that anyone can use it. It doesn’t matter how small, medium or large an organization is. The power of Referral can work for any size of business.
How to make referral work for you is the reason for this post. This post makes it possible for any business to master and use the art of referral marketing to its success.
To achieve this some vital aspects of Referral marketing system must be applied. A referral system requires a management software or website to help it coordinate the work of the referrers – to identify their marketing efforts and reward each marketer from the sales they have brought to your business.
That’s where most SMEs find it challenging to implore Referral marketing to grow their profits. What you need is explained here.
You will need a system that helps you:
- Constantly Find and hire motivated marketers faster
- Auto Manage their marketing efforts
- Auto rewards their marketing efforts
- Give new customers opportunity to become referral marketers
- And repeat the process over time
If all of these processes are automated, any business can plug into such system and explore referral marketing at its best.
✅ Cost of Using Referral Marketing
If you properly analyze referral marketing, it actually cost nothing. Yes, I mean zero cost in marketing. The best way to understand Referral marketing cost is to review how referral marketing works.
No company in the world pays marketing cost. However, the difference when it comes to referral marketing is that you don’t even have to worry about marketing cost. If you are using other marketing models, you will need to make provision for marketing cost and recoup later from sales.
But Referral marketing doesn’t need marketing cost and won’t require to recoup marketing cost. You simply add your defined referral bonuses (or the marketing cost of the product and as customers order the products from your referral links they are paying both for the product and the cost of marketing it to them.
However, this cost is little because each customer pays just a fraction of the cost, depending on your marketing cost. So these are costs you have to factor in when planning your referral marketing model.
✅ Your Referral Marketing Plan
Even though Referral marketing is the most effective marketing there’s in the world, it’s been very difficult for small businesses, and even large businesses to implement effectively. That’s the reason many businesses, especially SMEs have ignored it over the years.
It requires a system to help you both in recruiting the referrers, managing and tracking their successful referral activities, paying out bonuses, and continuously implement this strategy over and over non stop.
This kind of plan requires a dedicated platform, built at a high cost, requiring continuous management, and payment system that is cost effective and reduces frequent support services. Or you can use a third party platform and pay transaction cost for using then platform.
The biggest advantage of Referral marketing is being able to measure your results. You can accurately estimate how much markup to expend on marketing and what the outcomes would be.
You also enjoy the advantage of only paying for customers already won and not just customers reached. So, each customer gained through referral marketing completed the required expectations.
As a business, using referral marketing is one way of having never ending marketing plan. You never get to stop your marketing at anytime or for any reason. Marketing funds can never be a hindrance – because you are paying only when the referral efforts results to confirmed sales.