Referral marketing is often a bit underrated, especially when agencies are thinking about growing their client's businesses. In part, this is because it feels difficult to control and impossible to automate.
Enter ReferralCandy, which has cracked the code on referral marketing automation, at least, for eCommerce brands who fulfill a few simple criteria.
Here's how it works: current customers receive a promotion that gives them the ability to share an eCommerce store with their friends. Their friends get a reward, like a discount. They get a reward too, such as cashback, an even bigger discount, or a custom gift. The platform can be connected to quite a few commonly used marketing apps and offers analytics on how well the program is working.
Raul Galera is the Chief Advocate at ReferralCandy, and he joins us today on the Agency Ahead podcast to talk about the power of referral marketing and what it takes to launch a referral marketing campaign on behalf of your clients.
What ReferralCandy Learned About Working with Agencies
In 2019, ReferralCandy started interviewing agencies to find out where the gaps were in their referral marketing strategies, and to learn how they could help. They learned a lot about how they could help agencies do more with referral marketing.
"We learned how they see it, how they approach it when referral marketing comes up in a client conversation. We were looking to build our referral program, and we wanted to know what was going to make ReferralCandy attractive for agencies. We wanted to know how we could create this program so that agencies could see themselves reflected in it."
On day 1 of these interviews, ReferralCandy learned that referral marketing only works for certain types of clients.
"The first thing they look at is whether [clients] have a good product. Your product must be good. Otherwise [referral marketing] is just out of the question."
Customers won't recommend a product if it's no good, no matter how attractive the commission or how valuable the free product they might get in return might be.
In addition to a good product, Raul learned that the stores that use this type of marketing must have excellent customer satisfaction at the end of the day.
"You need your customers to be happy with the purchase they made, or a referral program won't help."
Agencies won't start looking at referral marketing, therefore, until their clients have passed the initial growth phase.
"They need a large customer base they can leverage. Then they can turn these customers into their marketing team."
Referral marketing just won't have the same impact for a start-up with very few clients as it would if you had a large base of followers, a large email list, and plenty of people to market to.
How Agencies are Positioning and Selling Referral Marketing
Raul says most agencies position referral services as a bundle with their other services.
"It's typically because an agency is handling the client's post-purchase flows, or it's an agency that's doing email marketing for them and so referral marketing comes up because it's something you can add to email marketing."
He says it typically works much better as an add-on service than as a stand-alone service.
He says some agencies are very structured about choosing when to offer referral marketing services.
"They make their customers go into these different levels. If you're level 1 and 2, you're focused on-site optimization, email marketing, etc.; once you move to level 3, that's where they're going to start getting into referrals, customer retention, or going even deeper."
Setting up the ReferralCandy Service
Part of the appeal of ReferralCandy is, of course, just how automated it is.
It's also easy to use.
"ReferralCandy is set up so even small brands that don't have a designer or a developer can use it and set it up. Setting up ReferralCandy can be as easy as selecting the rewards, uploading a logo and a banner, and… we literally do the rest."
For those who like to be a little more hands-on?
"We can go into full customization. You can edit templates directly with HTML or CSS. You can make it look like the rest of your marketing assets. You can connect it with several tools like Klaviyo and MailChimp. It really depends on the agency, and how they want to set it up."
He says agencies tend to stay really involved in the formation of the initial strategies.
"How much are we going to offer customers for referring their friends? What are we going to give to those friends when they purchase from the site for the first time? Are we going to offer more to the friends than to the customer?"
The marketing agency also has to test and fine-tune these campaigns, once launched.
He says that businesses absolutely tend to do better when agencies get involved with the design of referral programs.
"Down the line, the results are typically better."
How ReferralCandy Helps Marketers Learn About Referral Marketing
ReferralCandy has posted a lot of resources to help agencies learn more about how to make the best use of their platform.
"We have an amazing support team who steps in and makes recommendations. We also put a lot of content out there in terms of how to improve a referral program, how to launch it."
Raul also works directly with agencies to make sure they're able to make full use of the program.
"My job is to look at their accounts, look at their customers, and maybe reach out to them like: hey, this particular client got this promotion so it might improve the referral program. It's basically another set of eyes looking at their clients."
Raul says there are some common questions that come up. Functionality, but also best practices.
"What types of rewards should we offer? Should we offer a commission on a future purchase? A fixed amount or a cash reward instead of a discount? Should we offer a gift? All of that typically comes into play. They also want to know what other brands are doing to get some ideas."
They also want to know how they line it up with other campaigns they might be running at the same time.
"We're running a weekend offer. How can we make sure that's not going to affect the referral program or the other way around? How can we incentivize customers to refer while we have this other campaign running? How do we avoid diverting customer attention?"
Raul stresses that every client is different, but that they're usually trying to fit it all into the marketing mix they have for that client at that moment.
Places To Chat With Other Marketers About Referral Marketing
If you want to talk to other marketers about referral marketing, Raul suggests some of the Facebook groups that exist for eCommerce groups, especially those for Shopify.
"We're active in those groups, and we try to respond. We're also active on Slack communities. Whenever anything comes up there, we try to participate in the conversation. Especially these days, if you're in the eCommerce world, there are tons of communities you can join with people who are willing to help."
Raul adds that he finds this communication to be an incredibly special thing.
"Entrepreneurs and agencies are sharing experiences in their own world. They see eCommerce from their own perspective. It's a rich read, to see what Merchant Groups and agencies are discussing. It's fascinating for me."
How explicit should agencies be about selling referral marketing?
Raul thinks that selling these services works best when agencies bring it up to clients as a natural move for that company at that moment.
"Timing is really important."
When recommendations are happening organically, then it's the right time to explore referral marketing."The goal for all programs is to incentivize those referrals, getting people to refer even more. You can run a Net Promoter Score survey on your site and ask customers: will you be willing to refer? You can get 90% of those saying yes, but not even half of those are going to end up referring."
Raul stresses this doesn't mean customers don't like you or your products.
"They're just busy. There's a lot of things happening in their daily lives. It's all about having those things in place but also having a promotion going on, making sure the customers are reminded about the program and having a clear path for them, actually making a purchase, and signing them up for the referral program. It's a cycle. If you get a customer to refer a friend and that friend joins the referral program, the cycle starts again."
How 2020 Changed Referral Marketing
2020 is still shaping...pretty much everything, so Garrett asked how last year impacted the referral marketing industry.
"The referral marketing industry has grown with the eCommerce industry in general," says Raul. "I think everybody had a little bit of a hiccup for a couple of weeks in March. We just didn't know what was going on, and we didn't know what was going to happen to the rest of the year. After that, we saw eCommerce absolutely exploding. I think I read that we reached the level of penetration that was expected for 2025. We literally fast-forwarded 5 years in a matter of weeks. Shopify was having Black Friday traffic every single day in April."
He says one interesting thing that happened was that businesses and agencies started seeing referral marketing not just as a lead generation machine, but as a customer retention tool as well.
"There's a lot of competition out there. We need to create a community of customers. We need to make sure our customers are happy to be our customers and have a reason to come back for more, at least a reason to stick around, to stay top of mind and make sure they're talking about us."
Customers might not buy in the next six months...but you can keep them talking.
"I think that was the biggest shift. Brands needed to keep their customers around, and referral marketing was one of the tools to do that."
In other words, it comes back to the buyer's journey...and the unique ability referral marketing has to touch customers at every point on that journey.
What's your right now cause?
From the moment ReferralCandy opened its doors, its company mission has been to help SMBs.
"We have another product called CandyBar mostly dedicated to brick-and-mortar stores. We've seen the pain from merchants firsthand, so we've put them in the spotlight, put them out there, highlighted their voices. We've tried to make it easy for them to get online."
"At the company level, we've tried to maintain the base of brick and mortar stores and keep small businesses alive. Without small businesses, there's really no world as we know it in my opinion."
Raul lives in Spain, where the pandemic has hit especially hard. He feels lucky to work in the eCommerce world, an industry that's still alive when everything is going so crazy.
"On my own personal level, I've just been trying to help anyone around me that's needed help. I've helped with job introductions, applications, reviewing resumes, figuring out ways to find jobs, donating to charity."
He says he doesn't have one particular cause. He's just trying to give back in any way he can.
Connect with Raul Galera
You can get in touch with Raul by email.