Regardless of how perfectly integrated or flawlessly executed a marketing campaign may be, the sad reality of the situation remains: human nature can still carry greater weight than even the most professional marketing efforts. That’s because it is human nature for people to trust other people. They talk. Share ideas. Exchange nuggets of wisdom. Gossip. And ultimately, that entire process results in recommendations and suggestions delivered on a friendly basis, from one trusted source to another.

The most effective marketers recognize – and understand – these realities about the buying public, and they’re tapping into this invaluable resource through referral marketing.

How Does it Work?

 

Bearing far more than a passing connection to word of mouth marketing, referral marketing involves actively leveraging the services of the most vocal proponents for the operation in question, whether it’s a florist, a dentist’s office or an insurance agent, to name a few.

Crucial to the concept of referral marketing is the idea that existing patrons should be viewed as partners in spreading the word about a company, and accordingly, those advocates should be rewarded for their unsolicited efforts. Michigan business owners might choose rewards in the form of coupons, discounts or additional products and services, to name a few.

Consider the local florist that provides a 50-percent discount with a future transaction to any customer providing a successful referral to a new customer. A dentist might gift an electronic toothbrush to a patient that’s steered a friend to the same dental office. An insurance agent may choose to reward loyal customers that have directed colleagues to the same insurance office, with the promise of a cash-back reward.

Regardless of the nature of the reward in question, referral marketing actively uses a team approach to connecting with new customers through existing customers. After all, there really is no better advocate for a business than a friend.