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Customer Recommendation: A Force to Reckon for Boosting Revenue

Tanuj Diwan
Apr 21, 2020

8 mins read

Tanuj Diwan

The average customer has at least 6 powerful channels to voice their opinion. That is when we are counting only the most popular social networking portals and peer-to-peer review websites.

In fact, thanks to influencer marketing, customers are not even turning into building their own blogs, podcasts, and YouTube channels to praise or punish brands.

The internet has empowered modern-day customers to voice their opinions without any restraint. Positive, negative or neutral, customers find it easy to make their opinion heard and felt.

Businesses have long since learned this phenomenon. That is why they have started counting big on survey tools like Net Promoter Score and Customer Effort Score.

These tools try to measure a customer’s loyalty and the likelihood of them referring the business to their near and dear.

The power of customer recommendations

What is a customer recommendation? What makes it so powerful?

This is one question that could probably be running in your mind now.

A customer recommendation is an unpaid and voluntary recommendation that a customer makes to their near or dear about the business.

It could be positive, negative or neutral. In NPS parlance, they are segmented as- Promoters, Passives, and Detractors.

When it comes to new prospects who are searching for a product or service, there is always this nagging doubt lingering in the back of their minds, “Is this the best option?” They need reassurance that their choice is good and worth spending money on.

It is here customer recommendation comes into play. It acts as the final nudge that converts the prospect into a paying customer.

That is the power of customer recommendation. It can make a prospect sitting on the fence to make an informed and confident decision.

The strange thing about customer recommendation is that only when customers are routinely impressed by the customer experience they receive, do they start recommending the experience to others.

customer recommendation

Why is customer recommendation so important?

According to a Neilsen study conducted in 2012, “92% of all consumers report that a word-of-mouth recommendation is the “leading reason they buy a product or service”.

Word-of-mouth recommendation is perhaps the best example of a customer recommendation. We will cover more in shortly. Before that,

Here are 3 reasons that make customer recommendations important for any business.

  • Positive review = Profitability
  • Reduces Marketing Costs
  • Boosts CLTV

Importance of customer recommendation

Positive review = Profitability

Five-star ratings. Customer testimonials on websites. Awards and recognitions. These visual cues strike a chord in the hearts of customers.

They instill confidence that they are going to spend their hard-earned money on something that several other customers approve of.

Reduces marketing costs

Customer recommendations are marketing collaterals in disguise. They can be used as strong points in new sales presentations and sales collaterals when pitching a product or service to new prospects.

In fact, it is even possible to cherry-pick specific points from the customer recommendation and use them contextually as sales collaterals to win the prospect’s attention and confidence.

Boosts CLTV

CLTV (Customer Lifetime Value) is a metric that aims to calculate the revenue a business should be able to generate from a customer throughout the entire future relationship with a customer.

A customer who has given a recommendation has a longer CLTV. A longer CLTV, in turn, means reduced marketing costs, reduced support, and maintenance costs and more revenue per customer.

How to win customer recommendations?

Customer recommendations are a true sign of customer loyalty. Only loyal customers would spend the time and energy to write a good recommendation or speak well about a business openly.

However, customer loyalty is not an easy task. According to common industry benchmarks for NPS scores, most businesses struggle with a good number of detractors than promoters or passives.

In fact, it is difficult to turn detractors into passives and ultimately promoters. This is primarily because detractors are probably customers who must have experienced poor customer service in the past.

As a result, there is a large chance that they will give negative customer recommendations. Turning these detractors into promoters requires a huge deal.

Here are some ways that your business can win customer recommendations, even from detractors.

Ask for it

7 out of 10 customers would leave a review if they’re asked to (Broadly infographic).

In other words, if you are hesitant about asking for customer recommendations, don’t be. The majority of customers are willing to provide customer reviews, provided the business asks for it.

In fact, customers prefer dealing with businesses that collect their feedback and work on it.

So, asking for customer recommendations can work in your business favor in twofold ways — it gets them to respond and also gives insights into what they feel about the business and its offerings and also what needs to improve.

Incentivize the process

Broadly, customer recommendations are voluntary in nature and are not paid for monetarily.

However, it is perfectly alright to incentivize the customer recommendation gathering process.

For example, you can give gift vouchers to a customer for publishing customer recommendations on a review website or on social portals.

Alternatively, you can also run full-length case studies, parts of which can be used as customer recommendations.

Here is how a testimonial image would look like:

customer recommendation Testimony

Source:

Respond to customer queries

Customer queries that come in through support portals, emails, social media channels or even phone channels are gateways to customer recommendations. Conversations in these channels begin as issues that the customer wants to resolve.

If they are resolved quickly, the customers can be asked to leave a positive note (a recommendation) for the customer service or for the product.

How to maximize word-of-mouth-marketing customer recommendation for your brand?

Word-of-mouth (WOM) marketing is the sharing of customer recommendations through verbal communication. It happens when customers share their positive experiences with a brand with a friend, relative or any other peer.

For example, X sharing the interactive shopping experience with Y during a coffee chat.

Word-of-mouth marketing is more personal and is direct. As a result, it is also more persuasive too.

In fact, studies have shown that WOM drives at least $6 trillion of annual consumer spending and is estimated to account for 13% of consumer sales. [Source: Invespcro]

customer recommendation word of mouth

Source

Given the importance of WOM marketing, it is imperative to make the best use of it. Here are some strategic ways you use word-of-mouth marketing reviews.

Encourage User-generated Content (UGC)

User-generated content is largely customer reviews and ratings that are shared across the internet. Although WOM refers to direct orally shared recommendation.

In today’s internet-driven world, UGC is the best alternative for WOM. In fact, we can consider it to be as good as word-of-mouth marketing.

User-generated content is considered to be the most authentic form of customer recommendations since it is created by users who have already used the product or have in-depth knowledge about it.

Owing to this fact, 86% of millennials consider UGC as a good indicator of a brand’s trustworthiness.

Here are some ways you can garner more UGC for your brand:

  • Create a unique hashtag that can be used by customers while they are referring to your product
  • Create a community of users where they can, share, interact or even promote their own unique ways of using the product or service.

For example, Crocs, the casual shoemaker uses the hashtag #ComeAsyouAre to create a buzz around its products.

customer recommendation Examples

Source

Share testimonials or customer reviews

The power of WOM increases when the brand itself shares the testimonials or reviews. For instance, it is common practice to praise or punish a brand through Twitter.

There are also other platforms like Google My Business, Yelp, G2, Clutch, etc. where customers can write their reviews.

These reviews can be gathered and shared on the website, social media handles or even featured as case studies.

Doing so turns the already created testimonials and customer reviews into social proof that prospects can count on before making a final decision.

customer recommendation Reviews

Source

Create a referral program

A referral program is a systematic way of making your existing customers to refer new customers to your business. For the act of referring new customers, the referring customers are provided more features or incentives.

  • The benefits of a referral program is that:
  • It spreads quickly amidst masses
  • It is possible to measure the impact with accuracy
  • It creates a win-win situation for both the parties

A classic example of a referral program is the Tesla referral program.

For qualifying referrals, Tesla owners get a wide variety of referral rewards like exclusive tours of the Tesla factory, attend grand opening parties, and right to purchase exclusive models like the 5 QRs. Referees rewards include up to 10 $1,000 discount vouchers.

With its referral program, Tesla was able to achieve up to 42x increase on every dollar spent on their referral program.

customer recommendation referral program by Tesla

Source

In a nutshell

More than 62% of customers read online reviews and recommendations before making a buying decision.

More than 90% of customers believe in the brand recommendations that their friends provide. Customer recommendations are a force to reckon for more business.

Positive customer recommendations can boost your revenue significantly. There are several ways of collecting customer recommendations. The internet has opened up several channels through which you can gather word-of-mouth recommendations from customers.

It is up to your business to make the best use of them.

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