What is referral marketing

Girl recommending a store through referral marketing

Surely when you have ever searched for marketing topics, this term has come up and you have thought: What is referral marketing? Well you should know that it is one of the keys to success in many businesses.

We are going to explain what it is, why it is important and how to apply it to your company to benefit from it. So if you don't know anything about this term, when we finish, you will surely have a solid idea and some keys to use it for your online store.

What is referral marketing

A person recommending a store using referral marketing

This term may not tell you anything at first glance, but the truth is that there is a Spanish one by which it is translated and, as soon as you know it, you will easily know what referral marketing is: word of mouth marketing.

In other words, we could say that it is the strategy for customers to recommend your products or services.

In other words, it is a technique for customers to motivate others of your products or services.

This is not easy to get and normally It can only be applied to those customers who are loyal and who have really been satisfied with your products and/or service, so much so that it encourages them to recommend you to family and friends.

How referral marketing works

A person recommending a service

As you can see, what referral marketing is is not much of a mystery. Perhaps the most complicated thing is to achieve it among the clients. But in general, that is not difficult either if things are done well.

Actually, referral marketing It is not something that was born recently, but rather has been done for years and yearsyes Please note that these are recommendations. We give you an example. Imagine that you go to a store and it turns out that it has very good quality products at an affordable price. In addition, they give you a gift for the first purchase and you accumulate points that you can redeem to buy other cheaper or almost free products.

If a friend or family needs something that you know is in that store, the most normal thing is that you recommend it and that you tell him that there he will find what he is looking for. But if the store also gives you prizes for those recommendations, then you will want to say it more times. Because at the end of the day, your referrals will make you win.

Thus, It is becoming more and more common for stores to offer referral codes so that customers benefit and, in this way, the company indirectly.

An example of this can be a store that has the possibility of registering a customer to obtain a code with which a discount of X euros is given to whoever knows it. Those euros are not only for that new client but, for having brought it, the owner of that code also receives the benefit.

Why an eCommerce is going to be interested in "losing money" like this

A girl recommending a product

Many eCommerce and business owners, stores, etc. they believe that referral marketing is nothing more than a waste of money. Keep in mind that you are offering discounts or coupons for future purchases if people are invited, and even those people are also given discounts.

However, It should not be considered that way but as an investment. It is called the method of attraction. If you make a purchase and on top of that they offer you a discount on the next one just for telling someone else to buy, and you are also satisfied with the purchase, it is normal to think that you will want to do it, especially if you have in mind to buy again.

Everybody wants to buy and win. It can be a discount, it can be a surprise, a free product, etc. And this, although create incentives to buy again. And you also win another client who will also generate income if he feels satisfied with your attention.

Benefits of using it

If within your marketing strategy you use referral marketing, then you will know what the benefits are. In fact, with what you have read before, several benefits will surely come to mind.

In summary, in case you miss any, you should know that:

  • It has minimal acquisition costs. Although it involves an expense, it is actually more of an investment because in the end you end up recovering it in a larger clientele that can bring you more money.
  • It's free advertising. It is not that you buy from these people so that they advertise you, it is that they, by earning through you, are going to advertise you, recommend you and encourage their acquaintances to buy. And that, believe it or not, is very important.
  • It helps you to be more predisposed to buy more and earn more. The advertisements you make will have a greater effect because customers know that they can earn more. Therefore, it is logical to think that future products or services that you launch will be encouraged.

To give you an idea of ​​how effective referral marketing can be, depending on the data handled, a customer, if he has been satisfied, is able to attract 3 more customers who will buy from you, and in turn, will bring more. Do you understand how it works?

Ideas to apply referral marketing

As we like to be practical and offer you ideas that can work in your online store or in your company in general, some of the most common practices of referral marketing are the following:

  • Contests They are based above all on the fact that one of the conditions to participate is to recommend friends. It can be to say who you would share the prize with, just to say one, etc.
  • Events. With whom to get a word of mouth. For example, that there is a 50% discount only one day because it is the anniversary of your store. And that, if they are referred, you get 5% more.
  • Events. Can you imagine recommending a store to a friend and that, when he goes, they offer him a gift from you? Not only do you look good with that person, but the other will also look good, especially if you also give them something as well.
  • Coupons or discount codes for referrals. It is what is most seen and used in online stores. A discount coupon with which the referrals obtain a lower price than if they did not have it and in return the person who gave the coupon also obtains that benefit.

Now that you know what referral marketing is, do you carry it out in your online store? Have you tried it? Tell us what you think as a strategy.


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