Probably the best working and most underutilized PPC marketing strategy out there today has to do with artificially stimulating referrals from current and past customers/clients (your house list) using PPC ads, amplifying this (likely) best source of revenue for your business.
I do these types of referral campaigns all the time with any house list I can get my hands on. A list that is big enough to work with one of the ad networks is money to me, no matter how old the list.
In fact, I wish someone would pay me to use their house lists and take a cut of the sales, as that is how good this stuff is!
So where and How Do I Set up These Referral PPC Campaigns to Artificially Generate More Referrals?
Just take your list of customers’ names and contact information (either phone or email), push them out to your favorite ad network (either Facebook or Google, preferably both) with an incentive for these people to refer, and watch your register or phone light up like a Christmas tree.
Ever seen conversion rates that high before? Try one of these campaigns and you will see it for yourself.
How big does my actual customer list have to be to do this?
Because Google and Facebook have a problem with being too granular with your marketing as not to creep out the user with ridiculously small audiences that can target people on an individual level , the answer to that is 100.
If you do have a list of 100 or more customers in a database file ready to go, then you can start making money RIGHT AWAY by just following the stuff laid out in this article.
It’s pretty easy.
Great Examples of Referral Campaigns I Have Seen Before That You Can Use Right Now
While there are so many different ways you can approach these types of campaigns, here are a few of the better ones I have seen recently:
Get “Points” for Some Amount off All Future Purchases
I have used each of these variants at one time or another and have proven that they all work.
What It Truly Takes to Consistently Come up With Great Copy for Your Referral Campaigns (or Any Other Display Campaign, for That Matter)
If you wonder how I or any other great copywriter come up with campaign creative ideas, the answer is that we simply observe what other people are doing and apply it to our day-to-day testing strategies to consistently add to what we have in our arsenal, knowing what works predictably.
Pay attention to every advertisement you hear in your daily life and make a crib sheet of what competitors (or any other ads you hear/see) are doing to indicate that they may actually work, to plan out an ad testing schedule that works for you.
I can tell you that most ads, while they sound different, have very similar elements that are repeated with a different offer or spin.
Given these similarities, here are the main types of mental conversations you want your customers to have with themselves when they see your referral PPC campaigns’ ads:
- Urgency – “How long do I have to refer with the incentive? I have been putting off referring my friend, but I think the time to act is now.”
- Scarcity – “If this is such a good deal, how do I know there will be any referral discounts left for my friend tomorrow or if I will be able to find this ad again?”
- Exclusivity – “I like being appreciated, and this offer is just for their customers only. I am going to take advantage of this so I feel important.”
- Liking – “I really did like the experience this product gave me. I want my friend, whom I really care about and has helped me in the past, to have the same feeling/experience I did.”
- Fear – “If my friend doesn’t use this, they may eventually make the wrong choice and use something else not this good and miss out or have poor [insert problem]. I don’t want to risk that, since I care about them too much.”
- Reciprocity – “This company did me right by putting together such a wonderful product and delivering on their promises as advertised. I think I will give back as they are asking me to do.”
- Prestige – “My network of friends and I can be the only ones who get the best, and we will all be able to afford it now, given this great price discount.”
Rolling all of these elements into an offer, you can take something like:
I can tell you that bottom ad will work three to four times better than the top one every single time.
So, what sizes/types of ads do you recommend?
I always recommend the following ad sizes, as they consistently provide the best conversion and CTR (low CPA) that I have tested, averaged out across all the ads I am running for my clients:
- 120×600 – 5-10% Conversion Rates
- 970×90 – 10-15% Conversion Rates
- 728×90 – 10-15% Conversion Rates
- 468×60 – 3-7% Conversion Rates
- 300×250 – 12-17% Conversion Rates
- 160×600 — 20-25% Conversion Rates
I am not a fan of sidebar or Instagram ads (or any app advertising, for that matter), since with the testing I have run using identical offers, time and time again, the conversion rates for each type of placement is consistently worse than the good ol’ newsfeed, where people actually want to click on stuff.
Not to say that some of these other ad placements couldn’t ever work, it’s just not that often, as per my own experience. The only time I use Instagram or the sidebar is when I have tapped everything I possibly can on Facebook in the targeted area I am gunning for first and am getting saturated there.
Here Is the Exact Process to Follow to Get your Referral Campaign Going This Week
First, get your customers’ list of emails or phone numbers together in an Excel file:
Next, upload those to Facebook —
— Or Google, using the list upload feature there:
Finally, wait about 15 minutes to see how many of the names Google and/or Facebook can match up with the list, to see what information these ad networks have on file and to launch your campaigns.
Google and Facebook Both Will Tell You How Many of Your Customers Match Up
Customer Match on Both Platforms Is Surprisingly Similar
(Twitter Sucks, Though, and I Hardly Ever Use That for This)
Expect a 30-50 percent match rate of names you are eligible to advertise to (better on Google than Facebook) depending on what actual vertical you are in. B2C will work much better than B2B for obvious reasons.
The INCREDIBLE Math Behind Referral Campaigns
Everyone knows they need referrals and want them, but not many business owners really sit down and figure out how big of an impact they actually make on their businesses.
I encourage you to do this before you ever start, so you will know exactly how aggressive you should get with your referral campaign and know where the goal posts are for dialing in an acceptable cost per lead. If you do so, you will see you can spend about what you want and still make money on these campaigns.
To give you an example of how to calculate an estimated return from referrals:
If everyone who buys from you refers at a rate of 30 percent, then for every 100 customers you get, you will get 30 deals from referrals from those sales, just on the front end.
With a product sales price of $500, the resulting revenue from those referrals would be $15,000.
It’s not uncommon to literally double the amount of referrals you can get from a product with a great referral campaign on Facebook and Google.
So by taking a look at those numbers after figuring in a great working referral PPC campaign:
If every customer who buys from you with a referral campaign running now refers at a rate of 60 percent instead of 30 percent, then for every 100 customers you get, you will now get 60 referral sales.
The new resulting revenue from referrals when combined with your referral ad campaign is now $30,000, a 26 percent increase in total revenue from first time, non-referral sales and referrals when you also factor in all the referrals those people also refer.
To show you how this insane math works, buckle yourself in …
Referrals You Get Without Referral Ads
30 Original Referrals + 10 Referrals From Those Referrals + 3 More Referrals From Those Referrals + 1 More Referral From Those Referrals, for a Total of 44 Referrals.
Total Revenue From First-Time Sales, Non-referral-Based ($50,000) + Referrals ($22,000) = $72,000
Referrals You Get With Referral Ads in Addition
60 Original Referrals + 20 Referrals From Those Referrals + 7 More Referrals From Those Referrals + 2 More Referrals From Those Referrals, for a Total of 89 Referrals.
Revenue From First-Time Sales, Non-referral-Based ($50,000) + Referrals After ($44,500) = $94,500
Gain in Revenue Over Control Group Without Referral Ads = $22,500
This increase in referral rate (roughly double) is actually pretty consistent compared with what I have seen and am able to consistently produce again and again on my own.
But what about the cost of the referral campaign affecting these returns?
I usually spend about $1,000 marketing my referral offer on PPC ads alone to get those kinds of results from an audience of 100 people, which gives me a return on investment from my referral ads in the range of 2000-3000 percent.
But what if your referral rate is double this rate before you start your referral marketing campaign?
Instead of getting $44,500 in referral revenue from every 100 customers you generate with the rest of your marketing, you are now going to get $147,500 of revenue just from your referrals.
Results From a 60 Percent Referral Rate (vs. Only 30 Percent) & Follow-up Referral PPC Campaign Assuming a $500 Product Cost
120 Original Referrals + 72 Referrals From Those Referrals + 43 More Referrals From Those Referrals + 25 More Referrals From Those Referrals, 15 Referrals From Those Referrals, 9 Referrals From Those Referrals, 5 More Referrals From Those Referrals, 3 Referrals From Those Referrals, 2 From Those, and 1 From That One, for a total of 295 referrals.
Revenue From First-Time Sales, Non-referral-Based ($50,000) + Referrals ($147,500) = $197,500 Total
Revenue Generated From First-Time Sales Using ‘First Click’ PPC + Referrals After Running Referral PPC Campaign = Real ROI Of Your PPC Investment
You can quite literally expect to drive your whole business just off these types of referral campaigns if you can already achieve a referral rate greater than 40 percent. I have seen it done many times at a local level, it’s not that uncommon.
Just put a few more leads on the top of the funnel to get started seeding it and watch your referral campaigns grow your company quickly till you hit a saturation point and can basically stop worrying about marketing (assuming you can maintain quality and referability as all those sales come flying in).
Just when I made this sound all great for you to run out and get it done right now, there is something to realize and plan for before you get started, which is to limit how many times your audience should see your referral ads, to avoid them getting burned out and still stay receptive to your other marketing messages. You can’t just pound people with these ads and expect results to be as consistently good as what it will be when you first run it for each person who has purchased.
“Like any great direct response marketer knows, your house customer list is worth gold to your organization; you treat that asset with great care.”
— Corey Zeimen
So how much is too much exposure for referral ads with your house list?
I generally like to show one set of ads to a person a maximum frequency of seven times, and then wait a few weeks before I rotate out my offers to something else.
Facebook Tells You How Many Times Your Customers Have Already Seen Your Ad
Stay tuned to my next future blog post where I talk more about how else I market to my house list and mix up my offers so I can continue churning money out of my house lists continuously, without necessarily having to take breaks or wear out my top source of revenue.