It wasn't long ago when camera giant Nikon announced it would stop making film cameras and focus only on digital-another example of a new technology shoveling dirt on the grave of an old one. Today paradigm shifts like that are happening with increasing frequency. Take referral marketing, for instance.
You may be familiar with referral marketing's rather ho-hum history. How you were supposed to ask your customers to "tell their friends"...how they pretty much yawned when they heard your referral reward...how you waited around for something to happen...how nothing usually did.
Fortunately this kind of mediocre marketing is going the way of film cameras. By not building on any of the old foundations, the new Web-based trend in referral marketing is helping fulfill the promise of what should have been, by now, an indispensable way of doing business.
Here are seven key principles of the new referral marketing.
That Incentive Thing-"What's In It for Me?"
The real challenge in referral marketing, of course, has to do with the motivation issue: "Why should I go to all the trouble of telling my friends about your business?" This understandable reluctance is now being addressed in two ways:
1/ First, when people make recommendations to friends and family, the trend is to instantly and automatically reward them with meaningful points, discounts or other incentives. Today's referral plans are operating much like frequent flyer programs-when enough points are accumulated, members qualify for interesting rewards. That motivates them to be more persistent in making their referrals.
2/ Second, successful referral marketing plans take advantage of a powerful human motivation:
Recognition. In the workplace, for example, people often list "recognition" higher than "better pay" in what they want most out of a job. Accordingly, thank-you notes are now immediately and automatically sent to members of these plans who make a referral (that's in addition to notes for other meaningful "recognition moments"), It simply pays to say "thank-you."
Tools That Magnify Word-of-Mouth Marketing.
Okay, one of the bigger problems in the past was that customers only had their "word-of-mouth" to make referrals. While that's certainly nothing to sniff at-it remains one of the most powerful forces in all of marketing-it is pretty limited. Most of us only talk to a handful of people each day. That's where other online and offline referral marketing tools come in handy. Zero-cost tools-like e-post cards, online referral forms and "click-to-Website" emails-go far beyond the limitations of word-of-mouth and make it fun, fast and easy for people to make loads of effective referrals.
The Referral Email Secret.
One of today's greatest referral tools-emails-can be uncommonly effective, and it's not hard to understand why. Do you open lots of email from unknown sources? Few do. That's why referral email messages sent directly from a person to their friends or family (with the sender's name showing in the "from" part of the email) can make a gigantic difference. Statistic say that the emails from people we know get opened nearly ten to one over those from strangers. This is a big part of the referral marketing revolution.
Privacy is Never to be Compromised.
Face it, no one wants to risk putting their friend's personal information in the wrong hands. For that reason, today's referral programs go the extra mile to ensure online privacy. People need all the confidence they can get before sending offers to the people they care most about.
The Web Revolutionizes Referral Management.
In the old days, referral programs were, to say the least, hard to manage and update. Everything was done manually on index cards or, years later, on poorly maintained databases. Neither method kept up to speed and often referral-makers slipped through the cracks and went unrewarded. With the Web, all that's changed. The capability now exists to automatically track and record every referral, every point earned and every reward redeemed in real time. This kind of technology has never been available before to referral marketers. Along with this breakthrough...
People Can Now Control Their Referral-Making in Real Time.
Not only has the Web revolutionized referral management, it can also effectively sit the referral maker right down in his or her own personal referral "headquarters." Today when you make a referral, the technology exists to let you track your referrals to friends and family and, where applicable, to stay current with the points and rewards you've earned (remember that frequent flyer analogy?). This level of enjoyable, up-to-the-moment control wasn't even on the radar screen in the past.
Web Technology Has Cut the Cost of Referral Marketing.
There is at least one "next generation" referral marketing plan that does all of the above yet doesn't see the need to charge an arm and a leg. When referral plans like this cost well under $75 a month, it doesn't take too many "referral-to-customer-conversions" to pay for a year of service (in some cases, even one referral can do that). Credit Web technology for making this kind of sophistication so affordable.
We've come a long way since the days of index cards. Today's referral marketing is shoveling dirt on the grave of old referral marketing methods and is now poised to become the essential cog in every business that visionaries thought it would be by now.
Nicole Wicks
