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Back in October we spoke with Nokia at the Festival of Marketing. The topic up for discussion was referral sales marketing and how it gives brands a new way of taking part in eccommerce without selling direct to consumers.
In this article I put forward the case for referral sales and why it could take over from brand ecommerce.
Over the years, brands have dipped in and out of direct eecommerce, selling their products straight to the consumer. Apple is one brand that has seen considerable success by selling direct, whereas others like GSK have called it a day (at least for now).
A brand’s website is still a reliable source of product information for consumers. Almost 80% of consumers visit a brand’s website during their purchase journey, but are often unable to transact on the site and instead forced to buy from the brand’s partner retailers or – even worse – from its competitors.
Rather than lose this consumer interaction, brands should engage with consumers directly, displaying suitable offers from their retail partners on their website.
Technology now exists that enables brands to stop relying entirely on partner retailers; instead they can use their website traffic to their advantage by embracing referral marketing and turning their brand traffic into sales traffic.
The case for online sales referral
Referral marketing (or word of mouth) is still one of the most effective ways for brands to acquire new customers because it focuses on the consumer and allows them to make up their own mind and choose the most suitable product.
A staggering 92% of people trust product recommendations from people they know and customers who are referred to brands or products by friends and relatives are likely to spend 13.2% more and have a 16% higher lifetime value.
If someone buys a product because their friend bought and recommended it, this is the strongest form of marketing that a brand can hope for. So is it possible to replicate this in online marketing channels?
The clear answer is yes. As 58% of people say that they trust recommendations from brand websites and almost 80% of shoppers visit a brand’s website during their purchase journey, brands need to take advantage of this consumer trust to influence their site visitors’ buying decisions.
To do this, brands don’t need to set up their own ecommerce website and sell direct to consumers. Not only can this complicate relationships with retail partners, but it can also increase costs, as brands have to deal with order fulfilment, returns etc.
Fortunately for brands, referral marketing has now come of age.
Referral marketing in the digital age
Word of mouth (WoM) has always been an effective (and quite literal) sales method, but it is now being replaced by ‘social voice’, which refers to both on and offline conversations about brands.
The traditional, verbal word of mouth does still exist, but has been adapted to include digital media and offer an insight into conversations taking place across all channels.
We often see people asking for advice on social media, from hotel recommendations to a local plumber. In these situations Facebook friends, Twitter followers et al, race to offer their opinion and recommendation.
So it makes sense that almost 70% of Fortune 500 companies are now actively engaging with customers via Facebook and 80% of social media users cite Facebook as their preferred way to connect with brands. This concept is known as conversational marketing.
Brands are now using social media platforms to advertise their products to engaged customers. This gives customers an easy way to purchase products via Facebook or email, especially for the release of a new product launch.
Cut costs, increase sales and gain insight
Of course social media is just one way of gaining WoM referrals and for some brands Facebook and Twitter are simply not the right media for their products. So… what’s the alternative?
The answer is simple – become an advocate for your retail partners’ offers. By acting as a trusted intermediary in the relationship between consumer and retailer, brands can become the reliable voice of referral. To participate in referral marketing, all brands need is control of their product data and access to retail partner offers.
Engaging with customers whilst they are researching a product also prevents them from visiting a competitor’s site, as they are given the option to purchase during their browsing. Referral marketing also allows consumers to access all possible product offers from the brand, rather than just those that are featured by the partner retailer.
Referral marketing also improves the relationship between a brand and its partner retailers, as there is no competition between them, plus the brand is sending highly qualified referral traffic to their e-commerce site.,
Not only this, but by advertising partner offers on their website, brands can gain access to a huge amount of customer sales data that can be used to improve future marketing campaigns and sales strategy.
How can brands use referral marketing?
Nokia is one brand that has come up with an innovative way of using ecommerce without selling directly to its consumers. Instead, Nokia is marketing its products to engaged visitors on the various Nokia.com sites and referring them to its partner retailers.
The Nokia sales referral solution allows consumers to select the particular Nokia handset they wish to purchase and then browse available offers, filtering options by product feature such as mobile network, price and contract length, to build a personalised phone package.
Once the consumer is happy with their selected Nokia handset and contract, the referral solution directs them to the specific partner retailer where they can purchase that offer.
There are many consumer benefits to this solution as there is no favoured retailer and the platform shows all available products, effectively acting as an impartial product comparison engine.
By understanding their end consumer, brands can refocus their marketing activities, taking back some control of the way their brand is promoted and how their products are priced and advertised – all with very little effort involved.
There is also no need to risk existing relationships with partner retailers; in fact the sales referral platform can help to strengthen them because it benefits brands, retailers and consumers.
So has referral marketing come of age?
Brand loyalty stems from the quality of a brand’s products, but also how it personalises the customer experience and emotional engagement. The power of a brand can be remarkable – just look at the success of Apple, Amazon and Tesco. However, the power of recommendation is invaluable.
The reason why referral marketing is still effective is because recommendations are usually impartial opinions from those who have tried and tested the products. Over 60% of people are more likely to purchase a product if it has been independently reviewed.
Also, many people prefer to buy from their favourite brands, with 61% of people stating that brand loyalty does still influence their purchase decision.
It seems that for consumers, a recommendation from a trusted brand still counts for a lot.
As more consumers favour price over brand loyalty, brands need to do everything they can to keep shoppers engaged with their products and keep them from visiting a competitor site. Providing comprehensive product information and a quick and simple purchase journey are clear necessities for anyone working in e-commerce.