Running referral programs for 200+ brands gives us some fascinating insight into the psychology of referral for different demographics. Having built a reputation as experts in fast fashion referral marketing, through our work with Missguided, Lipsy and AX Paris among others, we have seen marked differences in what drives these customers to share a brand and what will in turn lead their friends to take up a recommendation.
Much has been written about Generation Z (also known as Centennials or Post-Millennials), how they communicate and their demand for relevancy and authenticity.
On the surface these ideals suggest that Gen Z are ripe for referrals; after all a recommendation from a friend is much more authentic than traditional advertising and the increasingly hyped influencer marketing.
But we wanted to dig beneath the surface and see what really makes them tick when it comes to advocating a brand to their friends or taking up a referral offer.
We uncovered some surprising insights.
Many referral offers include a voucher validity date to drive a sense of urgency and encourage redemption.
We examined the Psychology of Persuasion in a previous post and highlighted that scarcity can be a great “weapon of influence” to drive referral, with time limited offers a common approach which works well for many brands.
However some recent research we carried out with customers of our fast fashion brands revealed that in contrast to this, they were instead turned off by short validity periods for vouchers. Why is this?
For a demographic where money can be tight, payday is often a crucial driver of purchasing behaviour. A time limited offer might end before payday, which at best might limit conversion and at worst might instil negative feelings towards the brand.
For referral success in the fast fashion brands then, our research would suggest longer redemption periods for optimum results.
Another trend that our research highlighted, is that for Generation Z relationships are run on a first name basis.
Our technology enables friends to claim their referral offer by entering their referring friends name into the checkout to claim their referral reward. A great mechanism for capturing referral in real world conversations.
When we ran analysis on the names entered in the referral platform for our fast fashion brands, we found that in a higher proportion of cases, Generation Z’s tended to only enter the first name of their friends. Our technology, however sophisticated, struggles to match a referral to a customer based on the first name alone.
This phenomenon was significantly higher than for other brands, and so this research provided a really useful insight which helped us improve the messaging when capturing referral (ie - help us a little here; can you be a bit more specific?!) as well as supporting our stipulation brands need to continually test the order in which share mechanisms are promoted.
Get to know your customers by looking at the data and then design a plan of tests and enhancements to help smooth out any bumps in their customer journey.
Sharing - It’s not just about social
If you’re running a referral program for a young fashion brand, you might think you need to concentrate solely on social channels. This approach however will miss further opportunity for brand sharing amongst your customers.
Somewhat surprisingly email is as relevant to generation Z and Millennials as for Generation X and the Baby Boomers. Research from BlueCore show that 60% of Generation Z prefer to receive brand communications via email.
This is reflected in the results we see for the main sharing mechanisms for the referral programs for our fast fashion brands. Email continues to be one of the top methods of sharing brands.
Perhaps even more surprising is a finding from a report published by Retail Dive. This suggests that teen retailers targeting Generation Z were much more likely to be talked about face-to-face than on social media.
Indeed, when we looked at new referral customers delivered to our clients we saw that our “share by name” mechanism is one of the top performing sharing methods. Demonstrating that referral purchases are more likely to be driven by face to face conversation than social mechanisms!
What about other channels more often associated with this demographic?
As you might expect, Facebook is still a popular channel to share brands with friends, with fast fashion brands being shared via this mechanism 15% of the time.
However, Facebook might be on the wane for this demographic. As reported recently in The Drum, Facebook is losing market share of teenagers to other social channels. Indeed our figures show that although WhatsApp as a share channel is slightly lower at 12%, the number of friends who actually convert into a new customer are much higher when the referral came via WhatsApp rather than Facebook.
Overall the WhatsApp share rate for fast fashion brands is 157% higher than for referral programmes for other sectors, so it’s crucial that brands understand their audience and give them the sharing channels they use most.
Don't take social media metrics at face value. Share rate alone is only one part of the referral conversion funnel. It seems that Gen Z are more likely to take up an offer when recommendations come via more personal messaging apps than blanket social media posts.
Getting under the skin of your customers; making seemingly small tactical changes can make the biggest impact to referral marketing success.
What is clear, is that for fashion referral success, one size certainly doesn't fit all.