HOW MUCH DO YOUR FRIENDS REALLY INFLUENCE YOU?
Word of mouth, referral, recommendation etc. Call it what you will but ‘Friending’ (our play on the spending of money via the persuasion of friends or family) is a 100 billion dollar a year opportunity yet one of the most underrated and under utilised marketing channels.
There are actually two sides to ‘Friending’; on the one side of the referral coin you have the advocation of a product and on the other you have deferring; the dissuasion of a purchase. I have no stats to prove this one, but I’ve a nagging feeling that Mums around the world may just account for literally every first washing machine purchase of a twenty-something!
Elsewhere the stats are there – we are twice as likely to buy a product recommended by a friend than one we see on TV (EDR), 67% of consumer buying decisions primarily influenced by word of mouth (McKinsey), and 82% of people trust their friends on a purchase decision (Henley Centre) – yet bizarrely very few businesses have an organised, methodical, adequately promoted referral programme.
Maybe it’s just not sexy enough – the proverbial ugly cousin of the marketing family – but yet when implemented the numbers can be quite staggering and it holds huge, untapped potential.
24,000 new sales in 12 months
Working with a UK gym chain we are seeing 1 new referral for every new member acquired, of which 24% of those are purchased – culminating in an average of just over 2,000 additional sales per month.
18,000 new customers in 180 days
A Client of ours implemented a referral scheme for one of its high street loan products. In just under 6 months it has helped in bringing in over 18,000 new customers through its doors.
£6M and counting
Higher ticket items and luxury products are even more revealing. It’s part of our behavioural wiring where tying the ‘keeping up with Jones’s’ concept with the desire to being seen as part of the tribe means if Paul buys one, John does and so will potentially Stuart and David (names changes to protect the guilty!).
We have been working with a b2c Client for the last few years where an initial purchase can rise as high as several hundred thousand pounds. We have developed a semi automated referral programme that over the last 12 months have brought in sales of over £6,000,000. Last year that accounted for 20% of annual sales.
The win/win formula
From our experience with Clients, when you add in an incentive that is only available to the referring process then there is an increase in referrals of up to 35%. The key is to provide a dual win scenario – basically both the referrer and the referral benefit from something that is unavailable outside of that process. This can be value added, gift/cash related or simply based around kudos.
How can ‘Friending’ positively impact your marketing and sales results
Fancy adding a concerted, effective referral marketing programme to your marketing mix? Then drop us an email or give us a call on 0870 742 4458 and we’ll help you look at the opportunities available to you.