We’re continuing with the AARRR Metrics for eCommerce. So far, we’ve explained the first 3 – acquisition, activation and retention. This week it’s Referral time! (For a quick recap, see this infographic.)
What’s referral as an AARRR metric?
Dave McClure, who coined the framework, doesn’t set strict limitations on what it is and what it isn’t.
In his original presentation of the concept, he puts it broadly: it’s when someone refers someone else to your website and the new visitor takes some action. Just that. They don’t have to be a customer to do the referral, and the action is not necessarily a purchase.
Of course, in terms of e-commerce, we’re always aiming for a sale, but it doesn’t have to happen right away. In this case, referrals work the following way:
Why am I going at such length here? Did you notice that the referral started a new conversion funnel for a new lead? A new cycle?
Referrals act both as a confirmation of satisfaction of the currently activated lead or customer and as an acquisition of the new lead.
The framework includes all absolutely vital steps towards the end goal of a business – sustainable revenue. If all steps work correctly, you should achieve a state where your inflow of new customers is constant, they get hooked on what you offer (for free or not) easily, and remain your loyal customers for long, giving you a stable revenue.
We’ll be looking at referrals as the basic word-of-mouth spread of your brand because it’s older than the Internet and yet the best and cost-effective way of ensuring that constant flow of newcomers.
It’s a fact people like to appear cool and knowledgeable. That’s why they show off their new purchases. They want to be the ones to let their close people on trendy stuff and beauty secrets and be seen as influencers (it’s only natural!).
On the other hand, people trust their family, friends and close network better than any solicited reviews, expert recommendations and so on. So they’re times more likely to take their suggestions than those of a stranger.
So it’s a win-win. The first group has a strong inner tendency to share good products and experiences with others – for the benefit of the ego, and the latter is inclined to take the advice.
Before you ever hope to get people spreading word-of-mouth about your shop, ask yourself if they can say anything bad about the experience with you?
Just a few ideas what can be off-putting and cost you those referrals:
Think of anything that might make your leads say, “Well, this store might be nice, but I don’t feel it’s awesome…better not tell my friends, it might be a complete BS.”
This leads us to the basis for referrals – “exceptional customer experience”. They have to be so delighted by your products, brand, values or additional materials provided that they say “wow” and paste your link to their friends.
Nobody says, “Well, there’s just the next clothes shop online. Why don’t you check it out – I’m sure you’ll find something nice.”
In our Growth Hacking Examples post, we talked about shareability and virality as key ingredients to exponential growth. You have to make it easy for people to talk about you – even if they want to, it doesn’t mean they’re going the extra mile.
Games, quizzes, travel guides, recipes, videos – anything that calls for a share and can keep the new lead coming back.
Why? Well, it doesn’t count if they don’t take action after being referred. But such content materials are great for sharing with friends and get you quite a good social exposure plus the added bonus of the sharer’s personal affiliation with the brand.
What’s the most popular video content on the Internet? Yes, cat videos! They’re cute and hilarious.
IHeartcats.org has created a whole business catering to the cat-loving community. And you bet they use videos – who wouldn’t forward a panty-wearing kitty to family and friends? The bonus is people discover the website.
Another example – remember how everybody was taking the VisualDNA personality tests? Although not the best example because most of us didn’t know at the time what the company was selling, it’s a good idea of free access to part of your product to get people hooked.
We’d like to look at those from a different angle. Most probably, they’re the first and sometimes only association with referrals. Granted, they do work.
With the right incentives for both sides and convenient invites/ links, you should be able to turn it in one of your main acquisition channels.
How about а referral campaign that triggers sharing even before people have bought from you?
Do you believe you can get them so excited about your products, mission, and brand, that they’re willing to share before they actually have your products? (Note that we’re not talking about formal programs, but merely people sending traffic to your store.)
What about your brand and products stands out and is worth some time engaging with – even if people are not in a shopping emergency?
This is your point of reference you should focus on utilizing even more, your attention-grabber, your signature. It’s something people can talk and feel positive about even if they’re not your customers (yet).
Here are a few suggestions what you can offer plus what you might want them to say to their family or friends when referring to you:
“They are so cool, I really love they actually do it. Next time I need X, I’m getting it from them.”
“Oh, I got X from their site – it’s free, no purchase required. It was really helpful. I like the company a lot.”
“I’ve been watching their X free courses, they seem very professional. I’m thinking about signing up for their seminar as well. Wanna join?”
See, all these are activation approaches, but if the experience is great, it’ll stick and become that point of reference you need.
In general, all visually appealing products can benefit from beautifully curated social media profiles, style books, recipe boards and so on. Nobody would put their name under an ugly directory-like sales page, but eye-candies are awesome for sharing and stick to the mind.
Do you run a niche clothing e-commerce?
People spend so much time on the Internet reading what the famous do and wear, or just looking for inspiration for their own style (we’re vain creatures).
That’s the appeal of Pinterest and fashion Instagrammers – we need ideas. So it’d be a loss if you don’t turn this pass-time activity to your advantage.
ModCloth, a vintage and quirky fashion online store, has a whole Style Gallery with user-generated pictures featuring their products (shown above). Customers get exposure as fashion influencers they can share with friends and the store gets the credibility and displays positive feedback to newcomers. Sounds great to us!
See what Yumi is doing (they sell bottled fresh veggie juices)? Sure you want to tell your gym buddy/ best friend/ mom/ college daughter about them!
Did we give you another angle to look at referrals? We hope so. The trick is to always be working on your brand and products so that they’re likable and a great conversation starter. This will make spreading the word a breeze
See a case study on how one entrepreneur uses a referral network to expand his online business.
Check out the next article in the series, too, in which we discuss the last of the AARRR metrics – revenue – the Holy Grail, the aim, the prize for all your hard work.
Metrilo’s mission is to help you build your ecommerce brand and win your place in the customer’s heart. We share what we learn from our daily work with product innovators and founders here. Subscribe to our weekly newsletter to get the freshest lessons and conquer your niche.