Psychology and
Referral Marketing

Psychology and
Referral Marketing

psychology-and-referral-marketing
ivy

Ivy Buddee
November 18, 2019

Referral marketing is one of the most trusted forms of marketing. Referred customers have a higher lifetime value, are the best leads and generate twice as many sales. But if referral marketing is so popular, why do many businesses fail? It’s all about psychology and understanding how to use it in marketing.

Psychology and Referral Marketing

Social capital

If your friend wants to go for a dinner, they may ask you for a recommendation. You suggest a restaurant and your friend tries it out. The next day, your friend calls you to praise and thank you for the suggestion. This gives you a feeling of recognition because you value your friend’s opinion of yourself. And this is something you can use in your referral marketing campaign.

To do this, set up a simple, straightforward referral program on your website. Gather as much social proof as you can – reviews, blog mentions, ratings, testimonials – because most consumers trust online reviews in the same way that they trust personal recommendations.

Gratification

Why are some people happy to spend extra money to get same-day delivery? It’s all about gratification. We want things to happen now, not later. As soon as we realise that we must wait for something, we experience discomfort.

Create gratification by giving your customer a simple sign up form. Long sign up forms can look like a chore. Remove irrelevant fields like address, gender, etc. that may discourage users from signing up. Once they sign up, give them the option to share via social media, email or other messaging apps to make it easy for users to refer you.

Social proof

Social proof is about viewing other people’s actions as being the correct behaviour and using this to influence your own actions.

Use this in your marketing by finding social media influencers who are happy to work with your brand. When influencers share your referral program to their followers, your brand’s reach will automatically grow. Make your value proposition clear and use this to boost excitement and motivate people to sign up and share. The more it is shared, the greater social proof you’ll generate.

Using these three principles of psychology in marketing will help you get the results you’re hoping for. If you can influence your customer’s behaviour, it’s likely you’ll convert your happy customers into loyal income drivers.

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Psychology and Referral Marketing
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Psychology and Referral Marketing
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Learning about psychology and referral marketing will help you get the results you’re hoping for. Read our latest blog to find out how!
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DigiGround
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