Do forward-to-a-friend referrals work?

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The gloves are off
The gloves are off

The viral forward-to-a-friend tactic might be a quick way to build up a list, but others argue the process falls short. Are these referral marketing campaigns effective? Our experts weigh in



CONTENDER
Elie Ashery
President,Gold Lasso
More than 10 years marketing and online experience

The forward-to-a-Friend gimmick is a failed attempt by e-mail service providers to incorporate viral marketing tools into their applications. Because 100% of the most commonly used e-mail clients have a forward e-mail feature, people use that instead. The only thing we e-mail service providers can do to save face is to hope that the feature reminds people to use their forward button.

A recent survey to online market­ers by the Email Experience Council asked, “What is your most successful list-building tactic?” Only 6% chose “Viral: empowering subscribers to share my e-mails via forward-to-a-friend,” 9% chose “Acquisition: growing by renting lists,” and 84% chose “Organic: capital­izing on sign-up opportunities across all of my channels.”

These statistics prove that the forward-to-a-friend process is inad­equate, and a more formalized referral program is needed for success. A good program is automated, timely and usually starts where the original opt-in process ends. Once a Web site user has gone through the motions of opt­ing in, it is a perfect opportunity to ask for a referral. Ask the referrer not only for an e-mail address, but also a full name. When soliciting the referee to opt-in, always personalize the message and, most importantly, reference the referrer — this gives you instant cred­ibility and will produce a much higher conversion rate.


CONTENDER
Kevin Mabley
SVP, strategic services, Epsilon
More than 15 years experience in e-mail marketing

Ever-increasing referral marketing applications and opportuni­ties provide a cost-effective way to grow your e-mail file. A remarkable 65% of consumers forward coupons from CPG company e-mails to friends, and 55% forward retail e-mail offers, according to a recent Epsilon survey.

Also, the most up-to-date measure­ment of “pass-along” readership, the percentage of recipients who forward to a friend who in turn clicks on an e-mail link, shows the needle is holding steady at 0.5%, meaning one of every 200 delivered e-mails reaches an advocate for your brand. Special note to those in financial services and consumer products: Pass-along is highest in your niches, due to the popularity of credit card offers and Web coupons.

Referral programs can take the form of a special sweepstakes or coupons awarded to both the current customer and the referred person.

Hotmail is a classic “referral” case study. At startup, Hotmail attached a simple tagline at the bottom of each e-mail sent by existing users asking their friends to sign up for an account. After a month, the company had 20,000 subscribers. Within 18 months, it had 12 million.

Consumers use forward-to-a-friend e-mails because they have something to share. Personal endorsements are a powerful way to have your brand advocates do your marketing and your prospecting for you.



DMNews' DECISION

Mabley argues referral marketing is a cost-effective way to grow e-mail files, and that personal endorsements can be a powerful tool for consum­ers. Ashery contends the forward-to-a-friend process is an inadequate gimmick, and a more personalized referral program is needed in order to intelligently track activity and conversion.

Have your say E-mail your topic ideas to nancy.kearney@dmnews.com

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