Fact: Building an army of brand lovers increases retention & lowers your CAC

Marketing is full of growth funnels and frameworks that agree in one thing: since the best way to lower your customer acquisition cost (CAC) is by getting your customers to do the acquisition for you, advocacy is a must.

The first step to achieve this, is to acknowledge your customers as real people.

Clients, customers, users, visitors, or as I like to call them, humans, are really complex creatures. By nature, we are social and emotional beings. We feel, relate and empathize with our fellow human beings in such a way, we develop a deep sense of belonging that defines our decisions.

Users *cough*, I mean, HUMANS are real people with families, passions, stories, and dreams to pursuit, and as surprising as it can be, your product turns out to have a much more important role than you imagined: among all the products that exist, these people (your consumers) decided to spend a moment of their valuable lives (remember that they only have one life!) to choose your product.

Your humans deserve time and care.

Choosing your product is only the beginning of a long-term relationship you should be focusing on creating. Let's remember that the Marketing funnel is completed after the Conversion (the purchase), but it is at this point that the Growth funnel starts.

Conversion becomes Acquisition in this Growth funnel, and its next step is Activation, which depending on your product, is the step when users give your product an active role in their lives; they're not trying it anymore; they're actually using it! At this point, you should increase Retention efforts and pamper your users to ensure they don't leave.

Pretty much, taking care of your relationship with users works just like taking care of a normal couple's relationship. You must give time, flowers and joy to your significant other to guarantee they remain happy being with you. And if they are truly, madly, deeply in love with you, they will tell everyone about how happy they are with you and recommend getting someone like you. That's how Referrals work (after Referrals, comes the Revenue part of the funnel, but we'll focus our time today on explaining the magic of Referrals).

"Referral marketing, also known as 'word-of-mouth marketing', involves?attracting new customers through the recommendations of current happy customers. Providing incentives to customers to advocate your brand's products or services is at the core of successful referral marketing. "(Reputation.com )

Advocacy: Building communities and brand love

Referrals can become your lowest-cost acquistion channel, by spending from little to none in getting your humans to acquire more humans for your product. I want to tell you about some experiences I had in Jüsto , TREBEL Music and Coca-Cola , where I was able to test three different types of strategies to get true brand advocates.

1. Incentive-based referrals in Jüsto: Jüsto is a Mexican start-up (and one of the fastest-growing soonicorn startups in the Latin America region) that consists of a 100% online supermarket that, by eliminating intermediaries, maximizes the freshness and quality of the delivered products. To grow the user-base, Jüsto relies on an incentive-based program that gives $20 USD of in-app credit to every user that makes their first purchase using your referral code to both users (the old one, and the new referral). This is the most common type of referral strategy among startups and a very efficient one, where you define how much you are willing to spend/give per user. Still, I only recommend this strategy if you have a solid product with a high retention rate. Giving away money works very well to acquire tons of users, but if your product doesn't have what it takes to keep these new users onboard and engaged with your product, they'll leave and you'll end up wasting a lot of time and money.
2. Taking the time to educate TREBEL Music's community: TREBEL is the fastest growing music app in the LATAM region, and the sentiment in the comments of our TikTok posts used to be awful; people were trolling each other, complaining about TREBEL's app, and even giving shoutouts to our competition. So in order to revert this, we began responding to every single comment. We started greeting back users, helping users that had problems with the TREBEL app and, most importantly, educating them on what makes our product stand out among the others. After one month of responding to every single comment, we saw the results... Some users were now greeting each other, some others were answering the questions of other users about our app, and some others were even explaining our product's added-value features and the reasons to switch to our platform; we created a community of active members who love our brand and educate newcomers about our product. This strategy demands investing time, but as you read, building a community is worth it.
3. Making it easy to share brand love with Coca-Cola: We all think about sharing when we think about Coca-Cola, right? And trust me, that's not only because of the messages in the Marketing campaign. Coca-Cola enables you to share a Coca-Cola. The real magic behind Coke's Marketing is that it takes you from storytelling to storydoing by easing the product's shareability for you. Think about this: You have a family gathering on Saturday. On your way, you see a billboard ad with a message that claims that sharing a Coca-Cola with your family while enjoying a meal makes the moment better. You arrive at the store to buy snacks and find a promotion to buy a bag of chips and a 2-liter Coca-Cola bottle for a special price. There's nothing stopping you from falling for that promotion, so you buy it, take the Coca-Cola (and chips) with you to the gathering, and enjoy it with your family. That 2-liter Coca-Cola bottle was consumed by all members of your family, not because Coca-Cola told you to share it, but because it made it easy for you to share it. That's the key takeaway: make it easy for your users to share your product.

Referral programs are a low-CAC channel that, if done correctly with a high-retention product, can ensure rapid growth and a snowball viralization effect on the way. The more your users love you, the more they'll share you and the less it'll cost to drive awareness, consideration and acquisition.

Thank you for taking the time to read my article. I'd love to read your thoughts, ideas, learnings and experience with referral, community building & sharing strategies in the comments. And talking about sharing, why not share it with your network?