We're all about referral marketing.
If you're familiar with what we do in Viral Loops, then you know it.
The last couple of months we did a few interviews with some of the best in their respected field- we had the guys from Fetch & Funnel, Arri Bagah, Alexandr Fedotov, Hunter McKinley, and Natasha Takahashi, but none of them was an as strong advocate of referral marketing as Rodrigo Noll.
During our chat, he revealed the framework he uses (which is actually very simplistic) to build his referral campaigns, and how he managed to leverage referral marketing for Brazil's top travel club with smart prizes.
Who’s Rodrigo Noll and what does he do lately?
I'm a Brazilian referral marketing specialist and I am an entrepreneur.
I founded my first company in 2010. It was a travel e-commerce here in Brazil and we used to sell escape getaway trips so you could take short breaks and go on vacation many times a year.
We have sold that company to a bigger tourism group here in Brazil and then I went to the U.S. to take a short course in Boston. When I came back, I was hired as the sales and marketing director for a big travel club in South Brazil in a city called Florianopolis.
They say Florianopolis is the Brazilian Silicon Valley because there are lots of start-ups there and the ecosystem for entrepreneurship is very interesting.
I have grown this company´s revenue using referral marketing strategy, as only this channel represented up to 65% of the total revenue. As a brand, we used to do referral among our actual clients and we had great success.
That's how I came to the referral world. Nowadays, I'm not working for that company anymore and opened my own referral agency. We're are the first ones in Brazil.
Why referral marketing, and what was the most successful tactic that you used?
That's a very interesting story because the first thing I did when I got hired as the sales and marketing director for that company, was to talk to the clients. I think the very first action every marketer should do is to talk to the clients and you should do that very often.
So I grabbed the phone, I called 50 or 60 clients, and then I visited them in order to get to know their persona better.
One thing that every client was telling me- that was becoming a pattern, was: "Rodrigo, I'm very satisfied with your service, with your product. I love your company, I use it for so many years now and I even have referred, five, ten, fifteen, twenty other friends in clients."
Every satisfied client I was visiting was saying the same thing.
So I identified the pattern and I thought, that we had to power up the referral marketing strategy. When I first came to the company, they already had an active referral marketing program and I was responsible to give it scale, ROI and make it become the biggest sales channel for the company.
So I started a referral marketing program.
I was giving clients an upgrade in their own subscription for referrals. I tried a lot of prizes, but the single prize that brought me the biggest result ever was my own product.
The right time and place to ask for referrals.
With my clients, I have developed a method. And this method has four main key activities and tactics you should do to get a great referral marketing program.
One of these key activities, I call it the key moment.
So I think that it's very relevant, the moment when you remind your client that they can refer to a friend. I had mapped many key moments during my client's journey.
For example, the best moment when I get referred the most was when the client came back from the trips they were taking with us.
I think that's when the success cycle of your product and your service ends, that's a very good moment to ask for a referral or remind your client that you have a referral marketing program.
So, two key moments; Asked for referral when they are planning their trips, and asked for referral when they came back from trips. When they came back from their trips, it was a huge success.
Also, a good key moment I tested was when they answer the NPS research; when clients answer a nine and then they were promoters, I used to ask them for referrals.
Another one, last one that is very interesting.
My sales model was not that scalable. It was an inside sales model.
I had salespeople on the phone, and my sales cycle was really fast, actually. It was only for 20 days.
An experiment I ran that was really nice, was when the salespeople get to the end of the sale cycle and the sales are not closed, when the client says, okay I liked your product but I'm not going to buy it today.
This was a great moment to ask for the client for a referral because he already knows the benefits of the product and he surely can think of someone around their circle who can benefit from this product.
We got great success from that moment too.
A 4-step referral marketing framework that works.
My framework has four key elements.
Many people ask me about the tools they should use, or how much they have to invest to have a good referral marketing program. I think before deciding the budget, you have these four key points that you have to master so that your referral marketing program works.
So, the first key point is the prize.
What is the product or what is the incentive that you are going to give your persona so he's going to be interested in referring you. I think a big mistake people make here is they try to bribe their clients. They try to buy their clients, to bribe their clients.
Your clients, they are not making a living out of your referral marketing program.
Most of the times, what works the best is something that enhances their experience with your own product, with your own service; an upgrade or credit in the platform. That's the first point of the framework, incentives.
The second point is the mechanics. What is going to be the mechanics of your referral marketing program?
An e-commerce business is not going to have the same mechanics than a sales company and it's not going to have the same mechanics as a consultancy company. So that's the second point of the framework.
The third point is channels.
Referring your company should be easy, and should be everywhere. Your clients should be reminded everywhere that you have a referral marketing program.
Most referral marketing programs I know that failed, they failed because they are don’t activate the program. It stays in a corner in the footer of the website and clients don't even know you have a referral marketing program.
The fourth key point is the key moment, as I mentioned above.
So that's the framework: Incentive, mechanics, channels, and key moments.
The mechanics of a successful referral program for an e-commerce brand.
The mechanics, change according to the prices and to the sales method of the company.
A big mistake I see in companies trying to develop their first referral marketing program is trying to use, for example, an e-commerce framework in a company with another business model which doesn't fit.
And they use that because they only know the e-commerce framework because they hadn't studied, they don't know that they are other mechanics available. Especially in Viral Loops that you guys are very clear that the client can choose a template that fits their needs.
You've got to choose the right mechanics for your business model.
Otherwise, it's going to be hard for the client to understand how it works, and it is not going to work.
I have done a few e-commerce programs, and for everyone I did, I copied your template for e-commerce. I think that's the most successful one. There's no point in trying to do something different if that works already.
Super important metrics.
I think the viral coefficient (K-factor) is a metric that my clients always love to see.
I think that's not the main metric we got to measure, but it's a metric the clients love to see because they want to compare their business to other businesses. So, yes I follow their viral coefficient, but there are 2 other metrics I like to measure.
The first one is the, I don't know how I call that in English, is how many clients of your existing base, jump into the referral program.
I think it's the very first thing that I always focus on. We call it user adoption.
You have to set up a referral marketing program that your clients know that it exists and that your clients want to take part in.
But, I think this metric is not the most important.
I think the most important metric is how many invites every customer of yours has sent out.
That's why I like the milestone referral framework. Because you have many opportunities to make touch points, you can do retargeting with Facebook ads, you can do many things.
The main reason why the Milestone works very well is that the whole experience is more gamified. You can reward the people that send out at least one invite with more rewards.
You can combine rewards and you can give more things back to them. It's more interesting and exciting for them to invite a friend because it's more like a game rather than just sending out an invite.
Another very interesting thing I have done in this travel club is Facebook ads. Retargeting ads for my clients depending on the stage of the milestone referral they are in.
I have different ads for people who had referral one, two, three and four clients to remind them that they had bigger prizes.
The company had another online operation which was a travel app called Nativoo. We have grown this app, mainly through ASO and long tail strategies.
We positioned it strategically at the top of the funnel of our company. Every user who downloaded it was going to be invited to the main product, which was the subscription travel club, and, this would boost our referral strategy on the main business too.
We ended up with one million downloads with this Nativoo app at that time.
It was the official app for the Brazilian world cup. It was a very recognized app here in Brazil. It was the official app for the city of Rio de Janeiro, and we had great success.
It's still on if you want to download it. It creates travel itineraries for you. However, the referral program is not live anymore in the app.
A few last thoughts.
I want to add something regarding the Brazilian market.
I believe that every company in the world have already made a sale by referral. Everyone refers. Referring is a natural act of the human being.
Aristotle’s said that we are social animals.
We refer because we want to be accepted in groups. We refer because we want to give good information to our friends. So referring is a natural human act.
That's why every company in the world has already made a sale by referral even though they don't know about it.
So, the problem is, especially here in Brazil, that Brazilian entrepreneurs, they simply forget that referral marketing can be a good sales channel for them.
They simply let the referral sales come by look. Only organically. They forget that they can turn that into an active channel. So, that's the main opportunity I see in Brazilian markets nowadays. I don't know if that's a global situation in the U.S. or Greece or Europe, I don't know.
But here in Brazil, it's crazy how big the opportunity is. So few companies have an active referral marketing program nowadays.
I have run research with my online audience and I had two questions.
The first question was, “have you already referred, or have you already been referred to some company?” 94% of the people responded yes.
The second question was, “do you have an active referral marketing program in your company nowadays?” 98% of the customers of the audience answered no.
That's how huge the opportunity is.
I think that's an education problem. The market needs to be educated. I always say to people here in Brazil in my talks and in my workshops that referral marketing is not a campaign, is not a hack, is not an action. Referral marketing is a new sales channel.
And as every sales channel you have, it has to be optimized. It can be optimized.
You can invest time in making it better. So it's not magic, so it's going to work from nothing. It's a very interesting tool. And the biggest proof it's a sales channel is that I have generated lots of sales for this travel club for five years in a row.
I have left the company and it's still working. They're still beating their quota.
It's not an isolated tactic that would do that. A hack. It's a sales channel. Some people got to know that. Our responsibility is to educate the market.