Referral Marketing
Under recommendation marketing (also word of mouth , Eng. Word of Mouth ) is understood as a tool for acquiring new customers, which by word of mouth occurs, reviews and testimonials from customers. As a rule, the prerequisite is that the customer is satisfied with the provider's services. In this respect, adequate customer care and a corresponding loyalty marketing are upstream of recommendation marketing.
In addition to a company's customers, other market participants can also be considered as recommenders. This can e.g. B. Be an employee or network partner of the company. Network partners are also suitable recommenders. You do not necessarily have to have experience with the product yourself, but you need to be convinced of the provider's capabilities. B. consulting engineers, architects, etc.
Construction and development
Word of mouth is primarily about conveying information in a positive or negative way. A recommendation implies, in addition to pure communication, an influential reference to action, also of a positive or negative nature, which is usually preceded by one's own experience with the respective offer. The credibility advantage of personal recommendations over commercial messages has a comparably high impact on opinion formation, preference formation and purchase decisions.
Referral marketing is used as an acquisition method in many industries . Existing business contacts are used to gain new customers. This can be seen as the oldest merchant virtue in the market. This method comes from the United States, systematised and referred to as “advocating” or “word-of-mouth marketing”. and was brought to the German-speaking area in 2003 by Michael Mayer and Harald Lais, national directors of the business network International (BNI), and established in Germany and Austria based on the American model. Since the advent of Web 2.0 applications, controlled recommendation marketing, then often referred to as viral marketing , has moved more and more to the Internet.
classification
Recommendation marketing can be used in both marketing and sales . In sales, a distinction is made between active recommendation marketing or recommendation management (who would be happy about an offer?) And passive recommendation marketing (please recommend me!). This instrument can therefore be used for controlled acquisition.
Recommendation marketing wants to generate as large a number of positive recommendations as possible in order to generate new customer business and permanently increased sales. Since positive references require customer satisfaction, this is not just the job of sales, but of all departments that can contribute to customer satisfaction. In this respect, the goal of customer satisfaction should be an integral part of the corporate culture . This requires new training opportunities for all areas of the company.
Basically, the area of recommendations by third parties is different from affiliate marketing , since recommendation marketing is based on conviction. In contrast to affiliate marketing, in which market participants are primarily motivated to submit recommendations through commissions (often online in the form of links and offline through corresponding commission contracts).
The effectiveness of recommendation marketing is justified by the fact that statements by customers of a provider are considered more credible by new potential customers than statements by the provider himself. This is also one of the challenges of recommendation marketing: the recommendations must be convincing. Therefore, there is a close alliance with reference marketing, which can underpin the credibility of the recommendations.
Manifestations
- Personal recommendations: These are recommendations directly in the circle of friends and in the social environment of the consumer. The greater the trust in the person, the more effective these recommendations will be. Personal recommendations are probably the oldest form of advertising and are becoming increasingly relevant with digitization. It is still by far one of the most familiar forms of advertising.
- User-generated content (UGC) : Customers share their experiences with products and brands online, especially on social networks. Be it through the positive rating of a restaurant, the posting of the new shoes or through the reactions to review portals and price comparison sites. Customer opinions about products promote trust in brands and improve website conversions. This does not mean influencers. With influencer marketing, authentic content only imitates. UGC ensures trust and influencer marketing ensures awareness and reach.
- Product rating: There are online ratings for every product. They have become the decisive factor in the customer journey in all industries. People trust authentic reviews from existing customers on the Internet much more than any brand communication. The number of reviews also plays an important role in increasing sales.
- Trials: Free trials have already become the standard for digital products and free trial months are already considered good form in this industry. This trend is also spreading to other industries. Consumers are getting used to being able to try products before buying them. We are developing into a “Try-Before-You-Buy” society. For consumer goods, for example, product transfers among friends of the target group can be used as an excellent marketing tool.
- Seal for customer satisfaction: Seals are a special form of recommendation marketing. These bundle the positive experiences and reviews of the customers in the form of marketing key figures and thus build trust with the customers. This primarily addresses customers who do not want to read and compare hundreds of reviews individually. Seals on your own website and clearly bundled customer opinions convince potential customers.
Success factors
- Training of all employees who are in close contact with customers
- Integration into existing CRM systems
- Management commitment
Process in B2B
Original approaches include six building blocks.
- Recommendation question to the existing customer
- Qualification of the recommendation
- contact
- Appointment
- Feedback to the recommender
- Second feedback to the referrer to trigger further recommendations
The modern management process of referral marketing is now divided into four steps:
- Internal and external recommendation-focused analysis
- Definition of the recommendation strategy
- Planning and implementation of adequate recommendation activities
- Control and optimization of activities
For example, the Net Promoter Score (NPS) can be used to measure the results , with the help of which the willingness to recommend can be measured. This was developed by the American business author and business strategist Fred Reichheld together with Bain & Company . The recommendation rate can be used as a further key figure. It determines the proportion of those who became customers of a company based on a previous recommendation.
Other forms of marketing
literature
- Doreen Pick: Reference marketing in business-to-business business . In: F. Keuper, R. Mehl (ed.): Customer Management - Sales and Service Concepts of the Future . Logos Verlag, Berlin, pp. 103-131.
- Anne M. Schüller: Future trend recommendation marketing. Business Village, 2005. ISBN 978-3-934424-65-4 .
- Edwin A. Biedermann: Recommendation marketing - consumer networks , MSB-Verlag, Springe, 2015 (7th edition), ISBN 978-3-9817610-0-9 .
- Ekaterina Arlt: Referral Marketing - Working profitably with people and social networks. Dortmund Verlag, Dortmund 2011. ISBN 978-3-9812413-4-1 .
- Klaus-J. Fink: Recommendation marketing - the silver bullet for acquiring new customers. Gabler, Wiesbaden 2006. ISBN 3-8349-0005-2 .
- Peter Kenzelmann : Acquiring new customers through recommendation marketing. A practical book for sales and marketing. BoD, Hamburg 2007. ISBN 978-3-8334-7111-7 .
Individual evidence
- ↑ Definition of recommendation marketing, found on January 12, 2010
- ^ The 10 Greatest Word of Mouth Marketing Strategies to Utilize. October 29, 2018, accessed February 26, 2020 (American English).
- ↑ Sales strategy: free recommendations from chance. Retrieved March 18, 2017 .
- ↑ How is the recommendation rate measured? In: Unternehmer.de | Tips for SMEs & Startups . August 17, 2010 ( Unternehmer.de [accessed March 18, 2017]).