Why and how referral marketing is exceeding paid search and paid social

For those already giving their customers a participating role in their brand’s success, it’s the last marketing channel they’d switch off.

This was literally true for Lindsay Newell, head of UK marketing at Bloom & Wild, one of Europe’s largest online florists. She knew the customer lifetime value the business derived from referral marketing exceeded that of both paid search and paid social.

So much confidence did the business have in its referral marketing program as a growth driver that when it was forced to ‘turn off’ marketing in May 2020 after the Covid-19 pandemic prompted the first lockdown, referral marketing was the only channel it left running.

The florist grew its UK referrals by 800%, despite promoting it at fewer points in the customer journey than previously.

Newell, meanwhile, says her team tests constantly to learn how various markets and customer cohorts respond differently to messaging and incentives through referral campaigns.

Such success stories were once rare for a marketing channel that is now fast growing into its own skin and becoming comfortable with a more pivotal, strategic status in the marketing stack.

Traditional household brands and established retailers are now joining pure play online businesses in approaching customer acquisition and experience with an ‘advocacy-first’ mindset.

This shift toward earned growth isn’t a replacement for anything. Comprehensive Referral Engineering® programs act as a valuable addition to, and amplifier of, existing marketing strategies.

Menswear brand Spoke put its first-party referral data to work across its paid social channels to target consumers that looked like the retailer’s most valuable referrers. The experiment saw a 65% increase in conversion rates, a 30% jump in ‘return on ad spend’ and a 12% reduction in the cost of acquiring new customers.

Crucially, though, none of the above speaks to the single most important opportunity addressed by a move toward earned growth.

That is that advocacy – and importantly the level of participation it encourages in those we sell to – is slowly shifting the emphasis of marketing from the brand to the customer.

Referral done properly is data-driven – but it’s customer-led.

Amplified in the past two years by the forced loss of so many day-to-day freedoms we once took for granted, consumers are hungry for autonomy and self-determination. They want a more direct role in the way they shop for (and engage with) the products and services with which they choose to identify.

Consumers want to participate; to interact, share and recommend. Your buyers’ e-commerce journeys don’t begin on screens. Increasingly they start with offline conversations; not about your brand or product, but about their interests, their passions and their needs.

What does that mean for your brand? Well, it means your best marketing in 2022 will likely happen in the most ‘un-marketing’ moments.

It means your effective media channels will include everyday occasions in your customers’ lives: chats between parents at the school gates; picnics and pub nights; weekend walks and barbecues with friends; Sunday roasts with the family.

Customer participation will become as crucial in delivering experiences that match your buyers’ expectations as personalization has been in recent years.

For while automation driven by big data has transformed customer experience capability, the spreadsheets and numbers that dominate our customer experience conversations risk becoming somewhat divorced from the end users they represent.

Abstract scores only tell us so much about our customers’ values, beliefs and versions of what a relationship with our brands should look like.

New perspectives and a shared commitment to twinning comfortably volunteered first- and zero-party data with more innovative partnerships will get brand marketers closer to the customer stories that end users would recognize, buy into and participate in.

Referral is a rare marketing discipline, carried out in the cultural mode and language of consumers – normal people who don’t share the marketer’s vocabulary of ‘funnels,’ ‘touchpoints’ and ‘conversions.’

Our businesses are drowning in third-party data (though perhaps not for much longer). Yet how much does this data really tell us about our customers? There’s an unfilled gap between the reported customer insight that much of our data promises, and the legitimacy – the purity – of customer participation. It’s a gap similar to that between reading sheet music and being in a live audience while witnessing a spine-tingling performance.

After thousands of years of retail, your customers still sell your stuff better than you do, without even trying. Now we have the expertise to understand the psychology of referral and the science to drive, track and measure it, you can give your best customers the power to grow your companies.

Click here to see how leading brands use Referral Engineering® to acquire high-value customers while energizing existing ones.