Referral Marketing: Why it’s Necessary for Local Marketing and How Brand Managers Can Help

Amanda Knauer Written by: Amanda Knauer

Think about the last time you were looking for a new TV show to watch. Or you needed to find a new dentist. Or even a new restaurant or bar to spice up your Friday night. What (or who) helped you decide?

The most trustworthy marketing and advertising comes from people we know. According to a global survey conducted by The Nielsen Company, 83 percent of people say they trust the recommendations from friends or family, making it the number one source for marketing.

Simply put - referral marketing is powerful at the local level.

We know this through our 2015 State of Local Marketing Report,  which showed that one in four local affiliates (dealers, agents, distributors or franchisees) mentioned getting new customers because they were introduced by existing customers who had positive experiences at a brand location.

There are plenty of ways local businesses can capture and promote positive customer experiences, from monitoring online reviews to hosting successful local events. Whether the experience is executed online or in-person, offering current customers an incentive to help local affiliates grow their customer base is a big opportunity – an opportunity that can be multiplied by the number of individual locations a distributed marketing network has.

And your affiliates know it – here are just a handful of comments from what local affiliates had to say about referral marketing in last years’ report:

“Referrals from existing customers work best for us. If existing customers are satisfied enough to refer a friend, there is no better compliment.” – Footwear Retailer


“Building our business through referrals from our customer base is the best form of marketing.” – Mobile Communications Provider


“My most effective marketing program is the referral program I’ve set up. If a referral results in a sale, I give the person one years’ worth of our product.” – Automotive Aftermarket Dealer


“Whenever we can go out and get involved with the community, it seems to really help us network and build contacts. As long as we consistently follow up with these contacts, it usually leads to referrals and eventually business closse.” – Technology Retailer

One of the biggest thing our survey discovered about referral marketing was that local affiliates can’t always do it on their own. They need the support of their national counterparts. And for brand marketers, the opportunity is three-fold:

1.)  Educate local affiliates about referral marketing

Most local affiliates are aware of the benefits that come from word-of-mouth marketing. Some may need that extra push, though. Train your affiliates on the value of referral based marketing by providing training materials and case studies.referral1

Start by outlining the benefits of referral marketing (e.g., quickly generating satisfied customers, ensuring customer retention, improving sales revenue, reducing sales/marketing budget, etc.).

Make sure your affiliates know that referral based marketing is worth their time and investment. Remember, to have a strong customer base that will refer the local business, the affiliate needs to create a positive, trust-worthy reputation. That could range from excellent in-person customer service to a strong social media presence. Affiliates cannot expect to receive referrals if they don’t have the solid customer relationships that are needed.

Next, get their wheels turning and get them excited by providing case studies and examples. How does your corporate marketing team use referral marketing? How have other affiliates done it? Go farther by looking at competitors and other leading brands. Pull examples to show how your affiliates can potentially (and properly) execute a successful referral marketing campaign.

2.)  Offer opt-in referral programs and materials

Based on the products and services your local affiliates are selling, provide materials and programs that are best suited for local referral marketing. Brainstorm at the national level how your affiliates could take advantage of referral marketing. This starts by looking at numbers and talking to your dealers, agents, distributors or franchisees. What works best for them? Social media? Email marketing? Traditional marketing? Think of how you can easily integrate referral marketing into each of those avenues, keeping your existing local marketing programs in mind.

Traditional Media Referral Ideas If your affiliates use traditional media, create a templated ‘refer-a-friend’ business card or direct mail piece allowing the affiliate to customize it for their location. The affiliate could keep these in their store/location or mail them out.

Email Referrals Made Easy If email marketing is more appropriate, provide examples of how the affiliate could use the ‘forward to a friend’ function as a referral marketing tactic or build referral marketing email templates into your email service platform.

Social Media is Made for Referral Marketing Even if you don’t currently use social media, affiliates can easily use platforms like Facebook, LinkedIn, Instagram and more to promote their refer-a-friend campaign.  Programs can offer an incentive if customers share a select post on their social networks or you can structure them to only pay out if these posts secure you a new lead or sale. Run the numbers and consult with national social media experts so you can educate your small army of local affiliates, their customers and all the people they’re connected to online.

The options are endless. Brainstorm the ideas that will work best for your product/service, your affiliates and your industry then provide your network with the materials they’ll need.

3.)  Devote co-op funds for local referral marketing

One of the biggest reasons affiliates referral2 (1)can’t take part in referral marketing is because they can’t afford it. And because of that, they’re missing out on what they know is a huge opportunity. The national brand should offer co-op funds for local referral programs or help subsidize the cost using a national referral program by covering some cost of promotional materials. and/or pitch in and cover the margin losses of referral programs.

What is the affiliate offering? Store credit? Free month of a service? An upgrade? A piece of merchandise? Percentage off their next purchase? All of these require the affiliate to give something up. Encourage your affiliate to participate in referral marketing by providing the funds that they need or help cover some of discounted cost.


Referral marketing should be perceived as a necessary component of every local business. It helps retain customers, build community and emphasize your brand – all of the reasons you execute distributed local marketing in the first place. PLUS: Small businesses know they need it – now it’s on the brand managers. Educate the affiliates, provide them with materials and offer co-op dollars to help propel your local referral marketing program forward.

How else have your affiliates successfully executed referral marketing? We’d like to hear your best practices for referral marketing in the comments below!

To hear about referral marketing programs we’ve helped our clients execute, don’t hesitate to contact us here.


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