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How Do eCommerce Referral Marketing Aid in Improving Sales

No matter what marketing strategies a business might take on, word-of-mouth or referral marketing is the tried, tested, and classic method of driving sales. E-commerce, too, is heavily dependent on this form of marketing and there are numerous reasons to do so. They rely on it to bring in more customers and base their goodwill on customer recommendations and feedback which further provides them an insight into the necessary steps to be taken to drive sales from this type of marketing. 

Defining Referral Marketing 

As the term suggests, it is a form of promoting and marketing that allows consumer referrals with incentives included. With two types of referral marketing- organic and strategic- this type is proven and extremely popular among businesses and their customers. However, this strategy must be executed using the right techniques which can ultimately lead to a powerful marketing engine for businesses. 

Organic and Strategic Referrals 

As mentioned above, referral marketing in eCommerce is of two types- organic and strategic. 

Organic referrals also known as simple referrals demonstrate the consumers talking about the brand or product to their close ones based on their shopping or customer experience. 

On the other hand, strategic referrals are promotional tactics taken up by retailers to encourage shoppers to share or recommend their products. It is this strategic referral that is intrinsic to e-commerce referral marketing. 

Differentiating between Organic and Strategic Referrals 

Organic Referrals: 

Shoppers recommend the product or services on their own. 

The recommendation or feedback may be either positive or negative. 

Retailers have no control over it. 

The buyer is not rewarded in any additional way. 

Strategic Referrals: 

Retailers provide an underlying push to consumers to encourage recommendations. 

It always keeps the retailer in an advantageous position. 

Both the referrers and the referred are recognized and rewarded. 

How Powerful is Referral Marketing? 

Now that we have a clearer understanding of referral marketing- this marketing tool is indeed powerful and effective. The primary reasons being, 

Accurate Targeting: Referrals are specifically targeted as the business or brand is aware of its social audiences and customers in order to spread the word effectively. 

Speedy Outreach: In contemporary times, with the help of social media, outreaching is not at all a daunting task. Brands or businesses with a vast social following are capable of outreaching the average customer at large. This allows the consumers to refer by mentioning it online, within seconds. Hence, this has overall, increased the popularity of referral marketing in contemporary times. 

Trust Aspect: In referral marketing, since the pitch comes from friends and families, acquaintances, customer reviews, influencer opinions, publications, etc, the trust factor is immense which convinces people to buy the product without any hesitation. Human beings trust these more than general sales pitches, ads or endorsements. 

To conclude, 

Referral marketing is just not about organic or strategic marketing. It has a lot more aspects to it and is primarily done to call new audiences and consumers for businesses to showcase their best products and services. This, in turn, is recommended by customers within their circle of influence. Hence, this form of marketing not only increases sales for the business but also helps them to create a larger customer base and goodwill for the brand and therefore must be implemented strategically. 


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