My son is in kindergarten. He’s great at sharing with his friends. But, it’s a little trickier with his two-year-old sister. Sometimes when he shares with her, she gives back. When she doesn’t, he gets upset. She’s breaking a rule. More specifically, she’s breaking the golden rule.
The golden rule captures the compact at the core of humanity and civilization itself – the golden rule Wikipedia entry starts in Babylon. The golden rule is the embodiment of reciprocity. We understand as people and as citizens of the world that when someone does something that helps you, you should help them in return.
In marketing, this dynamic is quite literally captured by a referral from one friend to another. When that referral includes a benefit for both the initiator and the recipient, the power of reciprocity is sparked. Our data reinforces this fact. When incentives don’t exist, sharing doesn’t happen. When the incentives aren’t of similar value or aren’t transparently described, recipients don’t act as often. When sharing happens one-to-one with email, conversions are higher. Customers acquired through referrals are of the highest quality and are likely to share themselves. And, customers who refer their friends tend to be more loyal and make more repeat purchases, thanks in no small part to the incentive.
Social marketing has exploded. But, it hasn’t become a reliable acquisition channel. The reason is that social is often treated as location. But, social is human. Rather than advertising in the places where human expression is occurring, companies would be better served by initiating human expression. Referral marketing does just that – it’s a deliberately initiated and marketer controlled acquisition channel. It’s social in that it’s human. And, at its core is the golden rule.
Download Extole’s Referral Marketing Best Practices for 2014 to learn more!