What are the benefits of referral marketing

Referral Marketing: Why It's So Important

When it comes to customer recommendations and word of mouth, companies shouldn't leave anything to chance, but rather actively manage them. In our interview, Anne M. Schüller explains why this is so and how it can be implemented in practice.

Companies spend a lot of money on advertising, and recommendation marketing is not necessarily the top priority. Why do you think that should change?

Schüller: There are three reasons for this:

1. We live in a new business world. Today everything is "like" or "dislike". Companies increasingly have to show that they are among the really good guys. And it is most credible when this is not claimed by the provider himself, but is witnessed by enthusiastic users. Such referrers have a trust bonus. They arouse curiosity and create a buying mood. This significantly reduces resistance to buying - and saying yes is easy.

2. Due to the tightening of data protection laws, it is becoming more and more difficult to address interested parties "coldly". A recommender, on the other hand, not only creates warmth, but also a perfect entrée. And, as relevant studies show, more and more people are following their advice almost blindly. Because recommendations are based on experience. And they separate the wheat from the chaff. They make our life easy and give us time. And they reduce the risk of disappointment.

3. Much of the "old" marketing no longer works. Consumers no longer believe the siren song of classic glossy brochures and the selfish advertising of providers in the market. The recommendations, hints and tips given by enthusiastic users or posted on the web are most effective. They're the number one purchase trigger today.

For all these reasons, referral marketing has to move very far forward in the business plan. If you create attraction with the help of an army of promoters, you no longer need to deal with the weapons of the price war.

Why is it no longer enough today to rely on the simple word of mouth of satisfied customers?

Schüller: Even if a customer is absolutely satisfied, he does not automatically think about telling this to the whole world. It means to "vaccinate" him a little. With the help of suitable means, a large number of positive recommendations can be stimulated in a targeted manner in order to generate new customer business and permanently increasing sales. Overall, recommendation marketing must therefore be systematically built up in order to free the recommendation from chance.

Anne M. Schüller is a management consultant and loyalty marketing expert. For more than 20 years she has worked in leading sales and marketing positions in international service companies and has received several awards. The graduate in business administration and nine-time book and bestselling author is one of the most sought-after keynote speakers in German-speaking countries. She also works as a business trainer and teaches at several universities.

Now there are numerous companies that are trying to present themselves positively on social media platforms such as Facebook & Co. and also to win new customers. But only a few are really successful. What are the most common / biggest mistakes made in this area?

Schüller: The most common mistake is that there is a lack of a basic understanding of why people recommend. The reasons for this can be very different. Word of mouth and willingness to recommend arise especially when

  • if you can use it to express your personality
  • if you can nurture coolness and a need for recognition through it
  • when you can contribute to the well-being of others
  • if you can distinguish yourself through insider knowledge or as a pioneer
  • when you can feel like you belong and be part of a community
  • if you were involved in the creation process
  • when something entertaining or sensational is held ready
  • when something completely new or very exclusive is offered
  • when something extremely useful or highly desirable is offered
  • if there is something to win or to play with.

In a nutshell: people not only want money and fun, they also want to experience themselves as 'important' - and thus nourish their status. Or they want to do something meaningful. And leave traces. And be considered a valued member of a community. Anyone who helps them to do so will be rewarded with valuable word of mouth.

What are the advantages of professional recommendation marketing for companies compared to conventional advertising?

Schüller: This question is easy to answer: Firstly, recommendations are much more effective - and secondly, they are usually almost free of charge. In this respect, recommendation marketing is sales boosting - and the silver bullet when it comes to acquiring new customers.

Is this form of marketing only suitable for large companies or can smaller companies also work with this instrument?

Schüller: Smaller companies in particular can benefit quickly and, above all, in the long term from the effects of referral marketing. Large companies are often much too slow to use the tools of modern recommendation marketing in a targeted manner. Management there needs measurable immediate results every three months. And their measuring instruments are not even geared towards the success of recommendations.

Do you have a special tip for our readers in this regard?

Schüller: Some companies measure willingness to recommend, but that's only half the battle. Willingness to make recommendations is nice and nice, but action has to be followed by action. Only when an effective recommendation is made can this lead to new customers. And the recommender has to be so convincing that the recipients actually come and buy.

To find out, the recommendation rate is determined. It is the ultimate business metric. Because it says how many customers a company has gained due to recommendation. And that is - besides reputation and repurchase - probably the most desirable goal. Because in the end, only those who are actually recommended will be recommended. (masi)

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