How SMS Marketing Can Drive Customer Referrals

For practically any brand, healthy growth requires a steady source of new clientele in your marketing and sales pipeline. 

Today, one of the most effective means to drive this outreach is via referral messages. 

While you could find this new consumer base organically, a much more effective strategy is turning to your existing loyal customer base.

Particularly when those individuals are delighted with your product or service, they’re the perfect potential brand ambassadors to ask for referrals among their personal network or on review and social media platforms. 

Referrals are extremely valuable since these word-of-mouth recommendations tend to generate higher quality leads than those obtained through various other marketing channels.

And with the right SMS marketing strategy, you can increase the quantity and quality of customer referrals. 

Table of Contents

• Word-of-Mouth Referrals Drive Business Growth 
• What is SMS Referral Marketing? 
• The Advantages of SMS Referral Marketing?
• How to Write a Referral Message 

Word-of-Mouth Referrals Drive Business Growth 

When you sell a product or a service to a customer, the underlying goal is that it provides enough value that they come back for more, right?   

Yes and no. Of course, you want customers to remain loyal. But that’s only a partial goal. The optimal result would be that your product or service is of such high quality and benefit to the customer that they also want to tell others about their positive brand experience. 

But here’s the problem: Most customers won’t voluntarily tell their friends, families or social media about the vast majority of their brand experiences unless you ask and incentivize them to do so. 

This is where a referral text message strategy can make the difference, increasing the chances of customers recommending you to others.  

What is SMS Referral Marketing?  

At its core, referral messaging involves asking customers to share their brand experience with others. You send a referral message that they will then pass on, often in exchange for some sort of incentive—be it a discount, reward or some other tangible benefit.  

With an SMS campaign, a specific list of mobile subscribers receives the referral text message. The recipients can then enter their friend or family member’s contact information into the given data fields. From there, a secondary referral message will be sent to the warm lead that acts as a brand introduction, sharing what you do and what makes you unique.  

The incentive system is a key pillar of any high-quality SMS referral marketing program. Put simply, you need to brainstorm ways to motivate customers to actually make a referral. While there are dozens of potential incentives, some of the more popular methods include: 

• Gift cards or cash bonuses 
• Discounts on products or services
• Free products or services  
• A QR code that provides early access or exclusivity 
• Upgrades or add-ons 
• Contests or drawings 

What Are the Advantages of SMS Referral Marketing? 

Referrals are foundational to a brand’s growth and success. 

Converting a customer into an advocate can make a significant difference to your bottom line, especially since referred customers are more valuable. According to a recent study out of Wharton: 

“Referred customers are, on average, 4.5 cents per day more profitable than other customers. The gap is even larger after controlling for differences in customer demographics and time of acquisition. Whereas the average contribution margin of non-referred customers is 30 cents/day, customers acquired through the referral program have a margin 7.6 cents/day higher, an increase of about 25%.” 

The same study discovered that the total lifetime value (TLV) of referred customers, measured over a six-year period, averaged 16 % higher than that of analogous non-referred customers.

But why is SMS specifically such an important aspect of a referral program? Common benefits of a text-based referral program include: 

• Meeting customers where they are – We live in a mobile-first world. Today, more than 60% of today’s internet traffic runs through mobile devices. And this statistic is even more important considering SMS has ridiculously high open and engagement rates, especially compared to other marketing channels like email. In fact, 95% of SMS messages will be opened and read within 3 minutes of sending.
• Easier to convert – With SMS, you know that customers are likely to open your referral message. Therefore, the trick is to send the right message, to the right customer, at the perfect time. By personalizing your messages and segmenting customers, you can design a referral program that converts at much higher rates.   
• Valuable source of data – When you craft a referral message, you have total control over the data fields the referral recipient will receive. This could include their name, location, phone number, email, birthday, occupation, etc. And all these data points can be used to improve your future targeting and segmentation. 
• Analysis and optimization – One of the more valuable aspects of SMS marketing is leveraging the data and analytics to continuously optimize your campaign and learn more about your customer base. With this data visibility, tracking a campaign’s success becomes simple. And by making tweaks or conducting a/b testing, you can keep refining your process to see what converts. 
• Identify VIP customers – SMS referral marketing programs help you easily identify and track your most loyal and valuable customers. You can send VIP customers extra incentives, rewards and appreciation messages that demonstrate how much you value their patronage. Such appreciation could motivate them to refer even more customers. 
• Instant reach – SMS enables instant communication with customers who are likely to open your message in just a few minutes. You can use that to create a last-minute referral message about a flash sale or product drop. 

Referral Text Template: How to Write a Referral Message 

What are the best practices for writing a referral message? 

To craft the consummate referral message—one that grabs their attention and inspires action— here are some elements you should include in the anatomy of your SMS campaign messages: 

• The company name (or logo) – A referral message may be the initial touch point between a brand and a potential customer. As a result, you should introduce the company’s name and visual branding (if sending a multimedia messaging service (MMS) campaign) at the outset to grab their attention and establish your brand identity.  
• The referral mention – Remember, this is a referral process. So, you should begin your introduction with a blurb that name-drops their friend and explains how they recommended the lead. This helps demonstrate that the product or service has already been vetted, approved and recommended by a trusted individual.
• Highlight your value proposition – Briefly explain who your brand is, what it does and what sets it apart in the market.
• Referral offer – A brand should incentivize both the customer providing the referral and the individual receiving the notice. For the warm lead, the offer should include some incentive that encourages them to make a first-time purchase or sign up for a discount, free delivery or some other reward. 
• A CTA – The final part of your message is the call-to-action, which will, ideally, motivate the reader to take a specific, sales-related action. This piece of the message may be included with the referral offer.

SMS Marketing for Referrals 

Referral campaigns are a powerful marketing tool brands can use to incentivize consumers to share their brand experience with others. Targeting customers with this strategic approach empowers a business to selectively acquire more valuable prospects and retain them for longer at lower costs. 

And today, SMS and MMS are the ultimate delivery tools for a referral campaign. This method is fast, cost-effective and highly visible. 

If you need help building out an SMS referral program, Texting Base is designed for you. 

Our marketing platform makes designing, running, managing and analyzing a referral campaign fast and easy. When you work with us, you receive all the standard features of a mass texting service and industry-leading, cutting-edge features you won’t find anywhere else.

Ready to start getting more referrals? 

Build a campaign with Texting Base today. 

Sources: 

Statista. Percentage of mobile device website traffic worldwide from 1st quarter 2015 to 4th quarter 2022. https://www.statista.com/statistics/277125/share-of-website-traffic-coming-from-mobile-devices/

Wharton. Do Referral Programs Increase Profits? 

https://faculty.wharton.upenn.edu/wp-content/uploads/2013/05/Schmitt_Skiera_VandenBulte_2013_Referrral_Programs_2.pdf

Business.com. Text Message Marketing: The Ultimate Mobile Engagement Tool. https://www.business.com/articles/text-message-marketing-benefits/