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Cityhive Referral Marketing

Referral Marketing

Understanding and Harnessing the Power of Referral Marketing

March 2021

Every day in the United States, conversations about brands, services, and products happen billions of times. People love to talk, and one of the most common topics happens to be the services and products that people appreciate – which also means talking about the companies who offer those things.

 

Based on data from the New York Times, nearly 65% of new business is driven by referrals. That means about two-thirds of the people who make purchases of new items do it because someone they know recommended it. That’s a lot of conversations and many recommendations.

 

Findings from Nielsen also show that referral marketing has a huge amount of potential. Observations indicate that a person is four times more likely to purchase if a friend referred them to the brand or product.

 

Based on all of this available data, it’s easy to see why experts recommend making referral marketing part of your process. Consumer recommendations are huge and can help you succeed, no matter what industry you fall under.

 

What Referral Marketing is All About

 

When you break it all down, referral marketing is the practice of spreading information about a service or a product using a business’ current customers rather than solely focusing on traditional advertising methods.

 

If you are familiar with word-of-mouth marketing, you might be surprised to realize that this is one type of referral marketing. Word of mouth is when people who are interested in and impressed by a company talk about it with friends, co-workers, and family members. It’s often why certain companies go viral after events, advertisements, and new product launches.

 

Referral marketing can also be directed and initiated by a business to get current customers to refer others to use their products or services. For example, property managers could institute a policy where someone who lives in a community can receive a discount on rent for referring someone new into an apartment.

 

Most people have seen and participated in a referral program or several of them. However, while most companies are aware of how referrals can drive their success, not all of them are aware of how to create and scale a referral marketing strategy.

 

Many companies choose to create their own in-house referral program, and others manage one manually through email or another system. However, the companies that see the most success in referral marketing tend to automate the process. This involves using a single platform to manage, track, and reward those who refer people to them.

 

The Benefits of Referral Marketing

 

We already went over how effective referral marketing can be, which is a huge benefit in itself. While referral marketing does require a bit of time, building trust, and relationship marketing, the results can be well worth it. Some of the most useful benefits are explained below.

 

Better Cost-Effectiveness

 

Marketing can take a lot of time and effort. It also tends to cost a great deal. The fantastic thing about referral marketing is that you can inexpensively market your brand while making sure new people learn about your services and products.

 

The reason it can be so inexpensive is that your existing customers are helping you with the marketing. These are people who already have a relationship with you. It is a great way to create a more robust offline marketing strategy.

 

Additional Engagement Channel

 

When a company chooses to use referral marketing, it ties into everything from social media to emails and customer support. Most businesses are already sharing content on social media and sending out emails for various things, so two marketing strategies can blend seamlessly.

 

With referral marketing, you have another reason to communicate with customers and share things on your platforms. One option is to post public praise about those who refer business to you. This can offer engagement that leads to additional referrals.

 

More Loyal Customers

 

In general, someone referred to you is more likely to become a loyal customer of yours. Based on research by the American Marketing Association, these types of leads can create customers who stay with your business for a longer period of time.

 

An additional study by Goethe University shows that the customers that were referred to a specific business were almost 20% less likely to leave them than other consumers.

 

Features a Targeted Audience

 

When someone starts talking about a service or a product, it’s usually done for good reason. It’s brought up in a natural conversation because someone wants to share something that they find exciting.

 

They might also refer someone new to your business because it seems like the other person would appreciate the new product or service. This means you’re being discussed in front of targeted, high-quality leads. This also means that the person referred has more trust in you since someone they know recommended you to them.

 

Increased Word of Mouth

 

Word of mouth is the ultimate way to teach people more about what you can offer them. Referral marketing is a technique that offers scalability, so more word of mouth occurs.

 

When you decide to embark on a referral marketing campaign, your business’s name may be advertised in front of all sorts of people who wouldn’t otherwise hear about you. When you offer an incentive for people to recommend you, it makes word-of-mouth occur more often, building brand awareness in unexpected places.

 

Reasons Referral Marketing Works

 

Referral systems and programs create a way for you to have a structured manner of organizing and collecting all of your referrals. When you have the right software, timing, and approach, your business can make referrals happen and experience greater success. We’ll look at some of the reasons that referral marketing works below.

 

Social Proof & Trust Factor

 

Many people ask their friends for recommendations on what to watch on television, what to eat, where to shop, or which products to purchase. All of these situations involve a referral, also known as a personal recommendation. Even those where it isn’t obvious in all sorts of cases, individuals choose what to do based on what other people think.

 

This is precisely why referral marketing increases your social proof and trust factor. When tons of people recommend the same product or brand, it’s assumed that there’s a reason they are doing so.

 

Someone who has been referred to you is more likely to trust you since others agree. This is essential since it makes someone more likely to buy and makes the sales cycle shorter.

 

Social Currency

 

Everyone likes to share the things that make them feel good about themselves, which is also why social currency can grow a business. Social currency refers to the potential and actual resources obtained from having a presence on social networks and other communities, both digital and in the real world.

 

If someone isn’t sure about your business, they aren’t going to share information about you. So when someone does, it shows that you offer something special.

 

The reason referral marketing works so well is that the referrals or recommendations come from people that others trust, like friends or family members. This also happens to be one of the top reasons that a business will decide to implement a referral marketing strategy to stand alongside more traditional campaigns for marketing.

 

Available Target Market

 

People tend to refer only when they think someone is a good fit for a business, service, or product. People aren’t going to text every person in their phone to refer them. Instead, they will consider who could actually use the recommendation and send the information to them.

 

When sharing a referral link online, the same thing applies. The people who click are those who need something similar to what is being offered.

 

Because of this, the customers you already have are handling the heavy lifting for you. This ties into your social proof and trust factor. When someone personally recommends you, the referred person is likely to consider you an expert immediately. They’re more likely to come to you quickly rather than waiting it out.

 

Social Media is Booming

 

A huge swath of the population spends a good portion of their day on social media. The world loves social media, and there are various reasons for consumers to spend their extra time on these sites. Based on a report by Hootsuite, the average person in the United States spends more than two hours a day perusing social media.

 

Knowing this, you can turn it into an advantage for yourself. All sorts of referral marketing campaigns get shared on social media like Twitter and Facebook each day.

 

This happens because it is proven to work. People are sharing and browsing every day, and if your business is part of that, people are bound to see it. With more than three billion people using social media, it has to be a part of your marketing solution.

 

Email is Still King

 

Along with social media, email is important when it comes to a robust marketing solution. If you’ve already been working on marketing, you also know that you can create and adapt emails to fit in with any of your marketing campaigns. Also, email tends to be a more personal type of marketing, making it a reliable option.

 

Many of the options available for referral systems even have templates for emails or let you use email with your campaigns. Another excellent thing about referral marketing is that it can blend into other things you want to email your customers about.

 

Add it to a formatted newsletter or a simple piece of correspondence so customers know they can offer referrals.

 

Referral Marketing’s Impact for Local Services

 

When you’re marketing to a specific area, referrals can offer a huge benefit. Any local service, including offering apartments or condos, relies on recommendations from other people.

 

Implementing a referral program can ensure your name comes up more often when someone might be looking for a home exactly like the one you offer.

 

With a referral program, your name gets out to others in the city. People who know others in the same neighborhood as your building can share information and bring in people who might otherwise never know you offer properties. It’s well worth adding to your marketing strategy, especially since it is inexpensive and takes up very little time.

 

Using Referral Marketing with Condo and Apartment Residents

 

You may have seen referral marketing used by retailers, banks, and other businesses, but it isn’t as widespread when bringing in new renters to apartments, condos, and homes.

 

However, that doesn’t mean that it isn’t something you should consider. All of the same features and benefits that referral marketing offers for other businesses are available for those who provide properties.

 

Cityhive offers a resident referral program for New York City property owners that helps you get your vacancies filled quickly while building a loyal base of residents. The program offers an easy onboarding system where you can add your vacant units immediately.

 

Around the clock, online management lets you manage the referrals from anywhere you happen to be. It also comes with vacancy alert reports so current residents know when they should send out referrals to friends and family members.

 

If you need new residents and your current marketing techniques aren’t flawless, resident referral marketing could be the answer. Cityhive makes it less expensive and time-consuming to fill vacant units. With a focus on referrals, you can spend more of your time on other business processes to ensure continued success.

 

Ready to learn more about how Cityhive can help you fill vacancies and market your properties? We’d love to be in your corner during the process. All you need to do is send an email to [email protected]. You can also call us at 347-630-5970. Get in touch and find out how big of an impact resident referrals can have on your business!

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