When e-commerce sales are broken down by sources, the sales generated by referral traffic and recommendations are third largest behind direct traffic and search engine traffic. That is more sales than from traffic referred from social media. What makes this traffic so valuable?
The problem with shopping online is the sheer number of options available. People are simply overwhelmed when it comes to buying something. They first need to find a site to buy from, then choose from the various combinations of brands, types, sizes etc. This is why the referral invitation is so powerful. Let’s take something as simple a razor. The sheer number of permutations of what is available is painful enough, but which one is actually good? Now you get a mail from a friend recommending one? Would you really bother looking around for other options?
This is the basis of an email campaign run by Harrys. They are razor company and used this marketing tactic to pick up two referrals from every customer. In order to make the recommendation work for the referrer, they offer razors to two friends free. In addition, this works even if you were just referred from a friend got a free razor.
Customers love free gifts and tend to see such products more favorably when referred to by a friend. This is what drives the referral process and is an extremely smart and effective strategy to use customer’s social networks to bring in other potential customers.