Referrals arenâ€™t generated, they just happen, right? While many businesses believe this, it is a common marketing myth. Most businesses assume that referrals just happen by chance when someone tells another person about their experience with the products or services theyâ€™ve received. While word-of-mouth has always been an obscure concept and certainly unpredictable, new Internet technologies are making it easier than ever to nudge along and follow its momentum.
The Difference Between Referrals and Word-of-Mouth
Before you begin a word-of-mouth or referral advertising campaign, you should understand the difference between the two. While referrals and word-of-mouth (WOM) can both help to promote business, referrals go further, allowing customers to actually participate in the sales process. This participation may include a face-to-face, telephone or email introduction. And although a referral begins with word-of-mouth, word-of-mouth does not always generate a referral.
Successful referral lead generation starts when a marketer or business owner adopts a new mindset about referrals, recognizing the sales potential available through a warm market. A warm market includes those customers, vendors or other businesses that have worked with you in the past or have purchased your products or services, and had a good experience. Utilizing this warm market, plus integrating some kind of a customer relations referral system, promotes successful lead generation and keeps your business on track.
Cold Leads or Warm Referrals?
Many businesses are just too busy pursuing customers to take time and learn how to get customers to pursue them. They say people change for one of two reasons; pleasure or pain. Unless the pain is painful enough, many businesses would rather continue pumping money into ineffective advertising outlets or purchasing leads from brokers.
This is especially true for certain industries like the mortgage industry where lead purchasing is a mainstay. A cold lead is an individual or contact that is not familiar with your business, and has never purchased your products or services before. These leads demand the longest buying process and reaching them is challenging because it requires repeated message saturation to achieve optimal results or client conversion.
Today, higher advertising costs, increased competition, an overly-saturated consumer marketplace, and lower ROI are making business owners and marketers alike take a second look at referral marketing as an alternative to standard advertising methods that just donâ€™t seem to bring in the results they used to. Which sounds better, a cold lead or a warm referral? When statistics show that up to 45% of most businesses are chosen based on the recommendations of others, why do businesses and marketers still continue to throw their hard earned marketing dollars at a cold market?
The Internet offers hope through interactivity, affordability and accessibility. New technological resources are readily available to us, to help support referral generating efforts and make it easier to spread word of mouth. Unlike rising gas prices, we can actually fight back against rising ad cost by using the Internet to improve customer retention and facilitate in the referral generating process. Satisfied customer advocates are our best selling asset and theyâ€™re also the best defense against rising advertising costs.
Some ways in which technology can be used to grow referrals and save ad spend:
-Permission Based Emails â€“ a vehicle to â€œget the word outâ€
-Refer a Friend links â€“ makes it easier to forward information to others
-e-Newsletters â€“ simple and low cost way to stay top of mind
-Audio and Video Testimonials â€“ increases credibility and trust
-Electronic gift cards â€“ low cost, efficient way to send and track rewards
-Affiliate Web Links â€“ added exposure with reciprocal referral partnerships
Diana Dâ€™Itri is the Exec VP of Ravebiz, a leading referral marketing and technology company. Sheâ€™s a key driving force behind educating clients on how to generate more quality referred customers through practical applications and an automated, web based system called the Rave APG eReferral. For a free download â€œ31 tips for boosting referral businessâ€ go to http://www.ravebiz.com Diana can be reached at (866) 284-3020 or email her at email@example.com.