In a recent InternetRetailing webinar, How fashion retailer Coast uses the power of referral to drive new customer acquisition, we were joined by Emma Bonar, head of digital at Coast , and Lizzie Lee, global cheerleader at Mention Me, for a look at the secrets and success of referral marketing and how Coast uses it to encourage word-of-mouth recommendations. Here’s a bulletpoint overview of the session.
• Lizzie Lee, global cheerleader at Mention Me, started by introducing referral marketing – what it is, how it works, how it’s measured
Referral secret #1: To be referred you need to be remarkable
• Consumer research: Mention Me asked more than 2,000 shoppers what made a retailer remarkable. Trustworthiness, product quality and value topped the list. Discounts seemed less important, while green issues appeared to be rising in importance.
• What areas are likely to be recommended through word of mouth (key to referral)? Experiences. But also retail, with fashion, children’s clothes and homewares are all categories that are likely to be recommended to friends.
• Emma Bonar, head of digital at Coast, then introduced the company and explained some of the reasons behind its decision to opt for referral marketing. The retailer has good customer loyalty, she said, but “to be honest most people only shop for occasions once or twice a year. We wanted to see how we could use our existing customers to find new ones in between these occasions”. “Referral not only helps us to acquire new customers but gives an incentive to existing customers to come back.”
Referral secret #2: When to ask
• When shoppers are online, not in the middle of doing something else – and when they’re happy. Post-purchase typically where start working with clients. Also when waiting for delivery, or at the point of unboxing.
• Coast started with an overlay on the order confirmation page. Did A/B tests in the first nine months: referral revenue up by 450%.
Then expanded to other areas, including a landing page that now accounts for 26% of referrals.
Referral secret #3: Ask nicely
• Consumer research: What do consumers value?
Younger shoppers wanted money off a minimum spend order. Different things resonate with different demographics.
• How Coast used A/B testing to find out what’s important to their customers.
• Tested different referral incentives: found higher discounts more popular.
• Tested: generous vs self-interested: shoppers more likely to respond to an offer for themselves.
• Tested wording: little changes to the copy make a big difference: in one case adding the word ‘online’ meant 4% more customers.
• Now testing more complicated issues: eg segmenting customers by initial spend. If spend over £200 are offered a higher discount.
Referral as a marketing channel
• First order value tends to be 10-25% higher with referral marketing, says MentionMe’s Lizzie Lee, and customer lifetime value can double.
• 10% to 30% typical higher customer acquisition – though examples where it’s higher.
• “It can be a really powerful channel when used correctly.”
What’s changed with GDPR?
• GDPR has driven a change in behaviour. Particularly relevant on marketing right opt-ins. Previously it was 75% opt ins (pre-ticked box), now more like 25%. “This is a great side benefit of referral, getting those customers who might not actually yet have converted to be your customer… but are warm leads.”
• Expect to see customers who are 54% more likely to repeat buy after referral, while . customers who are themselves introduced to a brand through referral recommend more often. “The psychology around referral is very powerful – we’re not just putting incentives into a channel and hoping for the best, but trying to understand what customers are doing and how we can better incentivise them going forward.”
• Coast: AOV 29% higher among referred customers, they also make 10% more purchases than other customers.
• AB testing can really enhance referral levels: understand what works for your customers by testing hypotheses.
• It’s a nudge – but need to deliver on product/service promise in order to win referrals.
• Important to understand right points of delight in order to make it successful.
• Make it easy to refer: using name of customer, rather than links, makes it a more straightforward experience.
• Helps to tailor for the scheme for the demographic.
• Can improve a number of metrics.
The session concluded with a Q&A session. The webinar is now live on IRTV, including slides and the full Q&A session.