Online reviews versus referral marketing

I meet with a growing number of clients that inquire about finding ways to boost their online presence. Regardless of their industry, most believe that Google is the Holy Grail of leads and – consequently – new business. Although I don’t necessarily disagree, I strongly believe that Google is just one piece, albeit a big one, of the puzzle.

Sure; I continually harp on the importance of a solid referral strategy for most businesses – especially those in service-related industries. So, I figured I would do a little more harping, but this time talk about how Google – more specifically online reviews – can be effectively used in tandem with referrals.

Only moments ago, during my brief trip to Denver, I was sitting in a coffee shop scribbling on a paper napkin thinking of an easy way to explain the following. I came up with a scattered mess of arrows and circles and more arrows.

Not exactly crystal clear. So, I asked Torey – who is more graphically inclined – to give it a whirl. His graphic is what you see above and will help explain my concept.

Taking a step back, I am going retro for a moment to referencing the Buying Decision Process, which any seasoned business professional likely learned years past. Still applicable today, in my opinion it outlines the important points in time that any marketer should consider. I also believe that social influences greatly impact the decisions people make to purchase products and services. I would argue this is true even more today than ever before – as the internet reduces barriers created by distance and time – effectively allowing recommendations and referrals to glimmer brighter than traditional marketing, both locally, and beyond.

Oh boy, that was a lofty statement – which I am mildly proud of – but I will gladly explain. I believe that the Buying Decision Process is closely tied to Social Impact Theory, which (duh) explains how people are affected by social influence.

Social Impact Theory breaks down the effectiveness of social influence into three categories: strength, immediacy, and number.

Strength – a group (or individual) has more of an impact of influencing a decision the more important they are to the individual.

Immediacy – the amount of time and space between a group and the individual determines its potency – and how quickly a decision must be made.

Number – the more people (or reviews), the greater the influence.

This theory explains how companies that have active referral strategies combined with a local-centric online presence are among the most successful. The search for products and services is greatly influenced by when and where a prospect is when they need your services. A prospect searching for a pizza joint in a new city will almost always yield a Google search. The search for a reputable insurance agent in your local community, however, leans toward referrals from your trusted friends.

For most searches, Google has recently improved their search engine algorithms in favor of local businesses. They called the update “Pigeon” of all things. This is great news for local companies – but it only impacts about half of all new prospects – as indicated above. The other half is courtesy of word-of-mouth (referrals from your active promoters).

The bottom line: concentrating on ways to boost local SEO and encouraging reviews for your business is effective at targeting a specific group of prospects. Yet in order to cover all bases, and increase your conversion, combine your online presence with a strong referral strategy aimed at encouraging your promoters to share you with their friends and family.

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