Referral marketing: creating your marketing sponsorship system in 5 steps

What Is Referral Marketing?

Referral Digital Marketing Definition

Referral marketing could be translated as "recommendation marketing" or "referral programs." The concept is very simple: you set up a system that allows your customers, prospects, and partners to recommend you to their contacts (referrals), and when this recommendation leads to a sale, you reward them.

This referral system is an extremely profitable digital marketing tool. You rely on people who know you and are convinced of your services to convince their friends in turn. The advantage is that we trust a friend much more easily than an advertisement. Referral marketing is often associated with word-of-mouth, but as you'll understand, here we're taking it a step further.

Who Can Create a "Referral Program"?

Everyone. Really, everyone. A referral or customer recommendation system is relevant for all businesses, whether B2B or B2C, large or small.

The difference will be in the resources deployed and the structure of your program.

If you deal with 10 customers per year, the program will be informal but should be an integral part of your sales strategy. The idea will be to know when and how to organize a meeting with your customers and how to ask them to connect you with a future customer.

If you deal with hundreds or thousands of customers per year, you'll need tools to simplify the process and promote the referral program. It's probably also in this type of business that the referral system can be most powerful and create a snowball effect that far exceeds the effectiveness of any other acquisition strategy.

Difference Between Referral Marketing and Affiliate Marketing?

We sometimes see confusion between referral marketing and affiliate marketing. The principle is basically the same: we reward a customer who has recommended us to a new customer.

Affiliate marketing, however, is most often a more professional system intended for bloggers, business partners, and other digital players. We offer affiliate programs to websites or influential people. They talk about a product or service and are paid a certain percentage on any future sales. We're closer to advertising than customer recommendation.

Referral marketing is intended for your customers (it's even better when dealing directly with satisfied customers) and close partners—people who really know and use your services and products. They recommend your products and services to people close to them, people they really know. The resulting conversion rate is much higher and the return on investment all the more interesting.

Don't worry, it's not as complicated as it seems. With the right method, effective strategy implementation, and the right tools, it will soon be one of the pillars of your development.

How to Set Up Your Referral Marketing System?

Step 1: Evaluate Your Referral Potential

Everyone can launch a referral program in one way or another, but depending on the business, this doesn't involve the same approach. To evaluate your referral potential, the first thing is to ensure your customers are satisfied. This seems obvious, but if you have a customer satisfaction problem, it's useless to count on them to do your advertising. Then you have 3 questions to ask yourself:

• How many active customers do I have each year?

• How many potential prospects can my customers know?

• What is the average margin generated by a new customer?

Thanks to these three questions, you'll know whether you need a tool to simplify managing your referral program, how many potential customers each ambassador can bring you, and the value of the reward you can give to sponsors and their referrals relative to the margin generated.

Step 2: Structure Your Referral System

Setting up a customer referral system isn't that simple. You need to structure your program well:

• Which customers are covered by the ambassador program?

• Who can they recommend your services to?

• What are your referral offers, your rewards? (gift cards, direct compensation, concert tickets... everything is possible).

• Who will handle the introductions and how?

You must understand and model the entire process of your referral system, otherwise you'll head straight into a wall.

Step 3: Choose Your Referral Marketing Tool (SaaS or Not)

Often this is a key step. There are ultimately few well-designed tools for referral programs.

And if you don't know a customer of these solutions who recommends them to you, you'll never find them—it's like a pact that the solutions have signed among themselves! Just kidding.

The tool is important; it should allow you to structure your referral program well, ensure that ambassadors and their referrals are treated as they should be and rewarded appropriately.

But tools are also important for onboarding your customers and managing your program.

At Sales Odyssey, we have a little favorite: Yuccanlead.fr, a great solution that allows you to manage your program effectively.

Step 4: Onboard Your Customers into the Referral Program

This step is crucial. Setting up a customer acquisition system through recommendations only works if your customers play along.

This won't happen by itself. You'll need to communicate (on social networks, on your website, etc.) about this program at launch but also throughout its lifespan. Without this, you'll fail.

Beyond communication, choosing your tool is important. Don't just test the features that concern you in managing the referral program, but also the entire ambassador account creation funnel. If it's difficult to become an ambassador, you won't achieve anything!

Step 5: Manage the Referral Program

Referral marketing is indeed "word-of-mouth marketing," but word-of-mouth alone won't be enough for it to work.

You need to communicate on your social networks, via email, at every stage of your customers' journey with your brand so they all know about your program.

Once registered and having become an ambassador, you'll need to regularly renew your referral operations and modify rewards, for example, and communicate continuously on social networks to let people know. This is crucial.

Three Examples of Referral Marketing Systems

Referral Solutions Example #1: Noovimo's Referral System

Let's take the case of a network of real estate agencies specializing in commercial properties. The real estate market is generally tight, so you might say it's not difficult to find buyers/tenants.

True. However, finding properties for all these potential buyers and tenants is complicated.

All conditions are met for the program to be successful:

• The value of a transaction is high, several thousand euros each time.

• For each transaction, there are two satisfied customers: the seller and the buyer.

• Each satisfied customer is likely to know several potential buyers and/or sellers.

You can discover the Noovimo network on their site here, or discover their information site for future real estate agents.

Referral Program Example #2: Numbr

Numbr is an accounting expertise network specialized for independent professionals. They have tens of thousands of customers for whom they ensure accounting and tax obligations as well as filing articles of incorporation and even a bank card.

Their premise is as follows: an independent professional who works with us remains a loyal customer for many years because they are satisfied. Independent professionals generally have a network of many other independent professionals, all likely to be interested in quality accounting support.

The referral program also makes complete sense here. We're looking at a referral program with two winners: the sponsor who wins a great restaurant for two, the referral who saves two months on their support.

The principle is therefore here also as simple as possible and it works.

Referral Program Example #3: Boursorama

It's one of the best-known referral programs; it has propelled Boursorama's growth to new heights! We all have that friend who was more insistent than the most motivated salesperson... and who actually made me open an account there!

This program is interesting because everyone wins: we have a very good banking product, a significant reward for the sponsor, and a reward for the referral.

It's extremely simple to implement—only Boursorama customers can become sponsors and they are rewarded for each new customer they bring.