How a Referral Network Can Strengthen Sales and Loyalty

How a Referral Network Can Strengthen Sales and Loyalty

It's tough for new businesses to acquire enough clientele or traffic to break even. But even for established e-commerce brands, keeping a customer base loyal over the long-term can be a real challenge. Referral networks offer some of the best ways to cultivate a consistent and loyal customer base  - vital in today's uncertain market. Let's take a look at how a referral network can help to strengthen sales and loyalty for your e-commerce brand.

How do referral networks help your business?

A strong referral network can help your business in several key ways:

  • It draws new people to your business. If your business is referred to a new customer by a friend or family member, they are much more likely to make an initial purchase.
  • It keeps your customers loyal for longer. Customer turnover and churn are always something to keep in mind, but a referral network creates a sense of community and will help people stick around.
  • It prevents your products or services from sinking due to a few negative reviews. No matter how great your product is, a few lackluster reviews are difficult to avoid entirely, and highlighting positive ones helps you control the narrative.

In short, referral networks help your business succeed in both the short and long terms. If your other marketing strategies haven't worked so far, referral networks might offer you a better marketing option.

Do referrals really matter?

Put simply, yes. Product quality and customer service certainly matter for e-commerce. So does a positive user experience and a seamless checkout process with invoicing software that comes with crucial features like payment reminders and customisable templates. But at its core, a referral network provides you with something that almost nothing else can: free word-of-mouth marketing.

Positive word-of-mouth is hugely important for marketing. Not only can it boost your sales and improve your customer relationships, but it'll also bring new customers to your e-commerce business. Many customers don't make a purchase if they read even a single negative review. By building up referrals, you'll get ahead of this potential risk factor and solidify your positive brand image.

How to build a strong referral network from scratch

Fortunately, even if your e-commerce business is very young, you can build a referral network by practicing a few strategic marketing tactics.

Ask for referrals

For starters, don't be afraid to simply ask your customers for referrals. Customers who are pleased with your service or product will usually be more than happy to recommend your business to their friends and family members. This is doubly true if your business has some sort of social component. If you own a restaurant or a bar, for example, your business may be able to rely almost entirely on personal referrals you ask for from your current customers.

Start a rewards program

Rewards programs can be very effective at earning new referrals quickly. A rewards program usually looks something like this:

  • You offer a rewards bonus to your customers, for example, if they get someone to sign up for your mailing list as part of your email marketing campaigns, or if their referral leads someone to make a purchase.
  • The reward is something basic, like £5 off of their next purchase.
  • Even better, some rewards programs provide extra rewards as the customer makes additional referrals.

Luckily, there are lots of referral marketing tools you can use to jumpstart your rewards programs with minimal hassle. Obviously, you can't pay customers to give you a good review on Google My Business or similar sites, but organic (unpaid) reviews are fine and to be encouraged. 

Make customer service a priority

Naturally, the best way to make your customers want to refer you to others is to provide top-tier customer service in every way. By emphasising customer service in your interactions with your users, they will come away from every experience with you and your staff feeling good about themselves and about your brand. This creates a positive impression that sticks in the mind and makes them more likely to bring up your company to their friends and family naturally without any input from your end.

Have a local business? Focus on people who have just moved in.

If your e-commerce business gets a lot of its customers from local communities, you can also focus on people who have just moved into the area. These people are often looking for communities or new businesses to try, and you might be able to get them to refer your business to others if you make a positive first impression with your customer service.

Build long-term customer relationships

Last but not least, you should also try to build long-term, successful customer relationships with everyone who visits your e-commerce site. After all, the lifetime value of referred customers has been found to be 16% higher than non-referred ones.

Speak to your customers, engage with them on social media through things like branded Facebook groups, and do the best you can to take care of any concerns or provide them with special service. As you build up long-term relationships, your loyal customers will start to think of your brand as family and recommend you automatically to their own family members.

Maximising the benefits of your referral network

Building a referral network is one thing, but actually turning the increased website traffic into sales is another. Once you've built your referral network, you'll need to maximise its benefits by:

  • Maintaining top-tier customer service for your influx of new customers
  • Ensuring that you can meet increased demand
  • Remain engaged with your previous customers who referred your new traffic

You'll also want to make sure your website is as engaging and intuitive to use as possible. Keep the design simple and use communicative icons so it's easy for visitors to respond to your Calls to Action (CTAs). It doesn't matter how strong your referral network is if your potential customers finally reach your site and find it to be an unnavigable mess. According to the online marketer and web developer Nathan Finch from Best Web Hosting Australia, you would be wise to utilise web-building tools that make it easy to put together a high-quality e-commerce store.

“Certain website builders are explicitly designed for e-commerce users, says Finch. “Look for builders that include a lot of widgets and special features to let you build an excellent shopping experience for your online customers. These website builders often include things like built-in shopping carts or checkout page templates. Others might be more focused on social media, so they'll include widgets and controls for linking social. Bottom line: make sure you don't waste the power of your referral network after you spend time and effort building it.

And finally...

In the end, a referral network can significantly strengthen sales and loyalty for your brand and ensure that you have a steady stream of new customers to sell to. Referral networks can help ensure that your e-commerce business survives those turbulent initial months and becomes a longstanding cornerstone in its industry.

by Lee Li Feng | 27 Sep 23

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