We helped Mark Zurada, CEO of our client Shopography, contribute to the Wired Insights blog.
Referral Marketing Creates More Loyal Customers
More and more, marketers are becoming aware of the need for referral, or word-of-mouth, marketing. What used to happen at the neighborhood BBQ, or by chance in a supermarket aisle, has gained massive prominence in the digital era and is only growing in influence. The Internet has made anyone with a computer or mobile device a prospective advocate for your business, and with the power of social media factored in, anyone can be a referral source to anyone else they know, anywhere in the world.
It is with the referral that marketers can tap into two major elements that SEO/SEM cannot provide: those potential customers who are not looking for your business to begin with, and the implicit trust they have in the opinions of familiar sources when compared to traditional advertising.
It can be anything from stellar customer service to a product that does exactly what it’s supposed to do, but these are the things that encourage enthusiasm in a company’s consumers and make them want to share that within their circle of friends.
But what many marketers don’t anticipate is the level of loyalty that can be gained from these referred customers.
In a study conducted by The Wharton School of Business, customers who have been referred were shown to be nearly 20 percent more likely to remain loyal to a company compared to non-referred customers. In fact, the same study revealed that people tend to have a stronger attachment to an organization if their friends or acquaintances share a bond to the same establishment.
Now consider that the 2013 results of IBM’s annual survey of global marketing professionals revealed that one of biggest challenges facing the participating organizations was “retaining existing customers and improving loyalty and satisfaction” (36 percent). But, as of 2013, 72 percent of marketers still aren’t leveraging customer referrals as a strategic linchpin to their overall marketing efforts.
Marketing built on social connections has been proven not only to generate trust and drive new, high value customer acquisition but also improve loyalty. Why aren’t more marketers using referral marketing?
Mark Zurada is CEO and founder of Shopography, a social shopping platform launching later this month.