Referral marketing - what is it and what does it matter?

Positive feedback is one of the more desirable materials that satisfied customers can share online. Why? It's free advertising, often far more credible than an advertising campaign. People trust other people more than corporations, and with a few good words from themselves they can significantly influence the sale or use of a recommended service.

Referral marketing - what is it?

The market is overcrowded with articles and the consumer is usually looking for just one that will suit him best. How do you convince them to choose a particular product? It turns out that customers are much more likely to go for articles that they have previously heard about from people they know.

More people are more likely to opt for something already tested on the basis of a recommendation. So what is recommendation marketing? It is based on honest feedback from real users.

Many studies show that before a potential customer decides to make a purchase, he or she looks for reviews of the product he or she is interested in and it is on the basis of these that he or she makes the final decision.

The basis for creating a credible message in recommendation marketing is a group of satisfied users who become real brand ambassadors. Influencer marketing, often used to recommend services or products, is also linked to this process.

This type of campaign is based on working with people with a social media-built personal brand who are given products to test. As their real-life users, they can evaluate their performance and share their insights with their audience. Recommended items will be more likely to be chosen by customers for future purchases.

It is worth emphasising that this is a completely different activity from network marketing. What are the differences between referral marketing and MLM? In the case of the former, the key is recommendation, not sales. People who are not associated with the brand leave their opinions about a product, but are not obliged to sell anything in this way.

What is referral marketing?

Referral marketing has a certain advantage that is difficult to find in traditional advertising solutions. For a customer, a sincere recommendation from other customers can be more convincing than an agency-prepared campaign encouraging the purchase of a product. It is known in advance that this is an activity on which someone is expected to make money, so all products are advertised, the better and the worse ones. Recommendations, on the other hand, only apply to certain items, purchased, tested and verified by other users. However, not every opinion given by customers is true or in line with needs.

Two general recommendation systems are most commonly encountered:

1. Spontaneous customer recommendation - this is usually when a consumer has been so satisfied with a service that he or she decides to share his or her discovery with others, e.g. by leaving his or her positive feelings on forums, the company's social media, a blog or his or her own public profiles.
2. Recommendation received - the service provider actively asks people to leave their feedback in a specific place. Many people may not be aware that they can share their positive feelings or where to do so, so they are informed of this directly after using the service, on social media (e.g. there is a link in the bio to write a review), by email or via an app.

What does referral marketing consist of? In both cases, it is crucial that the reviews posted are organic, written by real users and driven by a desire to share positive feelings. It is usually easy for users to realise that the posts left are bots or have been bought, and this is not conducive to attracting customers and building trust with the brand.

Advantages of using referral marketing

Referral marketing is a win-win for buyers and sellers.

What do customers gain?

• Reliable opinions on the products they are interested in;
• A description of the advantages and disadvantages of the articles and what the choice may entail;
• Information on how other users felt after their purchase and why the product worked for them;
• Conviction of the rightness of one's choice;
• The opportunity to interact with an opinion leader and find out the answers to your questions.

What benefits does the referral business bring to the manufacturer?

• With a low outlay of funds, valuable feedback can be obtained on the products on offer and this can be introduced as part of an advertising strategy;
• Authentic recommendations arouse customer interest and this is an opportunity to increase sales;
• Recommendations are a kind of feedback - opinions can provide hints as to what is more desirable, what is valued and what can be abandoned in the future;
• The reviews left are a hefty dose of on-page content that is coveted by the algorithms - the more reviews there are, the better the chances of a domain ranking in a particular industry increase;
• Sharing consumer opinions influences brand visibility - positive posts may not only be on the direct channels of the company in question, but, for example, on thematic forums, online portals, social media or mobile app shops.

How does referral marketing work?

Recommendation marketing is based on a series of referrals linked, for example, to a solution that has worked for someone who decides to share it. In this way, it encourages those more hesitant to make a choice.

Among the examples of how recommendation marketing works, one can cite InPost's activities during the pandemic. Due to the obligation of consumers to stay at home, the courier company had its hands full, as can be seen by the extension of parcel delivery times both in terms of the days of the week and the arrival times of the couriers.

InPost then started to promote a contactless way of collecting parcels. All you need in the whole process is a phone with an app - after approaching the actual Paczkomat® machine, all you need to do is enter the order to be collected and then press the 'pick up parcel remotely' icon. As part of the promotion of the service, a lot of recommendation material has appeared online in the form of posts, videos and articles.