REFERRAL MARKETING-A Tool for new age

Referral Marketing

Referral marketing is a concept which identifies customers for a product supplier.  The referral customers recommend the products to friends, and relatives who are a closely knit social group. These people accept the product without any reluctance as the referral customer is trustworthy of his association with them.

The Referral market operates on the information that is transferred from one circle to another circle. The product experience shared by the first user instills confidence among the new customers and who in turn refer to other customers, thus setting off a chain reaction.   To attract new customers, referral marketing creates sales offers. To satisfy the existing customers some special schemes and offers are provided.

Aspects of Successful Referral Marketing

Following are the various aspects that influence the success of the referral marketing

1. Design of referral marketing program.
2. Actions of referral marketing.
3. Rewards of referral marketing.
4. Neglecting referral fraud.
5. Retail channel referrals.
6. Pre and post-purchase referrals
7. Evaluating referral success
8. Goal setting
9. Choosing the targeted audience

Referral Marketing Strategies

Strategies that help to develop a personal relationship with the customers for increasing product development are discussed.

1. Influential role of referral sources.

Firm position and successes spoken attractively at conferences and trade shows are important for developing markets.

2. Construct a stylish, high-quality, attractive website.

A poor website quality can spoil the image from consideration, hence companies better research and take stock of appropriate service providers.

3. Enlarge and preserve good social relationships with experts.

When a possible referral source is recognizable build strong social tie-ups to reach out to customers.

4. Cooperation pays

What you refer to some industries, are likely to receive from them in return. This understanding and cooperation definitely help to recommended products for promoting marketing strategy.

Comparison between Traditional Marketing and Referral Marketing

Traditional marketing looks for supporters among existing employees to increase word of mouth, aspire marketing efforts at lofty span value customers, and utilize customer allegiance programs among existing customers through rewards. In the case of referral marketing, it will depend on motivating referral-based customers, outlooks customers as influencers and supporters, search for existing customers that can give a referral with lofty span value, and utilize referral marketing programs to supplement traditional endorsements. Direct marketing is efficient to a certain level. On the other hand, referral marketing has an immense possibility of being successful. Referral marketing creates trust, but we cannot assure that advertising fabricates trust. Referrals are also considered as an efficient, cost-effective technique because they are not involved in the ‘selling’ part.

Merits and Demerits of Referral Marketing Compared with Traditional Marketing

Referral marketing has better advantages compared to traditional marketing. It comprises of suggestions of friends or family members who have greater credibility over branded advertisements, admittance to customers and enhanced matching of referred customers requires a good or service suggestion.

Referral-based customers are always enlightened than those obtained through traditional marketing programs owing to cooperation, trine balance, and Strong social connections with people. Cooperation refers to the responsibility of the referrer to offer novel customers based on his/her receiving payment. The balance narrates to a referring customer fetching in novel customers that match well with a firm’s contribution. Strong social connections with the referred customers aids, to cooperate with similar people.

There will be increased participation in a referral marketing program due to trustworthy behavior of referral customers to the supplier regardless of the rewards. The customers who participated in the referral marketing program can act as marketers for the promotion of goods and services. The customer referral program helps to maintain the existing customers, new customers and marketing relationship of companies

The major disadvantage of referral marketing program is, a referrer becomes responsible for unsuitable recommendations and recruiting any customer. In addition, if the programs conducted by referral marketing person are not as efficient as traditional word-of-oral programs it suffers. However the efficiency could be improved by providing remuneration for referrals and supporting capable referrers.

Checklist for Referral Marketing

The referral marketing checklist should assess the firm’s position and also help to improve the existing programs. The referral marketing checklist for individual firms is described as follows.

1. Issues based on the organization.
2. Issues based on planning budget.
3. Issues based on the selection of the referrer.
4. Issues based on media promotion.
5. Issues based on referrer rewards.
6. Issues based on the conditions of the program.
7. Issues based on the selection of software programs.
8. Issues based on evaluation of the marketing program.

Summary and Conclusion

Traditional marketing programs focus on customers. Whereas, referral marketing program’s goal is to attract both referrers and referred consumers. Referral marketing depends on databases of consumers and recognizes regular referrers to trace purchases by referring consumers. Referral marketing could not become equally successful for all firms. Referral marketing is particularly suitable for high-value goods selling firms, small firms with inadequate marketing budgets. In these situations, a transaction between a faithful friend, and associate business partner is significant, particularly if the referrer has long-term positive understandings with the firm.