SEO glossary: Referral marketing

In a nutshell: What is referral marketing?

Referral marketing is a method of acquiring new customers. Here, companies rely on satisfied customers who credibly and authentically recommend the respective product or service as brand advocates. This method, also known as referral marketing, is therefore not based on specific channels, but on recommendations.


Referral marketing and word of mouth: small but subtle differences

Referral marketing and word-of-mouth marketing are not one and the same thing. Although word-of-mouth is often used synonymously with the term referral marketing, it differs clearly from the marketing method in one respect: it does not have to be a recommendation and can be positive, negative or neutral.


Referral marketing, on the other hand, always refers to positive recommendations and customer reviews and clearly emphasizes the added value of a product.


Advantages of referral marketing compared to other marketing methods

Referral marketing has specific advantages compared to other marketing measures:


  • Companies from any industry can use this marketing method and gain referrers for themselves.
  • Unlike affiliate marketing and its "affiliates", referrers do not receive any fixed commissions. Those who recommend products or services do so out of personal conviction. The associated experiences of real people give referral marketing a high level of credibility. This ultimately increases your turnover, because a satisfied customer brings your company new customers.
  • Other marketing methods are associated with high investments. Finding referrers for a company, on the other hand, costs little and is still an effective way of acquiring new customers.
  • Customers who regularly share their recommendations with others generate more word of mouth. Those who are convinced brand ambassadors also tell their family and friends about them as referrers. In this way, a brand can build up an enormous reach with the help of successful recommendation marketing.
  • A personal recommendation is based on practical customer experience. Customer opinions therefore relate to useful aspects and less to pricing. This has the advantage that customers who buy a product based on a recommendation look less at the price. And that's not all: personal recommendations also contribute to faster sales.
  • Referral marketing works on various channels on the internet. Clever influencer marketing in particular enables companies to reach their target group better and faster through personal recommendations.
  • If a customer gives positive reviews, this is the best advertising for a company. Ideally, this creates a cycle (flyweel), which in turn generates new recommendations and increases sales.


Prerequisites: How does referral marketing work?

In order to conduct successful referral marketing, companies must create certain conditions and proceed step by step.


Identify brand ambassadors

A prerequisite for successful referral marketing is a targeted customer analysis. First, find out which people from your customer base are suitable as brand ambassadors for referrals. In addition to existing customers, these can also be employees who positively convey your corporate philosophy to the outside world.


Develop a recommendation strategy

Think about a successful strategy that will help referrers to attract prospective customers for your services or products. In this phase, approach referrers with an active offer.


Make an offer with a reward

Of course, brand ambassadors need an incentive to publish their positive customer testimonials for your products. That's why you should offer the prospect of a reward for this type of loyalty marketing. This could be a discount code, a birthday greeting or a promotional gift, for example.


In contrast to affiliate marketing, however, a reward is not the rule here. Some employees or customers do not want to receive compensation, but recommend your brand out of their own conviction.



Use digital tools to record the results of referral marketing. In this way, you can find out whether the references gained through referrals are contributing to the company's success. If there is still room for improvement, you can further optimize your strategy through effective monitoring.


Maintaining social networks

Social networks are an important prerequisite for contact with interested parties. Therefore, make sure your company page contains high-quality content. A quick response time for questions, messages and comments is an advantage, as it strengthens the bond between customers and the company.


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10 tips for successful referral marketing

With the help of the following tips, referral marketing works and strengthens trust in your brand and products.


Building and maintaining customer loyalty

Successful advertising stands and falls with customer loyalty. Therefore, get to know your target group precisely and use an analysis to get a clear picture of your customer base. This measure will help you to tailor your offers to new customers.


A good relationship with existing customers is just as important. If you already have an established customer base, you should still strive to always leave a positive impression. Therefore, invest in nurturing existing customers and create positive experiences with small tokens of appreciation in connection with your brand.


External brand ambassadors are also crucial for your word-of-mouth marketing. A recommendation is worth its weight in gold, especially from well-connected opinion leaders, as these high-reach individuals enjoy the trust of their followers and business partners.


Actively ask for recommendations

Occasionally take the initiative yourself and ask your customers after their purchase whether they would recommend your company. In this context, explain how you deal with reviews and where you publish them.


Use trigger

Well-known companies manage to set off triggers with their products. One example would be red shoe soles, which automatically remind most women of the designer Christian Louboutin. If you manage to link your products to a specific trigger through clever marketing, this could lead to passive recommendations. In any case, people will talk about your product in certain situations.


Storytelling is king

As with content marketing, good storytelling can make a big difference in referral marketing.


Ideally, your product should tell a surprising, unique or fascinating story. In addition to these emotional touchpoints, sprinkle your storytelling with recommendation stories. Even a casual remark such as "I won this business customer through a recommendation" can be unobtrusively included in the customer conversation.


Turn experts into important referrers

A review is particularly valuable in referral marketing if it comes from an expert. Professionals who radiate authority and can demonstrate expertise increase the credibility of your brand and strengthen trust.


So ask an expert to recommend your services and make this important product review clearly visible on your homepage, in your online store and in your advertising on social networks.


Emphasize your unique selling point

The most important thing in any advertisement is the emotion it conveys. A marketing product that conveys emotions arouses desire and therefore interest in buying.


Good products on the market are also distinguished from those of the competition by a unique selling point. So use the unique selling point of your products in referral marketing to get others excited about your idea.


Apply the two-in-one method

The two-instead-of-one method works both online and offline, including in referral marketing.


Examples include vouchers, pens or stickers as promotional gifts that are given to customers. Instead of one voucher, satisfied customers simply receive two. They can give the other one to friends or colleagues and perhaps turn them into new customers through recommendations.


Simplify your processes

A customer doesn't want to spend hours clicking through a page to leave a review. That's why it should be as easy as possible to submit recommendations. Social media platforms and their buttons are one tool for this.


Include influencers in your word-of-mouth marketing

Influencer marketing can be very successful if the people have an enormous reach on social networks. Especially if your company has not been on the market for long, you can use influencers as business partners and ambassadors.


Stand out with special campaigns

Who dares, wins! A company that makes a special impression on others and is remembered for its campaigns is more likely to be recommended.


For example, think about unusual campaigns that attract national attention and are interesting not only for business partners and new customers, but also for radio or TV journalists. In this way, you can increase the reach of your company through reporting and word of mouth - and also generate potential recommendations.


Referral marketing in the B2B sector: this is what matters

In B2B marketing, too, companies find customers who make a positive recommendation. In contrast to the B2C sector, where personal experience is predominantly important, reference marketing plays a decisive role here. Positive references are more substantiated, factual and long-lasting than spontaneous reviews.


To ensure that your company receives the best possible recommendation, a so-called reference agreement with your customers is a good idea. It regulates your approach and the modalities relating to discounts and other benefits.


Even more than with the B2C principle, (scientific) studies, case studies and publications with added value are in demand in this area. The more of your company's expertise is included, the greater the likelihood that potential customers will consider making a purchase. Just like the B2C customer opinions, you can share and disseminate the references via social plugins.


Conclusion: What is referral marketing?

Referral marketing for your company thrives on positive testimonials from your employees and existing customers, which help you to gain new customers.


Customer satisfaction is even more important than with other marketing methods. Only if your employees and customers are fans of your brand themselves will they write positive recommendations about your offers.


For referral marketing to succeed, you should offer a referrer attractive incentives for their reviews and make the processes simple.


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