Referral Marketing

Referral marketing benefits

- Acquisition - Additional purchase from existing customers - Earned media through referrals shared on social networks - Reactivation of customers who haven't interacted with your brand for a period of time

Multi-step conversion

A form of the customer journey that requires a prospective customer to pass multiple consideration milestones (or steps) between initial awareness and final conversion. Most often found in B2B and high-consideration B2C sales cycles. For example, prospects of B2B software sales progress from leads to meetings to opportunities before becoming customers. Each successive stage indicates increased likelihood to purchase.

Friend email capture

A great way to use customer advocacy to achieve email list growth goals. To do so, brands will ask referred friends to provide an email address in order to receive a coupon or discount code. A lot of marketers have email capture or new email list goals and objectives. Coupling advocacy programs with those goals can help brands achieve them. This also enables brands to issue rewards and coupon codes instantly, so they can reward on different success points before final conversion.

K-factor

A measure of the viral growth rate of website users, apps, customer bases, etc. Roughly, it is the product of the number of invitations users or customer send (i) multiplied by the conversion rate of the average invitation (c). Combined with the flywheel effect, this explains why effective referral programs don't just sustain themselves, but experience sustained growth.

Referral funnel / social funnel

A model describing the process of generating referrals and referred customers, from advocate generation through new customer conversion. It comprises the advocate funnel and friend funnel.

Advocate

A person who refers a brand, product, or service to a friend. Anyone who interacts with a brand can become this, and the goal of a referral program should be to make referrals a key part of the customers' experience. An "everyday" ___ is someone who may share your products or services 1 to 2 times. They can make up more than just your customer base, especially if you're promoting your program anywhere on your site and not just behind a login.

Friend

A person who sees or receives a referral from someone they know. This person may or may not already be familiar with the brand or its products.

Internal reward

A referral reward related to the product or service a brand provides. For example, a retailer that offers 10% off their products is offering this. Usually offered as an incentive for advocates to refer friends, these drive retention by incentivizing future purchases.

External reward

A referral reward unrelated to the product or service a brand provides. For example, a retailer that offers a $25 PayPal credit is offering this. Usually offered as an incentive for advocates to refer friends, these can provide continued motivation for super advocates who have already collected numerous internal rewards.

Referral program

A set of digital marketing campaigns built to acquire new customers by rewarding people who refer a brand to their friends. Also known as a "refer-a-friend" program, it encompasses campaigns across channels including web, mobile, email, social media, physical media, and more. This term also allows you to promote, analyze, and track campaigns, and the fulfillment of associated rewards.

Affiliate

A third party compensated by a brand for publicizing its products to the public. These are economic agents who receive a commission based on the amount of traffic or purchases they drive. Unlike referral marketing advocates, these are usually motivated by economic interest, not brand affinity. As a result, these acquire bargain hunters who are less valuable and loyal than referred customers.

Super advocate

A top-performing advocate. These are measured by the number of referral conversions they drive, the amount of revenue they help generate, or how much they share. They share on a much more frequent basis, and refer 3 or more times.

Promo link

A trackable link used as a CTA when promoting a referral program through email, social, printed media, etc.

Status drip emails

A type of scheduled email (which participants receive based on predefined parameters being met such as time, interactions, and purchases or lack thereof). This email is sent on a consistent basis, giving advocates insights into their referral dashboard. This is a great opportunity for advocates to remind their friends about the referral program who haven't converted.

Nurture emails

A type of scheduled email (which participants receive based on predefined parameters being met such as time, interactions, and purchases or lack thereof). This email reminds friends to either sign up for a product or asks them to make a purchase. This helps build a connection with friends and moves them further through the funnel.

Share link / referral link

A unique, trackable link that an advocate sends to a friend when sharing a referral.

3%

Amount by which adding a picture of the advocate's face to a referral increases the rate of conversion (x%).

12% - 18%

Amount more that loyalty members typically spend than regular customers (x% - y%).

30%

Amount of all eCommerce sales in 2015 that mobile commerce sales made up (x%).

5% - 15%

Amount of new customers that Extole customers tend to acquire through their programs (x% - y%).

18% / 30%

Amount of referrals sent from a mobile device; amount of referrals received on a mobile device (x% / y%).

4x - 5x

Brands using Extole find that their referred customers refer this many times more often than their non-referred customers (#x - #x).

Segment

Characteristics that are shared by a group of people. People can be part of more than one of these, and these can be specific to brands or shared broadly. Important ___s in referral programs include advocates who are the most, advocates who drive the most revenue, and recent customers who have not yet referred. Each of these ___s can drive additional marketing initiatives, such as surprise and delight campaigns.

Campaign

Comprises the placement(s), creative assets, messaging, rules, sharing mechanisms, and rewards for a referral marketing flow. A referral program can house multiple of these. Brands will employ different ___s to effectively target audience segments (such as super advocates and newly referred customers) simultaneously.

Advanced triggered emails

Continuous messaging around any activities within a brand's program. All too often, an advocate is only sent one message, but brands should keep the discussion going and give the advocate the feeling they're a part of something bigger.

Advanced triggered emails

Continuous messaging around any activities within your program. All too often, an advocate is only sent one message, but you want to keep the discussion going and give the feeling they're a part of something bigger.

Triggered emails

Event-based emails sent when an advocate interacts with the share experience.

Canada's Anti-Spam Legislation (CASL)

Legislation passed by the Canadian federal government which took effect as of July 1, 2014, that generally prohibits the unsolicited sending of commercial electronic messages, unsolicited installation of computer programs, unsolicited collection of personal information or electronic addresses, and the use of false or misleading promotions online.

Call-to-Action (CTA)

Messaging on a website, in an email, on packaging, or in other media that prompts someone to take action. Referral marketing ___s are used to encourage people to share referrals.

2

Number of customers (out of 3) who make a purchase online and go to the physical store either before or after the transaction.

Net promoter score (NPS)

One measure of a customer's likelihood to advocate for a given company. Using a 10-point scale and a one-question survey ("How likely is it that you would recommend [company] to a friend or colleague?"), this categorizes customers as Detractors, Passives, or Promoters. Every advocate in a referral program essentially gives a brand an ___ of 10.

Influencer

Someone who has a huge social following that refers a brand. They may be a smaller group, but they have a larger reach. Brands should encourage these people to become brand ambassadors, because this helps them understand that they are a value to the brand. This type of advocate shows the true power of a holistic approach; brands don't just focus on their existing customers, but rather the reach of their potential ones.

Average Order Value (AOV)

The dollar value of the average purchase that a brand's customers make. ___ is an important part of the program since it allows you to compare the referral channel against other channels.

Customer acquisition

The act of adding new paying customers to a customer list. The goal of most referral marketing programs.

Surprise and delight

The act of delivering something unexpected and pleasing to customers or advocates.

Customer Lifetime Value (CLTV)

The dollar value of an average customer's worth to a brand over the entire timespan of his/her interaction with it. Customers acquired by referral often have a higher ___ since they often have higher average order values.

Reach

The maximum number of people who can see a referral message from a given advocate. It is affected by the social networks that an advocate uses to refer and the number of connections s/he maintains on those networks.

Flywheel effect

The phenomenon by which referral marketing begins to sustain itself through the generation of referred customers. Brands find that customers acquired through referrals are more likely to refer friends themselves. Therefore, this occurs as a brand acquires customers through referrals, who subsequently refer friends, who refer their friends, ad infinitum.

Minimum Advertised Price (MAP)

The price at which a reseller agrees to advertise a brand or product. When negotiating reseller agreements, manufacturers using ___ as an alternative to Manufacturer's Suggested Retail Price (MSRP) can help prevent resellers from undercutting one another.

Referral rate

The rate at which advocates refer friends as new customers.

Native sharing

The same mechanism one would use to share a link with or email a photo to a friend through SMS. On the share screen, an advocate can tap the "share" button, and it pulls up the advocate's existing mobile sharing configuration.

Advocate funnel

The set of performance metrics that detail how often customers become advocates by referring. It encompasses impressions, advocate clicks, and number of advocates.

Friend funnel

The set of performance metrics that detail how well advocate referrals are converting friends into customers. They include reach, friend clicks, conversions, and revenue.

Experience gap

The time between when a customer clicks "buy" and when their product arrives; more and more retailers are looking to fill this.

16x

Times more likely that a customer is to share a referral if there is a call to action on the post-purchase pages (#x).