A 101 Guide to Social Referral Programs. Amplifying Your Brand Reach via Social Referral Programs

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1 Amplifying Your Brand Reach via Social Referral Programs April 2012

2 Harnessing the Power of Your Brand s Advocates via Social Referral Programs S ocial referral programs, by nature, tap into consumers need and desire to share information and content with their peers, resulting in Consumer-to-Consumer (C2C) social marketing. If brands can properly harness the power of C2C marketing, they can turn their existing customers into social advocates, creating a new, high-value marketing channel. This new channel can help brands produce highly qualified new customers and sales, boost traffic and awareness, and provide deep insight into customer behavior across their social graphs. Additionally, this channel can foster consumer-generated content to increase brands search engine result placement (SERP). With the increasing amount of consumer online sharing and conversations, brands have a new opportunity to identify their highly engaged, loyal advocates and turn them into social advocates who, in turn, refer the brands and the products or services they sell to their friends. This is the foundation of a social referral program. Social referral programs drive new traffic to brands websites from content that was created and shared by consumers. These referrals come in the form of s, instant messages, personal URLs (PURLs), tweets, posts, shares, +1s, etc. Due to the fact that these social referrals come from friends or connections, the referrals are highly qualified new leads or sales. Social referral programs are a must-have for marketers looking to improve their social footprints and influence their consumers to drive traffic and sales. With successful social referral programs powered for over 200 leading brands and agencies under our belt, the Extole team has assembled this Social Referral Program Guide to explore the basics of the social referral process and the importance of capitalizing on brands existing customer advocates. In addition, the guide will cover results marketers can expect to see from launching social referral programs. This 101 Guide to Social Referral Programs outlines: - A Shift in Consumer Behavior, the New Marketing Opportunity - The Anatomy of an Advocate - The Social Referral Process - Expected Results from Social Referral Programs - How to Get Started with a Social Referral Program 2

3 A Shift in Consumer Behavior, the New Marketing Opportunity Word of Mouth (WOM) has always been a high-value marketing channel for brands. On average, WOM recommendations result in 3 to 5x higher conversion rates than other channels. Research has also shown that consumers trust friends and peers more than they trust brand advertising. As stated by Nielsen 1, 90% of consumers trust recommendations from their friends and 70% of consumers trust opinions posted online. Until recently, the challenge has been finding an easy way to automate and measure WOM marketing, since it traditionally occurred offline. At the same time, consumers are sharing more online every day whether it s updates, conversations, recommendations, photos, tweets, posts, shares, or +1s. Currently, consumers share 4 billion things on Facebook, 200 million things on Twitter, and 1 billion things on Google+ every day and Mark Zuckerberg predicts 2 that every year, consumers will share twice as much as the year before. This increased amount of sharing enables marketers to tap into the power of C2C dialogues. The increase in consumer sharing also results in an increase in social SEO, and the search engines have taken note, now incorporating consumer-generated content into SERP. Both Google and Bing have updated their algorithms to pull in social signals and even display personalized results. For many companies (especially those with constantly fresh/dynamic consumer-generated content), social referral traffic has risen to the #2 or #3 source of referral traffic (behind organic search and any online advertising). The reach of social networks is staggering. Research shows social networking sites reach 82% of the world s online population; representing 1.2 billion users worldwide. Research also shows that 1 in 5 minutes online are spent social networking; with 3 out of 4 minutes spent on Facebook. What this means: consumers are online, and in order to get in front of them marketers must join the conversation and participate with consumers within the content Total Unique Investors (MM) The Rise of the Global Social Networking Audience 1,600 1,400 1,200 1, Source: comscore Media Metrix, Worldwide, March 2007 October B Total Internet Users 1.2B Social Networkers By the Numbers - Social networking sites represent 82% of the world s online population 1.2 billion users worldwide - 1 in 5 minutes spent online is social networking; 3 in 4 minutes of social networking is on Facebook - Facebook: ~800M users; estimated 1B users by December Google+: ~90M users; on track to reach 400M in year - Twitter: ~500M profiles - LinkedIn: ~135M members 3

4 areas of their social graphs. On average, each Facebook user has 130 friends. If brands can reach as few as one person on Facebook and get that person to endorse the brands products or services, brands have amplified their reach by 130. This goes for Twitter and Google+ as well (with smaller averages but the numbers are growing). In a recent report by Pew Research 3, the average American has 634 ties in their overall network, and technology users have bigger networks. The increase in consumer sharing online, combined with the reach of social networks and the power of WOM creates a massive opportunity for marketers. The opportunity is to tap into these online conversations and incent loyal customers to promote and recommend the brand to their friends. This powerful new marketing channel is the basis of a Social Referral Program. The Anatomy of an Advocate To understand how to effectively launch a social referral program and foster advocates, we must first understand the anatomy of an advocate. Social advocates are people (customers) who talk favorably about brands or products, and then pass on positive (WOM) messages about the brands through their social graphs. Whether they have signed up for a brand s database, follow a brand on Twitter or have liked a brand s Facebook or Google+ page, these advocates are an instrumental part of a marketer s strategy. A number of factors contribute to the motivation behind social advocates. Some advocates refer friends because they feel a sense of obligation to a brand. Others are driven by a sense of self-importance. And let s not forget about those who feel an authentic excitement about a brand and its products and services. At Extole, we ve found with our 200+ customers that there is a small subset of social advocates who, by their nature, are willing to promote brands and the products and services they sell, we refer to these as organic advocates. Your advocate population can be amplified to include a much larger set of customers by incorporating the following tactics: - Make referring easy Make it easy for customers to share your brand s products and/or services with their friends. Include relevant sharing options ( , Facebook, Twitter, Google+, etc.). Default messaging that advocates can customize helps increase sharing and the effectiveness of the messages. - Increase participation with incentives Give your customer advocates a compelling reason to share with their friends. This could be an internal offer (free goods, discounts, or loyalty points), gift cards, or charitable donations. Make sure there is an incentive for their friends to make sharing more attractive. - Add recognition and gamification Tap into human desires and behavior to compete, excel, and be recognized for achievement. Add in leaderboards and scoring to your referral program to foster participation and additional sharing. Brands have an enormous opportunity to foster their customer advocates to create an incredibly powerful marketing channel via social referral programs. Done correctly, social referral programs can amplify a brand s reach exponentially. 4

5 The Social Referral Process A social referral program is an end-to-end marketing program built to identify and engage a brand s social advocates, convert friends into new customers, and optimize results. The social referral process begins with outlining the referral program and offer. The next step is promoting the program to the brand s customer base. From there, the brand will be able to identify and foster social advocates who will promote the brands and refer friends. Friend offers and conversion tools encourage friends to purchase, register, or redeem. Analytics help the brand understand customer behavior across their social graph. 1: Brand Launches Social Referral Program Brand creates a referral program offer and promotes to its customer base to drive the highest awareness and participation rate. 4: Friends Receive Trusted Recommendations Friends receive social shares as trusted recommendations in the form of personalized s, tweets, Facebook messages or posts, Google+ messages, etc. Because the referral comes from a friend, there is an increased open rate, click-through rate (CTR), and conversion rate. 2: Advocates View Offer and Participate Loyal, engaged customers see the referral program offer and choose to participate. The referral offer provides customer advocates with a compelling reason to share and includes an offer for their friends. 5: Referral Process Amplifies Over Time Effective social referral programs are run on an ongoing basis, continually drawing in more advocates and their friends, creating a high-value marketing channel that draws new customers, traffic, sales and improves SERP. 3: Advocates Share with Friends Advocates share the referral offer with their friends and social communities via posts, tweets, s, photos, etc. These social shares live on and have a positive impact on social SEO. KPIs Analytics Advocates: 11,017 Shares: 67,260 Visits: 21,218 Sales: 1,623 Sales by Share Channel Campaign Performance 2,100 1,800 1,500 Other Facebook PURL Twitter 1, / / / / /2012 J. Hilburn is the leading ecommerce destination for quality, custom-tailored menswear. 5

6 Expected Results from Social Referral Programs The measures of an effective social referral program are participation, amplification, friend clicks, referral traffic, click-through rate (CTR), and conversion rate. The ability to track and measure across these dimensions and channels enables brands to optimize the program for ongoing success. Program Measurements - Advocates Referral program participation is measured by the number of customer advocates sharing the program. The number of advocates will vary according to the size of a brand s existing customer base, richness of the referral offer, and how the program is promoted. - Shares per Advocate Program amplification is measured by the number of times each advocate shares. A share can be an , tweet, Facebook post, Google+ post, etc. The number of shares per advocate will vary according to the richness of the offer, ability to continue to earn rewards, and ease of sharing. - Social Shares Program reach is measured by the total number of social shares across , Twitter, Facebook, Google+, etc. These social signals drive referral traffic, awareness, and social SEO. - Clicks per Share CTR of social referral programs is measured by the number of friend clicks per social share, which varies according to the sharing channel. Shares via social channels (Facebook, Twitter and Google+) see a higher click-per-share rate because they are one to many shares. shares see a lower click-per-share rate because they are one to one shares. - Friend Clicks Friend clicks reflect the volume of new referral traffic driven by a social referral program. The volume of friend clicks will vary according to the richness of the friend offer and incentive. The clicks come from the social share , tweet, Facebook post, Google+ posts, etc. - Friend Conversion Rate The friend conversion rate reflects the number of sales-per-friend clicks and varies according to the sharing channel. - New Conversions (Sales) Conversions are the number of new friend sales, opt-ins, or redemptions resulting from the social referral program. 6

7 Brands can optimize the performance of their social referral programs by testing and optimizing offers, effectively promoting the program, and testing messaging by sharing channel. The Social Referral Funnel Social referral program effectiveness is measured by: - Advocate participation - Shares per advocate and number of shares - Friend clicks (referral traffic) and clicks per share - New conversions and conversion rate Advocates Shares /Advocate Social Shares Clicks /Share Friend Clicks Conversion Rate Conversions Sharing Channels There are a number of ways in which advocates share a referral program with their friends, including , personal URL (PURL), Facebook, Twitter, Google+, etc. Sharing, clicks per share and conversion rates vary according to sharing channel. Making sharing easy, and testing and optimizing messaging according to sharing channel are important components and directly related to social referral program success. Clicks per Share by Channel Conversion Rate by Channel Twitter Facebook Twitter PURL Facebook PURL Amplification (clicks per share) is highest in social channels Twitter is highest; is lowest. Conversion rate is highest in oneto-one sharing is highest; Twitter is lowest. 7

8 - is the most highly used sharing channel by advocates. An share is sent directly to a friend, so does not see the same amplification as social shares. drives the highest conversion rate of all sharing channels. However, it sees the lowest clicks per share. - PURL The second highest advocate sharing occurs via PURLs. PURLs can be used to share with friends through , blogs, instant messages, and social networks. PURLs can be shared one to one (such as via an ) or one to many (such as via a Facebook post). PURL sharing sees the second highest conversion rate, but lower clicks per share than social channels. - Facebook The third highest advocate sharing occurs via Facebook. Facebook posts are one to many shares, as the referral exists within the post and results in the second highest clicks per share. Facebook conversion rates rank third after and PURL. - Twitter The fourth highest advocate sharing occurs via Twitter. Twitter posts are one to many shares and get the highest amplification in terms of clicks per share. Twitter conversion rates average the lowest of all sharing channels. Customer Examples The following are sample results from Extole social referral programs. The examples span the breadth of social referral program volumes, shares, and conversion rates to illustrate what companies can achieve with social referral programs across number of advocates, social shares, clicks (referral traffic), and conversions. Industry Examples Retail, Automotive 14-Month Total Services, Food Services 7-Month Total Retail, Online Apparel 7.5-Month Total Advocates 46,196 16,951 2,978 Shares/Advocate Social Shares 128,834 43,969 22,754 Clicks/Share Friend Clicks 109,612 50,040 20,598 Conversion Rate 15.65% 8.52% 19.80% Conversions 17,157 4,261 4,078 8

9 SendGrid, a leading cloud-based delivery service, knew that word-of-mouth referrals drove a significant amount of its business. Wanting to capitalize on this, SendGrid partnered with Extole to launch a Social Referral program. Results: Past 12 Months - Identified over 1,000 brand advocates - Averaged 6 shares per advocate - Generated over 6,000 social shares across Facebook, Twitter, and - Drove over 600 new transactions - Achieved 428% ROI in the past 6 months How to Get Started with a Social Referral Program Successfully executed social referral programs drive measurable social marketing results for brands and should be run on an ongoing basis. To get started with a social referral program, there are several elements to consider: - Creating the offer The referral offer provides customer advocates with a compelling reason to share with their friends. It also includes an offer to incent friends to convert. Brands should consider their business type, customers and program goals to determine the best offer for their customer bases internal offers (free goods, discounts, or loyalty points), gift cards, or charitable donations. Effective internal offers can also incent repeat purchases from your social advocates. - Promoting the Social Referral Program Driving awareness of the social referral program is critical to its success. Brands should leverage their owned assets, including corporate websites, lists, as well as social networks Facebook, Twitter, Google+, LinkedIn, etc. to promote the referral program to their customers and drive the highest participation rate. - Sharing tools for advocates Making it easy for your advocates to share with friends is imperative to a referral program s reach and effectiveness. Depending on business type, brands should include combinations of , Facebook, Twitter, Google+, and LinkedIn as sharing options. Providing a pre-populated message that advocates can personalize improves the effectiveness of sharing messages. 9

10 - Converting referred friends Providing a simple, personalized experience for referred friends ensures the highest level of trust, engagement, and participation in a social referral program. Ensure that friend landing pages are personalized, concise, and have a clear call to action to drive optimal results. - Monitoring and optimizing Tracking, testing, and optimizing a social referral program over time will improve results. Make sure you can track performance of program promotions, so that you optimize placements and copy. Test different offers to see the impact on advocate participation and friend conversion. Monitor your sharing channels to make sure they are being used effectively. An end-to-end approach to your social referral program will help you identify and engage the greatest number of social advocates, foster the highest rate of sharing and amplification, and drive new high-value sales. Conclusion Social referral programs are a critical part of a brand s core marketing strategy. As online sharing and conversations continue to increase, brands have an enormous new opportunity to harness the power of their brand advocates and turn them into social marketers. With the new tools available, every brand should consider a social referral program to drive highvalue sales, acquisition, traffic, and improved SERP. Extole s 200+ customers are experiencing measurable social marketing results and they are seeing that these results are significantly higher than those of other marketing channels. The power of a social referral program is that fundamentally, consumers trust friends more than advertising. We hope the Extole 101 Guide to Social Referral Programs has helped you understand the importance and opportunity in implementing a social referral program and what results you can expect. For information on getting started with a Social Referral Program or Best Practices for Launching Social Referral Programs, please contact Extole at hello@extole.com. 10

11 Endnotes 1. Global Advertising: Consumers Trust Real Friends and Virtual Strangers the Most, The Nielsen Company, July 7, 2009 ( 2. Jason Kincaid, Zuckerberg: Online Sharing Is Growing at an Exponential Rate (and Users Are Sharing 4 Billion Things a Day), TechCrunch, July 6, 2011 ( com/2011/07/06/zuckerberg-online-sharing-is-growing-at-an-exponential-rate-and-usersare-sharing-4-billion-things-a-day/) 3. Keith Hampton, Lauren Sessions Goulet, Lee Rainie, Kristen Purcell, Part 3: Social networking site users have more friends and more close friends, Pew Research: Social networking sites and our lives, June 16, 2011 ( Technology-and-social-networks/Part-3/SNS-users.aspx) About Extole Extole is the leading Consumer-to-Consumer Social Marketing Platform, enabling brands and agencies to turn their customers into social advocates. Extole powers social referral programs, promotions, testimonials, and robust social analytics for more than 200 brands, helping them grow sales, increase traffic and awareness, and gain critical insights. Customers include Vistaprint, AAA, Shutterfly, J. Hilburn, New York Times, Kate Spade New York and SkyMall. Extole is a privately held company based in San Francisco, California. Follow us Facebook Twitter Google+ LinkedIn hello@extole.com (877)