How to unlock more revenue without more resource
The pandemic has significantly accelerated the shift to e-commerce and there’s no going back. Instead of going in-store, shoppers are going online. Often, they’re discovering new brands that can fulfil their needs when their traditional go-tos are struggling.
While that may have presented good news for your customer acquisition targets last year it also presents a challenge. How can you sustain this growth, throughout 2021 and beyond?
If you fall into this category, you’ve likely already pushed your existing marketing channels to the limit. You’ve run pay-per-click (PPC) campaigns. You’ve hosted targeted ads on social media. You’ve sent personalised email campaigns.
But hitting your growth targets is still a challenge.
The good news is there’s a marketing channel out there that could turn it all around. A channel that will not only generate revenue now, but a steady stream of revenue long into the future. That’ll cement – and boost – your market share for good.
It’s called referral marketing.
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Imagine if every new customer you acquired introduced their best friend to your business. Chances are, they’d match your target customer profile and like your brand before even placing their first order.
That’s the magic of referral. Here’s how it can drive sustainable growth for your business, throughout the pandemic and beyond.
Spread the word
People naturally tell others about the brands they love. That’s even truer in the current situation.
Referrals have increased even more than online orders for a number of sectors. In the first lockdown, online orders for gifting brands, for example, were up 245% year-on-year. Referrals were up 650%.
Chances are, people are talking about your brand right now. But are you making the most of these conversations? Do you even know they’re happening?
Only businesses with referral programmes can track customer advocacy and its impact on their bottom line. Better yet, they can optimise these word-of-mouth recommendations. By experimenting with different incentives, sharing methods and messaging, referral can become your most cost-effective marketing channel. (You can find tips on experimenting with referral in this guide.)
While it’s understandable that the shrinking economy has prompted some brands to resort to short-term tactics like endless sales, this approach isn’t sustainable. Any spike in acquisition rates will be short-lived, as customers buy once then search for more good deals elsewhere.
In contrast, referral is a sustainable means of acquiring customers likely to be a good fit for your brand.
Because referred customers don’t just spend more. They grow your customer base.
Referred customers are three times more likely to bring in new customers than any other shopper.
Better yet, the customers they introduce spend on average 25% more on their first order, repeat purchase more, and are three times more likely to refer their friends.
Their friends are also likely to spend more, order more and refer others.
You get the picture.
Unlike other marketing channels with a limit on what they can achieve, referral grows as you do. So you can keep acquiring more and more customers who love your brand.
Nurture customer advocacy
Not every customer will be ready to refer, of course. Some first-time customers, for example, might want to receive your product before they tell others about it.
Experiment with other ways of nurturing these customers throughout their lifecycle to become brand advocates. You could, for example, serve highly targeted content driving the next best action. That could mean driving customer segments to leave a review, follow you on social media, or sign up to your newsletter.
By taking this approach, LoveCrafts discovered that showing customers a welcome message increased revenue by 32%, while a discount message increased revenue by 46%. Imagine the impact of applying this finding to every marketing campaign.
Looking beyond the next sale means you can build brand love that drives significant long-term value. This is even more important in the current climate. Consumers are spending more carefully and scrutinising the brands they shop with. 70% of consumers believe brand trust is more important now than in the past.
As Hannah Stacey, director of brand at Ometria, explained: "All the evidence points to the fact that the single most important factor for determining a brand’s long-term success going forward is how well they are able to build and maintain a relationship with their customer – in short, CRM teams are going to become the heroes of the story."
After all, when we’re spending our hard-earned cash – whether that’s on a snack, a sweatshirt or a sofa – we’re buying with our heads and our hearts.
Sure, that sweatshirt will keep you warm, but how will buying from that brand make you feel? How will it make you look to others? These are all thoughts darting around our subconscious minds when adding to basket. (The same goes for referring brands – you can read more about that in our psychology of referral whitepaper.)
Use this to your advantage. Promote what you stand for and customers that buy into this will actively tell others about your brand. 29% of consumers are more likely to recommend brands that share their values and ethics. And the pandemic has made this awareness of the brands we shop with even more important.
Building brand love takes time and effort, but it’s well worth the investment.
Customers who love your brand are more likely to:
- Spend more, with reduced sensitivity to premium pricing
- Repeat purchase
- Recommend your brand to others
Grow your business (in the pandemic and beyond)
Despite how things feel right now, this pandemic won’t last forever.
Eventually, normality will resume. Consumers will again choose between endless shopping options, both online and off. Put the right strategies and tools in place to make sure they choose you.
Once things are back to normal, your referral programme will help you to keep learning about your customers. It'll equip you with insights that mean you can keep nurturing brand advocacy that drives long-term revenue.
As you prepare to sustain your business growth in the months and years ahead, turn to your existing customers. Engage with them in ways that build meaningful relationships, and you can create a virtuous cycle of growth that sustains your market share, long into the future.
Abi Wendt is client director at Mention Me.
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