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You don’t need a high profile like Amazon or Uber to benefit from referral marketing as even a small business can not only benefit from a referral program but attract high-quality clients at a much lower cost than the money spent on ads by some of the mega retailers.
A referral program for small businesses is one of the most effective ways to convert leads into an increased customer base through word of mouth about your brand.
People trust recommendations from known sources more than anything else. Yes, they do read reviews online but are more inclined to believe someone they know rather than trust a complete stranger. This is where the referral program streamlines the entire e-Commerce process and work so well for small businesses.
A referral program offers a great way to turn your customers into brand advocates and rewarding them for being your most powerful word of mouth marketing tool. It only asks customers to refer a friend or family member who are most likely to trust their opinion. This can sky-rocket sales and build long-lasting customer relationships.
Benefits for e-commerce businesses
There are myriad of ways in which a referral program can be good for your online business:
- Increases customer base: When existing customers share your brand with their near ones, it creates a large audience immediately.
- Builds awareness through word of mouth: if one hears about a brand from a trustworthy source then the trust sticks, which create a ripple effect and spreads the word effectively.
- Grows customer retention: Referral programs are not just about attracting new customers, but retaining the old ones as well. By rewarding old customers for referrals, you show them that their loyalty is valued.
- Enhances brand credibility and trust: When a loyal customer vouches for a particular brand, it boosts credibility instantly. People trust recommendations from peers more than a traditional ad. This enhances the reputation of your brand and makes it easy for the new customer to shop.
- Referral programs are cost-effective: While ads can be very expensive, a referral program is a great budget friendly alternative. Not only that, you are investing only on loyal customers and rewarding them for doing the marketing for you.
- Greater customer engagement: Referral programs offer a fun way for a customer to stay connected with your brand for which you need to give incentives to get other people involved.
- Works well with social media: Your loyal customers can easily reach out to friends and family members and share the referral codes and links over social media with just a click. This also boosts the brand image online and tap into all your customer’s networks.
- They are easy to start: The best part of referral programs is that they are super easy to setup. There are many online platforms that handle all the configuration for you, right from tracking rewards to creating a unique referral link which allows you to get your business running quickly.
Finally, choose a referral program that aligns with your business model, whether for existing or new customers. Decide on who gets the rewards, when to give the rewards and what the reward value should be to make the program not only enticing but profit making too.
Reviewed and edited by Albert Fang.
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Article Title: Why Referral Programs Work for Small Businesses
https://fangwallet.com/2024/12/05/why-referral-programs-work-for-small-businesses/The FangWallet Promise
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