A little disclaimer before you read this post: I am a market-research-aholic and lately I have been indulging myself with a number of different studies around the psychology of referral.
The research has been for Mention Me clients - getting real customer feedback has proved invaluable for us. We use the insights to accelerate the performance of newly launched refer-a-friend programmes and to inform test plans to further improve conversion using our AB testing by cohort capabilities.
The picture painted by some of our latest research was of a customer journey defined by two moments of truth:
- The moment your customer shares
- The moment their friend decides to shop
The research revealed that both have ‘last mile’ challenges. A referral programme could pave the path for success with the best technology and a smooth customer experience but a successful referral could still fail at these key milestones if the psychology isn’t spot on.
Moment of Truth 1: Sharing
Referral is prompted, but not only in the way you might be thinking. Of course, marketers prompt active referral by asking their customers to introduce friends at the end of the checkout, in emails, in inserts, etc.
On the plus-side these active referrals are great because marketers have an element of control over the timing, incentive and message; and they can be tracked.
For the research subjects in our study though, there was also a downside to active referral: a complicated bundle of psychological factors (we call these weights and balloons and have discussed them in our first post in our psychology of referral series).
The reality exposed by this study was that unless the mix of persuasive elements is instantly right, most of the time the reaction to being asked to introduce a friend is gently scornful indifference. The subtleties of the psychology vary dramatically based on the positioning and attributes of the brand: discounting, ubiquity, quality of product, quality of service, etc.
Thank goodness for AB testing. I’m not sure how a marketer would get through the active referral ‘moment of truth’ and all it’s complex psychological baggage without it.
In this study the subjects also talked about a different type of prompt. They most strongly recalled examples of passive referral - where the recommendation was prompted by a friend’s compliment or question. “Those are nice sandals…”. No rocket science here, but a useful reminder that there is still a big referral marketing opportunity beyond giving your customers a slick online user experience.
In this use case customers were most likely to share face-to-face with individuals or in small groups. The social pressure is lifted because there is reassurance of the friend’s interest from the conversation or compliment. In this case it would be almost rude not to let them know where a purchase was made.
The moment of truth for passive referral has different challenges. It’s a will-o-the-wisp of a moment which marketers struggle to reliably convert into a measurable sale.
Share by name technology was developed here at Mention Me to address the word-of-mouth moment of truth. We find that adding it to a refer-a-friend scheme can drive between 30 and 40% more new customers than social media and link/email based introductions alone.
This study was qualitative, so no metrics on the ratio of passive to active referrals - that would be fascinating. We were focusing on the fashion sector so I suspect the importance of passive referral would be very high for this test group.
Moment of Truth 2: Deciding to shop
Put yourself in the shoes of your customer’s friend, the one they introduced, at the moment they see the email in their inbox.
This is exactly the moment we focused on in another recent usability study.
The research subjects spoke warmly about getting a recommendation email from their friend. They were predisposed to liking a brand due to the halo effect which comes from how they feel about the friend who sent it. At this stage their shopping impulse is driven largely by curiosity and the indirect persuasion of their friend (and not by your brand). Do I like her style? Do we have similar taste? What price range does she shop in? There is a very, very high likelihood the email will be opened.
And then you have the second moment of truth in the referral journey: deciding to shop.
The moment lasts a fleeting 8 seconds.
And then it’s swallowed up by distraction.
The challenge of this moment is that these pre-customers don’t know YOU yet. They don’t really know what products you sell and and how they relate to their needs. Their shopping impulse is not yet strong - especially in the case of the active referrals we talked about earlier.
So, your customer, their friend, has helped engineer the introduction but it's up to you to convert them into a customer. You’ll need to work at this and you’ll need to make it compelling. A referred customer is not a free lunch!
Most referral emails in our study were being opened on mobile phones. Heavy mobile usage is correlated with loss of concentration and forgetting important information. The transient human attention span is widely agreed to be 8 seconds.
And mothers with young children (under 5) - the target demographic for this study - are amongst the highest users of mobile phones and also very likely to be multi-tasking. eMarketer has an interesting piece about this here.
Understanding the behavioural psychology at this moment of truth in the referral journey has helped us create test plans to make refer-a-friend more sticky. We have plenty of ideas - but to learn those you’ll have to book a demo ;-)
If you’d like a quick insight into the sort of psychology experiments we’ve run and the results they’ve produced you can download our guide to experimenting with referrals. Happy reading.
We do lots of usability research at Mention Me both on referral in general and for specific clients. This piece of research was supported by our usability research partner GutsyNinja and we'd like to say a big thank you to them.
If you’d like to learn more about how we’re thinking about referral marketing send us an email and say hello: email@example.com or subscribe to our blog.