Pass-Along Referrals Pay Off

Want proof that referral-marketing strategies are a cost-effective way to grow your e-mail file? Here are two informative numbers: Sixty-five percent of consumers forward coupons from consumer packaged goods company e-mails to friends and 55% forward retail e-mail offers, according to a recent Epsilon survey.

The most up-to-date measurement of “pass-along” readership, the percentage of recipients who forward offers to a friend who in turn clicks on an e-mail link, shows the needle holding steady at 0.5%. This means one of every 200 delivered e-mails reaches an advocate for your brand who passes your message along to a solid additional prospect.

There’s even better news for those in financial services and consumer products. Click-through rates for forwarded media are highest in these niches, due to the popularity of credit card offers and Web coupons. The following chart gives these rates among a variety of industries.

Referral programs can take the form of a special sweepstakes or coupons awarded to both the current customer and the referred person. These promotions tend to be very effective in consumer as well as business-to-business marketing.

Hotmail is a classic referral case study. At its startup, Hotmail attached a simple tagline at the bottom of each e-mail sent by existing users asking their friends to sign up for an account. After a month, the company had 20,000 subscribers. Within 18 months, it had 12 million.

In another case, a well-known bathroom supply company wanted to introduce a new showerhead to existing customers and to prospects on rented lists. The company launched a sweepstakes to drive site traffic and registrations. The results: an astounding 15% click-through rate and 7% viral forwards.

The best way to capitalize on the power of viral marketing in e-mail is to create compelling content around your message that consumers are willing to share. New channels can provide powerful outlets for this type of marketing activity. In addition to online bulletin board services and forwarded e-mails, marketers should provide content appropriate for social media and blog sites.

Social media endorsement has the benefit of a personal endorsement, one of the strongest proven purchase drivers. Social media content should contain information – whether entertaining or useful – which consumers would feel good about sharing with their friends and family. And marketers wishing to use these services should make sure their content is easily rendered and legible in a variety of formats.

Marketers must use viral marketing techniques responsibly. For example, some marketers use a form embedded within the e-mail where the current recipient can enter a friend’s e-mail address. If you use this technique and do the actual sending of the message, be sure to explain where you received the recipient’s name, preferably in the subject line. Otherwise, the message may be perceived as spam.

Consumers use tell-a-friend programs because they have something to share. Let them share it! Personal endorsements are a powerful way to have your brand advocates do your marketing for you.

Kevin Mabley is Epsilon’s senior VP of strategic services. He has more than 15 years of experience in e-mail marketing. He can be reached at kmabley@epsilon.com