Referral Marketing: 6 Foolproof Strategies for 2021

/ marketing / 5 min read
Anastasia Sviridenko

Table of Contents

Referral marketing is an unmistakably powerful way to grow your business. Its power and impact can be largely summed up with two simple statistics: 83% of consumers place trust in recommendations from friends, and 66% trust consumer opinions posted online.

The simple truth is that people are much more likely to trust other people, before they trust a company.

Unfortunately, referral marketing is largely underutilized by small businesses because of the misconception that it is both time-consuming and expensive to execute.

Let’s dive in to see why that’s inaccurate and how you can quickly build a successful referral marketing campaign with a small budget.

What Is Referral Marketing?

Referral marketing is a concentrated effort to encourage past and existing customers to help promote a business and its products and thereby help expand the company’s reach and potentially increase sales.

Why Is Referral Marketing Important?

Effective referral and word-of-mouth campaigns have a natural scalability to them. You encourage one person to spread your brand name, which increases your customer base. With more customers, you have more opportunities for referrals and more effective word-of-mouth.

In fact, new customers that have found your company as a result of a referral are 4 times more likely to turn around and then refer you to people they know.

Referred customers are also 18% more loyal, with a 37% higher retention rate, and they spend much more money than non-referred customers. Research performed by the Wharton School of Business suggests that the lifetime value of a new, referred customer is 16% higher than non-referrals in the same demographic.

4 Key Strategies For Successful Referral Marketing

Developing a successful referral marketing campaign does require a thoughtful strategy guiding it. Naturally, you need to offer a quality product and service; people won’t make recommendations if they can’t stand behind them.

Aside from continuously working to improve your product and service, there are a few more referral strategies you can use to start driving business growth today

1. Automate Referral Marketing For Effortless Growth

Source: Referral Rock

One of the easiest ways to set up a referral marketing program is by using a referral automation tool. Tools like ReferralMagic and Referral Rock automatically reach your customers on their preferred channels without you having to do anything manually.

These campaigns are automated while still being customizable, if needed. You simply need to create a landing page or sign-up form for your referral program and let the platform do the rest - everything from distribution, management, communication and analytics.

2. Create An Optimized Referral Form

Which brings us to our next point. However you decide to structure your referral marketing campaign, it is absolutely crucial that it is an easy and frictionless process. Create a simple referral form for your customers to quickly provide you with the information you need from them.

A quick trick to ensure that customers complete the entire sign-up process is to create an interactive form that’s divided into steps to make it easier to digest. Using a dynamic form builder like Paperform, you can even make it possible for customers to save incomplete forms and return to complete the rest later.

The best part about using Paperform is that it integrates with the aforementioned referral automation tools, which means that anyone who signs up for your referral program is automatically added to your ReferralMagic or Referral Rock account. This makes it much easier to manage all your affiliates in one place and can shave hours off your week.

3. Build Social Proof Through Social Media

When businesses consistently post quality content on social media platforms, they have greater social proof and end up establishing a reputation. In turn, this helps encourage customers to commit to a referral. People enjoy sharing and texting things to their friends and connections that they feel will be useful, interesting or funny.

Being active on social media channels is doubly important because it is through these communities that many customers make their recommendations and share information about your brand or products. If you aren’t present, you’ll miss out on connecting with these audiences.

If social media just isn’t right for your business, you can leverage other channels. For instance, in your email and text message marketing campaigns, you could attach a call to action that encourages audiences to refer friends.

4. Incentivise Referrals With A Reward System

Most referral marketing campaigns work with a reward system. A customer receives a discount or special offer if they refer new customers. Sometimes, the referred customer also receives some sort of incentive. This helps entice their action and participation in the program. Whatever reward you offer customers, it needs to be relatively low in value, but exciting enough to build buzz.

It is possible to create significant word-of-mouth without an incentivized referral program, but these rewards definitely help enhance your efforts. That said, it is possible to over-reward for referrals. “Buying” positive reviews and recommendations can quickly come across as dishonest. You’ll lose any social credibility you’ve been able to build.

Examples Of Successful Referral Marketing Campaigns

One of the best ways to create a successful referral marketing program is to study the businesses that have pulled it off effectively.


Source: Athleta

Aside from offering a healthy 20% bonus for referring new customers, Athleta does a great job of pairing this with the shared experience of working out with someone. This allows the referral marketing to happen almost naturally. The athletic wear company also does an excellent job of making their referral process incredibly easy for customers to find and use.


Source: Julep

Makeup company Julep leverages its audience’s behaviors to grow their referral marketing efforts. They know that their subscribers are hyper-active on social media and they utilize these activities to help attract more subscribers by allowing referrals to be sent through email, Facebook, Twitter or with a personalized link that can be used on any other social media platform. This cross-channel effort nets the makeup company five times as many shares.

Hanna Andersson

Source: Hanna Andersson

With an effective referral marketing program, this clothing company was able to reach its new customer acquisition goal faster than normal; just two months after implementing their program, they were at 25% of their goal. The success of their referral marketing was caused by three key factors:

  • Visible: Hanna Andersson made sure that their referral program was visible on the website and across social media.
  • Easy: Participation in the referral program was built to be very easy. The new, referred customers did not even need to create an account to get their discount offer!
  • Fast: Rewards were sent instantly, which helped entice customers to send more referrals.

When it comes to referral marketing, there is no substitute for providing a good customer experience. If you’re already doing this, your business can easily supercharge its organic growth through a referral marketing program. Get started today by creating your own referral marketing landing page or form and integrate this with a referral automation tool.

Get started with Paperform for free.

About the author
Anastasia Sviridenko
Anastasia Sviridenko is a content marketing manager at TextMagic. She is always on the lookout for new exciting content formats. When she's not working, you can find her staring at the shelves of the nearest bookstore.

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