Customer referrals and word-of-mouth marketing are powerful ways to grow your business and build trust with your audience. But how do you measure the impact of these strategies on your bottom line? In this article, we'll show you how to track and analyze the results of your referral programs and word-of-mouth campaigns.
Before you start measuring anything, you need to define what you want to achieve with your referral and word-of-mouth marketing efforts. Do you want to increase your sales, retention, loyalty, or awareness? Do you have a specific target audience or segment that you want to reach? How do you align your goals with your overall business objectives? Having clear and realistic goals will help you focus your efforts and choose the right metrics to track.
I agree, but I believe that breaking it should be mentioned that these goals need to be broken down into what can be achieved by the team currently, and what can be achieved if additional training, or specialists were brought onboard. Essentially breaking down these goals into items that are currently actionable, and what would scalable.
While I believe having a goal is important, without passion, anything pursued will eventually be in vain. If you want your business to succeed, you need to be in alignment with your authenticity. As long as you’re acting out of good faith then the consumer base is already out there. Just be in alignment with your authentic self. This will ignite something within you that will be a lighthouse in a consuming storm. Having this light is the actual thing that will help you focus on your goals, as there are no goals without passion.
Depending on your goals, you may want to measure different aspects of your referral and word-of-mouth marketing performance. For example, you can measure the referral rate, which is the percentage of customers who refer others to your business. Additionally, you can track the referral source, which is the channel or platform where your referrals come from. You can also measure the referral conversion, which is the percentage of your referrals who become customers or take a desired action. Additionally, you can track the customer lifetime value (CLV), which is the total revenue generated by a customer over their relationship with your business. Furthermore, you can measure the net promoter score (NPS), which is a measure of how likely your customers are to recommend your business to others. Lastly, you can measure the customer satisfaction score (CSAT), which is a measure of how happy your customers are with your products or services.
There are two important things to understand when running a business: 1. You’re actually running a community. 2. Being a business owner means being a role model. When you run a business you set an example, if you choose to be more sustainable than your competitors, people will take notice. If you take the time to research the ingredients you are using to ensure the health and safety of your consumers/community, people will take notice. This is important to understand.
To collect your data, you need to have a system or tool that allows you to track and attribute your referrals and word-of-mouth activities. You can use referral codes or links, surveys or feedback forms, or analytics or CRM software to do this. Referral codes or links are unique identifiers that you assign to your customers or partners who refer others to your business. Surveys or feedback forms are questions that you ask your customers or prospects to find out how they heard about your business or how satisfied they are with your products or services. Analytics or CRM software are applications that help you monitor and analyze your website traffic, sales, retention, and other key indicators.
Most website(s) tools do this automatically, or after you have turned on specific settings in the software. If you’re company/site doesn’t have this feature I would look into Google analytics.
Once you have your data, you need to analyze it to understand the impact of your referral and word-of-mouth marketing strategies. You can use techniques such as benchmarking, segmentation, correlation, and testing. Benchmarking involves comparing your results with your previous performance, your competitors, or your industry standards. Segmentation involves breaking down your data by different criteria, such as customer type, referral source, or product category. Correlation involves finding out how your metrics relate to each other, such as how referral rate affects CLV or NPS. Testing involves experimenting with different variables, such as referral incentives, messaging, or channels, to see what works best for your business.
Based on your analysis, you can identify what works well and what needs improvement in your referral and word-of-mouth marketing strategy. You can then use this information to optimize your tactics and increase your results. For example, you can reward customers or partners who refer others to your business with discounts, freebies, or recognition. Additionally, you can encourage customers to share their positive experiences and reviews with your business on social media, review sites, or blogs. Furthermore, creating engaging and valuable content that showcases your products or services and educates your audience is a great way to optimize your strategy. Finally, partnering with influencers, experts, or advocates who can endorse your business and reach new audiences is another way to optimize your referral and word-of-mouth marketing strategy.
This is where SEO or search engine optimization is going to be your best friend. Every link that you have that backtracks to your website or social media accounts places your higher in the calculated number list of websites that pop up on Google or other search engines. The better SEO you have on your website the higher up that list your site you will be. Traction to your website can and will play a role as well but having well written SEO is going to help in the long run.