Mention me

Editor's Notes

1. Intro I am here to talk about one of the most fascinating elements of marketing: word of mouth marketing Start with a question: uber Heard from a friend? How many of you have used Uber? How many were influenced by a friend before you first used it? How many of you used their referral programme? That is the power of WoM marketing. Yet how many of you feel like you are successfully using WoM and referral marketing in your businesses. You are going to go away from here Persuaded of the value of referral marketing Knowing how to make word of mouth marketing work for your business
2. Two types of referral marketing: both very effective. Marketers want to be thinking about both. Uber is a great example for both.
3. Passive referral or “word of mouth” is the holy grail of marketing. It is the recommendation given to the right friend at the right time. It is everything you aspire to in all of your other marketing channels: right audience, right message, right moment. It conveys trust in a way that other channels simply can’t. How does WoM happen? Sometimes it is born out of raw enthusiasm for your brand. Sometimes it is born out of a friend complimenting one of your customers. Or asking for advice about a product. And their lies the challenge. This type of referral is uncontrollable. It’s happening out there all the time but what can you as a marketer do about it? The vast majority of brands just cross their fingers and hope more comes in. Or they focus on their net promoter score and hope that the people that give their brand an 8/10 or higher will go on and do the decent thing and recommend them like they said they would. Uber do better than this. They ensure that there is an incentive in the mix. That incentive means a recommendation is on the tip of their customer’s tongue. And when a friend pulls out their phone to call a minicab at the end of the night the uber solution is there and a simple referral code is easily accessible and usable in the moment. It is so simple and so effective.
4. The other type of referral is prompted referral marketing. More often known as refer-a-friend or member-get-member. This is about encouraging customers to share a brand with friends who might value it more directly. It doesn’t wait for the perfect moment, it asks customers to reach out to the right people. In asking this favour of customers, businesses almost always need to offer incentives. And when done well this can be incredibly effective. Also, unlike word of mouth marketing, it is controllable. Marketing teams can track and encourage this behavior and they have levers to pull to make it more successful. Uber didn’t just encourage word of mouth they also prompted customers endlessly to share and promote uber across their network. It was in doing both of these things that Uber gained more than half of their customers from their referral programme.
5. Brands like Uber, Airbnb and Dropbox have led the way on referral marketing in the last few years but the referral channel is set to become much more mainstream. Nielsen have done some great research on this. They’ve tracked trust and relevance of difference channels over time. Trust is how much a potential customer trusts messages that come in from a channel. Relevance relates to how relevant most messages from a given channel are to a potential customer. Here you can see that most existing channels are pretty bunched up on this chart. Mobile text ads do lease well on trust and relevance. Review and mobile editorial do best. But when you add refer a friend, it is head and shoulders above the other channels in both regards.
6. The other fascinating thing from this research is that almost all channels are losing trust. Almost all of these channels are gradually sinking on this chart. Nielsen has pointed to the rise of social media as one of the causes of this. The exception is referral from a friend. As people trust broadcast channels less, those recommendations from friends become even more valuable. Trust is so hard to build but in referral it isn’t built, it is transferred from one customer to another. That is worth a lot. FB alogrithm changes increase conversion on referral creative by 22%.
7. We’ve been learning a lot about word of mouth and referral marketing because it’s what we focus on. It’s what we do. And it’s what we’ve done exclusively for the last three years. We run over 100 referral programmes for brands across sectors and of different sizes … some of which are up here. From Farfetch and matchesfashion.com to Arcadia and Debenhams to Ovo Energy and eHarmony. And what we’ve seen across these brands is that referral is an amazing marketing channel.
8. It delivers volume. There aren’t many channels that you can add into your mix and have this level of impact. Quality And it brings in new referrers. Because referred friends are 3x more likely to refer other people. This is the path to viral growth. And critical to what we do is encouraging both word-of-mouth and prompted referral. We believe you need both to make the most of this channel.
9. To bring that to live and to show you how we do that I thought I’d show you a brief video that explains it. This shows how even in running a marketing-led referral programme you can encourage and track the word-of mouth marketing.
10. What you’ve seen was the user experience and it’s critical that it’s simple and intuitive and that it mirrors customers’ natural behaviours. However, in order to make it as successful as possible you need to understand it as a funnel, just like other customer journeys. And it is our job us to optimise the funnel. This is how we think about it.
11. And these are the types of numbers that we typically see. There’s a range. The optimisation process usually sees us start towards the bottom end of this range and climb towards the top. When you’re at the top referral will be at the heart of your marketing mix.
12. To optimise and to reach referral success we think of it in terms of this equation. Fundamentals come down to your business fundamentals. Your fundamentals should lead you to make different decisions about how you set up referral The incentive is interesting. It’s never just about the incentive but it matters. Our most sophisticated clients understand the elasticity of the different offer levels and type of offers. Psychology is key. Our funnel has a social interaction in the middle. If you don’t get into the heads of your customers. And promotion. You can have the perfect referral programme but if customers don’t know about it they won’t be talking about it. I’m going to walk through these to give you real examples of how to make referral work for each of these.
13. There are lots of components that impact referral in terms of how your business is set up. Here are some of them. I’m not going to walk through them all but I’ll talk to a few of them. Demographics Customer Satisfaction Discounting Environment – for bot heavy discounters and non-discounters It is rare that any of these are show stoppers but they will lead you to set up the referral programme in different ways.
14. The next P is psychology and this brings in lots of different components of referral, including the incentive.
15. When we think about psychology and incentives we often think of this weights and balloons metaphor. Explain metaphor. We’ve done lots of focus groups on this and these are some of the comments we’ve got in relation to these areas. Read comments. When we start with new clients we find them fixated on the left hand side. But it’s the right hand side that matters most.
16. Incentives are the oil in the machine. In most they’re not the primary driver but they do matter. They give your customer a reason to have a conversation. A good example here is Glasses Direct. 3x improvement. You will want to test different incentives for different customer segments to see what motivates them. Price elasticity of referral offers.
17. Effort matters. This can be in the user experience or in the Some of the worst referral programmes ask you to fill in a form with your friends names and email addresses. Too much work and it feels wrong. This can also be about the hoops you ask customers to jump through. Some require customers to introduce 3 friends. People don’t believe its challenging to introduce one friend, if they think they need to bring in three they won’t even start the process. A media client where the new customer had to be live for three months before they got a £10 voucher. Felt too far away and so people didn’t share. We reduced it to one month and the share rate increased 3 fold.
18. The social side is the most important part of sharing. People ask themselves: Will my friends like the brand? Will they appreciate the offer? Will they be grateful to me for sharing it? If the answer is yes, they’ll share. In the case of a prompted referral, the incentive might have made them think about sharing but it is the answer to these questions that will make them share it. A great example here was a test we ran with Bloom & Wild, the flowers brand. Give your friends £15 off = fine. Let your friends send their first bouquet for £10 = astronomical. Financially similar offers. The latter made it feel like they were able to do something for their friends that they would appreciate.
19. The final component is social risk. If there is any chance that they’ll look bad they will not share it. If they’ll look like a spammer. If they don’t know what their friends will see. If they might be perceived as trying to profit from their friend. As a marketeer, these are all traps that you can fall in and if you fall in any one of them them referral simply won’t work. Messaging and mechanics matter a lot here.
20. So all of this matters … but it’ll only make a difference if you can test and optimise it. Your challenge is to find the key to unlock the referral channel for your business and your different customer segments. Here is an example of a very simple test that we regularly run to understand the psychology of customers around referral. Generous vs selfish. Which do you think worked best?
21. If you are running a referral programme, you need a testing capability to make it fly.
22. Of course you want to test more than copy. It’s important to be able to test the offer. The amount, the type of incentive, spend constraints – all need to be tested. But how do you do that? If you serve the offer on the left on a Monday but want to change it on Tuesday to the offer on the right.
23. Marketing teams need to be able to change everything, including the offer, but referrers and their friends have to get what they were promised. You do that using AB testing by cohort in order to make sure that all customers have a positive and consistent experience whilst you benefit from learning what resonates with your customer segments. At Mention Me, we find this is one of the main reasons that people outsource referral.
24. Testing and optimising referral offers is critical to turn the channel into a big success but has other benefits. Your not only learning about how they react to referral offers, you’re learning about how they think about your brand. In emails, your seeing how customers are talking about you as a brand … we have some clients who read these out in team meetings. And you’re learning who your best customers are. Your most valuable customers probably aren’t the ones spending the most money with you. They’re the ones who are bringing you the most new customers.
25. The final part of our equation is promotion
26. The rule of thumb is aim for the points of greatest delight. The best we’ve found is the order confirmation page. And then you want to think about your own business: Example from Hush – email after you’ve worn the clothes Example from Green Man Gaming - when you are in play with friends Example from Buyagift - when you leave a review Example from eHarmony – email right before your first date...
27. For each business we work with we map this out.
28. You’ll have seen on the previous slide, the “in store” option. Everyone aspires to be omnichannel and referral can be omnichannel too. For instance if you walk into any matchesfashion store you can give the name of a friend who referred you and they’ll be able to give you the introductory offer and the referrer will be given their thank you reward. This is a really positive customer experience and is word of mouth working as well as it can. A compliment about a new dress turns into a recommendation of a brand that turns into a customer walking into a store and buying and the brand thanking the existing customer for the recommendation. What a great experience
29. And when you get a good referral programmes in place and you make sure you’re set up to test and optimise and you promote it in the right places you can see rapid progress. This is an example of progress. Month 9 was 725% better than month 1. Without testing we’d never have got passed month 1.
30. It’s this progress that gets us to great results. This is an amazing channel.
31. And we’ve only been working at this for three years but the results are very real and scaling rapidly. This is what we’ve seen on Mention Me so far. If you’re not yet harnessing WoM and using Prompted Referral you’re missing a massive opportunity.
32. If there are 4 things I’d like you to remember from today they would be this. WoM and referral marketing should be a meaningful channel for most retailers. It’s a great channel that brings in the highest quality of new customers You can make it very easy to set up – and this is a mini-plug for Mention Me, but we can get you set up with two javascript tags Make sure you’re setting yourself up for success with the tools you need to capture genuine WoM and to test and learn as you go. If you’d like to get the referral channel up and running, please do come and speak to us. We’re here at pod 1 or you can email me at andy@ Thank you.