Referral Programs As a Marketing Strategy
It's important to investigate every possible marketing strategy that can bring attention to your company. Try to find strategies that keep your costs at a minimum, while reaching the maximum number of potential clients. When you're brainstorming marketing strategies to use for your new business, consider integrating a referral program into your plans.
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What Is a Referral Program?
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A referral program is a method of drawing in new customers using old customers or other agents familiar with the business. You use your current list of contacts to refer new customers to your products and services. So for instance, if you're a real estate agent you can ask your former clients to tell their friends and family to contact you if they plan to buy or sell a house in the near future. It's a cheap and simple marketing strategy based on word of mouth, WOM, advertising.
Benefits
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One of the key benefits of using a referral program as a marketing strategy is that you don't have to spend money on advertising up front. You only pay when someone provides a successful referral. Also, it eliminates the need to pay someone to distribute promotions on behalf of the company. A referral program can continue to bringing in new business indefinitely.
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Online Referrals
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One common type of referral program is online affiliate marketing. With this type of marketing strategy you employ other companies or individuals, who you may or may not have a previous relationship with, to direct people to your website. If the customer purchases your product you must pay the affiliate representative for the referral. The payment is either a flat fee or a percentage of the sale.
Setting Up a Referral Program
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Regardless of the type of referral program you plan to use, the process is pretty much the same. First, identify each specific product or service you want to sell. Next, set a promotional offer that attracts referrals for the people who promote the product on your behalf. For instance, you can offer a $50 payment for each referral in the case of a real estate sales connection. Finally, provide the referral with promotional materials, such as business cards and fliers, or online banner ads, in the case of an online affiliate program.
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