MGM: understand the benefits of having a referral program in your company

Anyone who is confident in selling a quality product or service, with good customer service and a competitive edge, has a great chance of making money by giving a little boost to word-of-mouth marketing.

Therefore, in this article we explain the main benefits of having a referral program, how to implement it and some precautions to ensure the success of this investment.

What is MGM?

MGM is an acronym for Member Get Member or literally translated: member brings member, which is a marketing way of talking about the famous word-of-mouth advertising method.

This way of attracting new consumers based on the good experience of current customers is as old as the market.

This is because we are highly influenced by the people we have emotional ties with and sometimes even by the opinions of strangers.

After all, who has never been put off or even given up on buying an item or signing up for a service because of bad reviews from complete strangers in the comments?

Therefore, it is important to emphasize that the basic principle for your referral program to be successful is to have a purchasing journey that captivates your customer from beginning to end.

Benefits of having a referral program

Anyone who works in sales and closing deals knows how difficult it can be to get new clients.

The greatest marketing guru of all time, Philip Kotler, once said that it is 5 to 7 times more expensive to get a new customer than to keep an existing one.

And killing two birds with one stone, the referral program works on both fronts: appealing to customers who are already familiar with your brand and generating opportunities for new consumers.

Lower your CAC

In this sense, the main benefit of joining a referral program is to reduce your CAC, that is, your acquisition cost per customer.

After all, the process until your customer decides to buy from you doesn't start the moment they enter your store or your website.

Investments such as offline media, paid media, investment of time and money in social networks, paid traffic and even your sales team are included in the amount you pay for your customer to come to you and have enough confidence to decide to invest their money in your brand.

With the referral program, trust in your product or service is already built by the opinion of an acquaintance of this potential customer.

 

Qualified audience

Another advantage of referral programs is that customers who come through this channel are already predisposed to purchase and are more likely to have the profile of your product.

For example, a consumer of a high-end store that sells clothes for upper-class women is very likely to recommend the brand to friends, acquaintances and family members with similar tastes and lifestyles.

This way, you waste less time and money investing in buyers who are unwilling or outside the target audience profile of your business.

 

Reliability of your brand

One of the great values ​​we preach here at Beatz is: no one buys from someone they don't trust. That's why the referral program is so valuable, because with it you can use the credibility you've already gained with your current customers to attract new ones!

 

Customer loyalty

A good loyalty program works on both fronts, generating benefits for both the buyer and the referrer.

Therefore, with a strong appeal to those who already buy, like and trust your brand, you can engage your current customers and bring them to your company or e-commerce more often.

After all, you can encourage them to take advantage of the referral program benefits available to them so they don't lose them. For example, if your program offers discounts, it's important to set an expiration date for using the coupon. This will trigger urgency in your customer, who will take advantage of the benefit so they don't lose it, even if they didn't want to buy something beforehand.

How to implement a referral program?

Now that you know what it is and the benefits of joining a loyalty program in your business, here are some tips to make this system happen.

After all, this program will be part of your customers' purchasing journey and it is essential that it is functional so as not to create a negative experience for the consumer.

Study your audience

First of all, study your audience! Create forms, ask questions and record the preferences of your ideal consumer.

This way, you can create attractive exchange currencies that effectively motivate your customers to refer and buy from your business.

For example, if your target audience is more into minimalism, creating non-functional gifts may not be the best choice. Opting for progressive discounts and cashback may appeal more to this consumer’s desires.

Now, if your customers are super in tune with internet trends, creating gifts that are objects of desire could be a good idea.

There is no ready-made formula, you need to get your hands dirty and study your buyers.

Choose customer benefits

As you may have noticed, good referral programs generate benefits for both the referrer and the person being referred.

Therefore, pay attention to the previous step and study with your sales team how much you can invest in the referral program. How much you can invest in gifts or how much discounts you can achieve without losing profitability.

Systematize the program

As explained previously, the referral system is part of the customer's purchasing journey and negative experiences can backfire on your investment.

Therefore, it is important to implement a system that is practical for customers to use and managed by your team.

A good solution is to have the referral program registered online, where the customer, through registration, can have their purchases and referrals recorded.

Have a system to deliver the benefits

In this same sense, it is important that the user has easy access to the benefits generated by their referral program.

If you generate a discount code for the next purchase, make this clear by sending this proof via email or message to your customer.

So make it easy for the buyer to show that they are entitled to the benefit if they register their purchase.

Align your entire team on your referral program

And of course, when you implement your referral program, it is essential to train all employees to explain the system to customers, to understand how it works and to make it happen.

Therefore, schedule time to train and prepare explanatory materials so that everyone is familiar with the program and knows how to apply it. This way, you generate a good and uniform experience for consumers.

Work on marketing your referral program

And if word of mouth is older than walking forward, another saying we are faithful to is that advertising is the soul of business.

Without advertising that informs your referral program, your investment will stagnate.

When launching your new system, it is essential to have a targeted campaign to announce the news to your customers through multiple channels.

After all, it is important to keep in mind that, even if your customer is impacted several times by your advertisement, it may take time for them to effectively understand and assimilate what is being offered.

Therefore, be multichannel and efficient in communication. If you still have doubts or difficulties in making this happen, talk to Beatz.

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