What do Pirate Metrics, Seth Godin or any other web god out there have in common? They recommend leveraging the power of referrals. In this section we help you understand why you would want to launch a customer referral program.
Welcome to another session on “Customer Referral Programs”, today we’re going to talk about why would I launch a customer referral program. Once again, it might seem pretty obvious, but it’s always good to go over. So, one of the most obvious reasons you want to start a customer referral program, is because you’re a pirate. So it’s not actually because you’re a pirate, but because of pirate metrics.
So the AARRR in pirate metrics, for those who don’t know, Acquisition, Activation, Retention, Referral, Revenue. And, if you prescribe to the idea of pirate metrics, referral is right in the name there, so of course you must be looking at the idea of doing customer referral programs. And just to point out, this is customer acquisition, customer acquisition, customer retention, this is not talking about any other forms of referrals, this is just talking about a customer referral.
But perhaps, you’re just a Godinite, maybe you just want to do a customer referral program because Seth Godin talks about doing it. Also a good choice, or maybe you want to do a customer referral program, because anyone else talking about marketing on the web talks about the value of launching a customer referral program, or perhaps, you’ve thought about it a little bit more, and the real reason you want to launch a customer referral program is because it’s still one of the most cost effective ways to grow your business.
Power of Referral Programs
When one customer makes a referral to another, they’re doing something far more powerful than any celebrity can do, they’re doing something far more powerful than any billboard can do, or any pay-per-click ad, they are literally taking the trust they have between them and a friend, and they are associating that, they’re lending it to your brand for a moment. So if you imagine with me, if you go into the office on Monday, and you tell a friend, “Hey, I saw this movie, it was great, you should go see it.” Well, what happens if that movie sucks? You just burned your credit with that friend. They don’t want to listen to your reviews for movies any more, they may think of you as maybe a little more annoying, but, because we know that concern is there, we only recommend movies that people are actually going to like, and the same thing happens when we refer products.
Why we make referrals
When I refer a product to someone that I know, I want to be helpful, I want to gain social credit, and therefore that person knows they can trust me, because I’m making a referral and I understand the consequences.So on top of just being more effective, customer referral programs also help with their cash flow problems.In earlier sessions, we talked about affiliate and partner programs, and they cost you cash to pay out to these partner, but with most customer referral programs you can actually get away with just simply giving a discount, maybe a credit in the future, or swag, which is valued far higher by the customer than it actually costs you.
All three of these approaches reduce the damage that a partner program or a pay-per-click ad would do to your cash flow.So you might be a pirate, you might be a Godinite, you might be a web marketer, or you might just be really looking for the effective and efficient growth that a customer referral program brings you, either way, that’s why you’re looking at a customer referral program. So, that wraps up our session on why would I launch a customer referral program