#240 – Referral Marketing With Raúl Galera

Thomas Green here with Ethical Marketing Service. On the episode today, we have Raúl Galera. Raúl, welcome. Thanks for having me. It is my pleasure. Would you like to take a moment and tell the audience a bit about yourself and what you do? Absolutely, so I’m the partnerships and business development lead at ReferralCandy, and for those of you who are not familiar with referral candy, we’re an app that allows e-commerce stores to set up and run customer referral programs, so basically a way to acquire new customers by turning your existing customers into your marketing team, which is something that helps you acquire new customers and also retain your existing ones.

Thank you for the introduction. I suppose based on what you’ve said, I kind of like, it would be beneficial to understand a little bit about how it works, so could you, do you mind giving us an example of like a, just a small example of what that process looks like? Yeah, absolutely. So from the consumer perspective, what ReferralCandy does is that when you are, when you’re a consumer and you’re buying something from an online store and you complete the checkout process, you’re going to receive an invitation to join the referral program from that store. It could either be in a form, in an email form or some sort of widget or pop up. After you accept to be part of the program, you get a unique referral link that you can start sharing with your friends and then you can put that on social media, you can put it on a group chat, whatever it is. And once your friends click on the referral link, they’re going to see an offer that’s unique for them. It could be like 15% off their first purchase or 20% off, and then from there they’re taken to the online store so they can complete the purchase and it tracks the whole referral process from the moment that they clicked on the link until the moment that they completed the purchase at checkout.

And once we verify the transaction, we send the reward to the customer that made the recommendation in the first place. So essentially it’s like if you’re a fan of a particular product or you’re a regular customer, you can be an advocate of it and earn money from it by recommending it to others, that’s essentially a summary. Exactly. Yeah,  you can either, you can either make money or you can get a discount on your next purchase or you can get some sort of like free product or a gift card or something along those lines. That’s up to the store to decide what kind of reward system they want to implement. Do you have any thoughts about, shall we say, a natural way to go about doing it, because I don’t know who your target market is necessarily, I mean I would think it was perfectly reasonable for say like a content creator to put a referral link in. I think people are quite used to that, but if you’re as a sort of consumer I think, let’s say you’ve got thousands of Facebook friends or something and you put a link out, what would be like a natural way to go about doing that, that’s not sort of salesy to the people that you are actual friends with.

Yeah I honestly think that you can’t really be too salesy in front of people that you care about in the sense that when we think of like coming from a former salesperson myself, you know when we think about a salesperson, we typically think about somebody that’s just trying to push the product to us and you know no matter what they want us to buy the product and that’s it, that’s the only objective but you can’t really do that with a friend of yours or a co worker or you know a family member assuming that you have a good relationship with that family member. If you’re recommending a product it’s because you either you liked it, you use it yourself and you liked it or you think it’s a good purchase or something that that family member friend and coworker is going to enjoy. And so I think that’s why referrals tend to work so well, it’s because people that are promoting your products, your customers, do not sound like sales people and also in the eyes of their friends also don’t sound like sales people, it sounds like a like a legit recommendation.

And one more reason why I think that referral programs I tend to work, it’s because if we’re taking like a step back before you have a referral program running in your in your store and your online business, you’re probably getting referrals already. Um It’s just that if you don’t have a system to track it, it’s kind of impossible for you to know if the customer who just bought a pair of tennis shoes was referred by a friend or or or just happened to stumble upon your website. Um And so having a system kind of kind of obviously helps to to identify those referrals that are probably happening organically, the whole point of referral programs to, you know, increase the volume of referrals by adding incentives, which is something that always works, works with people. But yeah, so going back to your question about being natural, I think once again, I think it’s um I think the way that we talk to our friends and family coworkers is natural per se. Um And so when we’re recommending a product, we’re probably doing it out of our own experience.

And so if we say that we like it, it’s the same, it’s the same, the reason why we always look at product reviews before we buy a product because we know that the for example, the product photos that we see on the on the product page are perfect, right there, made with you know, really professional cameras, perfect lighten. And so we know that it’s almost true, but it’s not as true as seeing a picture taken with a smartphone from somebody that that left the review even if we don’t know that person, right? So we’re always trying to get to kind of like that level of social proof and and a recommendation from a friend, I would always help and we know that our friend would not recommend the product that they didn’t enjoy just to get $20 out of it. Were your thoughts on the concept of sort of like that totally agree with you about referrals being, shall we say trusted, recommended um whatever springs to me is like the there’s no self interest in it for the person who’s recommending it, meaning like if I were recommending to a friend, like a restaurant is always the example given right, you should eat at this restaurant because it’s amazing.

But if that person knew that I then made a commission from that, maybe it wouldn’t be as shall we say persuasive, have you got any thoughts around that topic? I mean it’s it’s definitely possible, but once again, I I think that in the majority of cases you wouldn’t recommend something to a friend, you wouldn’t recommend a bad restaurant to a friend and then it’s basically just because you’re gonna get about your next time because because it’s you know it won’t hold like that. They’ll they’ll try it like sure they’ll trust you, they’ll try it and then they’ll never trust you again with recommendations which again it happens you know we’ve we’ve all gotten a recommendation from a friend that it was probably an honest recommendation. They just you know legit enjoyed that restaurant, that hotel vacation spot Netflix show whatever it is and then we experienced it ourselves and it was terrible and you know we’re probably thinking okay well you know now we know we can’t really trust that person with recommendations but um sure the fact that they’re getting something out of it might make it a little bit more um might make somebody like raise an eyebrow.

But at the end of the day it’s It’s our own reputation that’s on the line. So you know nobody nobody would you know sell the reputation for for $20 or for a 15% discount on their on their next purchase. So um that’s one recently and then the other reason why I think that it doesn’t really happen that often it’s because um we’ve seen a lot of referral programs that you know when you’re setting up a referral program you need to decide how much you want to give your customers to encourage them to refer. And you also need to decide how much you’re going to offer their friends to become customers for the first time and make that first purchase. In a lot of cases, we’ve seen a higher reward for the friend than than for the person that’s making the recommendation. And in those cases the business owner knows that their customers are going to talk about their products anyway. Um and so they decide to just put more emphasis on acquiring that first customers just because the referral is probably going to happen.

And also given given something, offering something to somebody that we care about. In a lot of cases it’s it’s a it’s enough of a reason for us to go out and refers. So, so yeah, I think that’s kind of like, you know, social relationships, type of, you know, uh aspect, I think it’s really interesting and if you know how to play it out well it can it can really uh I mean you can make an impact, a positive impact on your business. Yeah. And I think the the examples were maybe it might work really well is if you know that person and you know, they’re spending let’s say X amount on a particular product and you can get a significant saving on that particular product, then really you’re doing them a favor and the product maybe even better than the one they’re buying. So I guess the how would you go about doing it if you were, let’s say, I don’t know online and you had a link to share, what would you say as a consumer myself? Yeah, let’s say you were referring someone.

What would you say? I don’t think I would say much, I would probably show. So if I have a picture that say it’s, you know, clothing, if I have a picture of me wearing that, that’s what I would do is have a video of me unboxing the product. Um you know, I would definitely go with that word. I mean we react a lot better to uh, to what’s what’s visual and sure, I can tell, I mean I can tell my friends that hey, you know, this t shirt that I bought, it’s great and you should definitely get it too, but until they see it, you know, they can’t really, you know, wrap their head around the fact that this teacher is so great that they actually need to by themselves and if I can, if I can combine the two, um, you know, even better. But I think that visual aspect is what makes it uh really important. We have a bunch of brands that are incentivizing their customers to do this basically posted on, posted on social media and you know, either Takas or use this hashtag um, and then, you know, you can also use your following obviously, but they want that visualize, but they want people not actors, not, not necessarily influencers, not necessarily models wearing their products because they know that works even if there’s not a referral program involved just they know that scene regular people wearing their products is definitely going to help other people figure out okay, that will look good on me or Okay.

Yeah, if I know how that person looks like in real life, so I know that if that dress is looking good on her, it’s gonna look good on me as well. So that that kind of like again going back to that social proof, I think that’s what really helps. So that’s what I would do and like I said, a lot of brands are encouraging their customers to do unboxing videos on on Youtube just because you know there’s a reach and it’s always kind of a cool process to to watch those videos like you know, like what’s gonna happen next? Like what’s the packaging like? Um So yeah, I think the visual aspect, you know, can will always be you know, as many words as you can as you can write, praising a product. Is there anyone I mentioned the example of someone with thousands of facebook friends, Is there anyone that, let’s say it works best for good question. Um So something that we’re seeing um these days is that uh merchant online stores merchants are setting up two different accounts.

Um There are two different referral programs so that you want for their customers where they typically give discounts to both parties and both the the customer that’s making the recommendation and the existing, sorry, existing customer and the new the new friend, the new customer, but they also run a separate referral program for people that have a little bit more of a bigger audience influencers. Um and so in in that case it typically give them a a cash reward and usually higher and it’s usually kind of like either lifetime or, or you know, you’ll get a commission for the first time purchases that every customer that you refer to us will will make. Um and so both of them work obviously, You know, a regular regular person like myself that, you know, I might have like, you know, 350 followers on Instagram, my my my reaches more limited than somebody that has 30,000 followers, right? Uh and and actually makes a living out of their their instagram profile. Um and so you would think that in terms of volume, obviously it’s good to have those people that have like a bigger reach just because they can get there.

But we’ve also seen that influences are a little bit too big Are a little bit more disconnected from their audience. And so their posts don’t necessarily work as well as somebody that has 3, 10, 15, 30,000 followers on the 22nd. So I’ll take both for different reasons. Um also because again, the way that you are promoting the product is a little bit different if you’re a consumer, okay, I literally spend my money on this product and I’m recommended to you. Um It looks a little bit more similar to the restaurant recommendation or the Netflix show, it’s like, hey, you know, paying for this service and this is something that I found that’s interesting and an influencer who, even though we trust them, even though also the reputation is coming from the line because they don’t want to recommend the product that they don’t like, they want to see it first and they want to make sure it’s good. Um even though we know that there’s kind of that level of trust and that they actually believe in the product of the shoe, actually believe in the product if they care about their reputation. Um it’s not the same, We know that there’s something behind it that we know that there’s more of a financial incentive on their side than on the customer side.

Like I said, both of them work, both of them are different levels of water mouth, and again, we’re, I mean, we’re actually promoting both, like, you know, we tell companies that if you can start working with influencers do it because it’s gonna pay off in the long run, but yeah, I would say that both of them work at different levels and for different reasons and you mentioned influencers, I think if I’m not mistaken, they’ve been a bit more, should we say regulated in the sense that they have to be transparent about the fact that they’re promoting, is that something a consumer has to do if they let’s say they buy a product and then they put out a referral link, do they have to disclose that? It’s a that they would make sort of commission from that or something? That’s a very good question. Um, I don’t think so. Um, but I’m also not a legal expert, so I don’t want anybody to take my advice on that about it, but um, I think that has more to do with people that are kind of doing it more professionally. Um you know, if you’re just getting a discount or getting a $10 gift card or $10 cash reward for referring your friends, I don’t think you necessarily need to do it the first time, but again, I’m not not a legal expert, so don’t don’t take my advice.

Well, putting the, putting the legal stuff aside, do you think that should happen or do you think that’s more of a hindrance? I mean, I personally don’t think so because we’re talking about people who are not necessarily making a living out of it. Um, you know, this and referral programs have, I mean they happen in all shapes and four, we focused on e commerce, but there’s referral programs for um, you know, all sorts of products, you know, it could be, you know, even kind of related financial products, like for example coin base has a referral program and they give you a Bitcoin if you refer a friend and they buy a certain amount. And TransferWise also has a referral program and they literally give you cash if your friends, you know you refer ex friends and they you know transfer X amount. So I don’t think so because personally I feel like it would add a lot of um just like unnecessary maybe regulation or unnecessary hassles for something at the end of the day. It’s just it’s something that people are doing again, you’re not waking up in the morning and adding to your to do list to refer TransferWise to refer Coinbase to your friends, it’s something that just probably happening organically and it’s not you’re not making uh a living out of it.

So it’s a different story if you are maybe like a content producer or if you’re an influencer or if you have um some sort of platform where you’re actively looking to make money from that. But the majority of the recommendations that happen between you know, people like you and me like me referring my friends, there’s not necessarily a financial drive behind it because of the reason that I that I said earlier, if I even if I’m making money out of it, I wouldn’t recommend the bad product to my friends. So so I think the incentives a little bit a little bit different and in relation to yourself what are some of the sort of biggest challenges with the business you’re in? I would say that um Well we’ve had challenges um and we’ve also had kind of upsides um both of them run by things that we can really control. So operating any commerce, anybody who’s in e commerce or is being in the commerce for the past 3, 4, 5 years.

We’ve been through a roller coaster, we’re still in that roller coaster where we, we can really predict, I mean when we were never able to predict, but it’s becoming more difficult than ever to predict what’s gonna happen. At the beginning of of 2020, I remember that we said o e commerce. Well in April of 2020 E commerce reached the level of penetration that was supposed to happen in 2025. Um And so 2020 was a great year for anybody who was selling online because that was pretty much the only option, like consumers were kind of legally forced to buy online because a lot of the different options wearing available. Um And so but now e commerce revenues, e commerce kind of penetration, it’s kind of going down To a more natural level, more to like what it would look like a natural progression from 2018, Um and so yeah, those are all things that we can’t really control. Why is that going back to 2,019 levels are slightly higher than 2,019.

But because people are spending more money on other things, restaurants, travel services, things that they couldn’t really spend money on before they’re still buying online. I’m sure a lot of people, I’m sure the majority of e commerce consumers are spending more money on e commerce than they did back in 2019. Probably not as much as they did in 2020 because you had no other option. Um And I’m sure that a lot of people that weren’t maybe we’re afraid of buying online in 2019 now they’re regular, you know E commerce consumers consumers and they buy products online on a regular basis. And but that gap on where we’re spending our money, it’s it’s definitely there and we obviously don’t know what’s gonna happen right, like also we have inflation issues, you know we’re talking about potential recession recession, we don’t really know exactly what’s gonna happen. So I would say that’s kind of the biggest, the biggest challenge both for the upside and the downside is that we have been dealing with a lot of things that we had no control over and we’re just trying to kind of like you know serve serve that as best we could.

Maybe you got some biggest wins that you’re proud of. I mean yeah so one thing that we we talked about a lot internally and the companies that I mean sure 2020 2021 were years in which anybody who was in the e commerce business um did very well considering the, you know how terrible the situation was. But I think it also um it’s also work that we did over the previous years of kind of like being ready for that, not actively knowing obviously what was gonna happen and like the position we’re gonna be in, but I think we did a lot of things right to be prepared for that situation. So even internally at the company, we we had a lot of systems, we write everything down, we process absolutely everything and when Covid hit and everybody had to start working from home, we had the systems in place to work from home. Nobody. I mean pretty much the only aspect that people at falcon, they were missing from the office was the social aspect which obviously you can tell, but literally everything else was working perfectly.

We knew our processes, we knew what to do, we knew um you know, everything was in place, It’s like if it’s like if we weren’t prepared for it, right? Um and so I think that’s something that as a company but also as a product, I think we were we have done a really good job over the past few years to um two basically position ourselves as the leaders in the from marketing for e commerce and building a product that was meant for that and I think our consumers trusted it and again, so just happy that we, you know, did what we did um in order to be prepared for a situation that just, you know, came all of a sudden and, and we were lucky to be prepared. Well, um, I like the definition of luck is preparedness, preparedness meets opportunity, so I guess that’s congratulations on actually being ready because obviously as you know, some people weren’t, but how did you get involved in the business?

So I joined the company about six years ago, um and before that I was, I was exposed to the tech world but not working on it. So I was, I was doing sales for a startup that was providing recruitment services for tech companies and startups and so my job as a sales person was to convince these companies to let us, you know, kind of handle their, their recruiting, so on a weekly basis, I was meeting with people that were either working at tech companies or launching their own startups and I will hear, you know what the company was about, what the product was about, whether we’re building and you know, I was surrounded by all these people that were obviously way smarter than me and they were building all these amazing products and I was like, I, I really want to work in the college, I want to work in in tech, um and I started looking for companies that were hiring for remote sales people um and referral can be happened to be one of them, I found them on ninja list.

And so I instead of actually again, doesn’t really, I mean it’s not like I’m preparing it for your podcast specifically, but one thing that I liked about referral candy was that it’s kind of like honest marketing in the sense that you know, you’re trying to convince your customers to promote your product if they liked it because again, no, um if you have a good product, if you have a good experience customer experience, your customers are gonna go out and refer anyway, so why not building a system around it? So I particularly like that part of like that kind of honest marketing of like, you know, making it more transparent. So again, not not that I prepared for for your podcast, but you know, it’s kind of kind of matches. Um and so I saw, yeah, I saw that we’re hiring for a position on angel list and instead of applying, I sent an email to danish our ceo and he replied we had a few calls and I’m still here. So well done on all that and just coming back to what we talked about in relation to how a post might look.

I kind of like the sort of documenting your life type approach. So you know, like when people, I don’t know less. The typical example is like I’m having this meal today, like when they put out a post about like what they’ve eaten or what they’ve done. Like I went here type thing, I think it fits in quite nicely with like I just bought this product type thing and you know you can look at it if you want to, it comes back to the sales, the thing that I mentioned which is and I know different definitions of that, so it might be worth touching on your on your definition of what sales is actually or what you see sales to be. But if you’re documenting your life and you’re putting it online and you can get benefits from doing that, that’s kind of like it turns something which is perhaps an exercise that you’re doing that you’re not getting anything in return from to something which you might do. Um But coming back to that after that ramble, I asked you what your approach to sales is, how do you feel about sales and what sales mean to you?

That’s a good question. I so over the past six years I’ve been doing business development partnerships basically at referral candy. Um And I think, I mean it wasn’t it was a difficult transition for me mostly because I’ve always thought that obviously you know, you have to provide value um and you know and whatever you do and if you’re in sales you need to provide value to customers, but that’s the only way that you’re going to get there first of all their attention and eventually their business and with partnerships it’s even more important um You know if you if we’re working with marketing agencies, if we’re working with other tech companies with media companies um I think it’s good in whatever shape or form if it’s possible had the mentality of providing value before you receive value and it’s something that it might be missing a little bit on maybe the sales world.

But people that work in partnerships like myself, we kind of have that in mind all the time. You know if you’re just starting to work with an agency um and you know maybe they haven’t referred any customers to you yet but you happen to know somebody who might need their services, just go ahead and send it. You know like don’t don’t make anything, don’t sorry don’t make everything a transaction, don’t make everything something that needs to have, you know some sort of like a check and balance and like well I’m going to um I’ll send them this customer once they send their first lead or anything along those lines. If you provide value, people will be more inclined to provide value. So that’s kind of my approach. I know it’s a little bit of an ideal scenario but that’s kind of my approach how I like to approach sales also even from a personal kind of selfish perspective it makes you feel better. Um you know, if you’re if you’re providing something, if you are getting something in return for something you’ve done, it’s you know, it feels better than you know, receiving something that you’re not necessarily having a sort of response to or you know anything all the time.

So yeah, kinda kinda putting that skin in the game by like, you know, providing value to other people. I think it’s crucial. Thank you for sharing that and I certainly don’t think there’s anything wrong with having standards and having your values. So I appreciate the share. I did say beforehand, I was going to ask you what success means to you, so when that sort of term comes up, what what does that make you think of? Good question? Um I mean in my opinion, I think it’s progression. Um So at a personal level professional level company level um I think success means that you are, did you being able to pull yourself in a position in which you are better than what you were a year before? It could be uh could be again on the professional level, maybe you’re in a position with more responsibilities, you’re maybe you’re managing people, you’re you know, having a higher compensation obviously, you know that’s success if you can compare it to uh to where you were before and you’re and you’re able to acknowledge the process that took you there obviously if it’s if it’s based on luck then you know, you’re not really going to appreciate it as much, but if you know exactly what you did to get there, um that’s going to, that’s gonna be rewarding and that’s gonna be, that’s gonna feel like success.

Um, I don’t think a lot of people feel successful after winning the lottery, they might feel happy, they might feel relieved, but I don’t think successful. Exactly. Exactly. Exactly. Exactly. So it’s the same analogy that I will put, you know, somebody that’s going to the gym, if you start going to the gym and after a year you’re gonna see results, maybe you’re not where you want to be, but you’re closer and you can see the journey and you can see what you put into it. So, um, same, honestly, you can apply that and I try to apply that to not only professional, but also, you know, personal relations, you know, personal kind of development. Um, just try to improve. Be also be aware that there are things that might prevent you from improvement, but, you know, try to figure it out how to overcome those. And you know, also I always have a sense that uh, that again, there’s a lot of things in your life that you can’t control. So try to work around them. Thank you for that. Is there anything that I should have asked you about today. They should have asked me, um, honestly don’t think so.

I mean we’ve actually covered um a lot of things that I typically don’t cover in in other podcasts. So I actually I appreciate that you made me think with uh this past couple of questions, especially the one about success and what sales means to me. Um and that’s something I was not expecting. But I’m glad that you asked. So yeah, I don’t know, I don’t know if there’s any other topics that I don’t have, any other topics that come to mind. So you’re prepared for next time, right? Absolutely. But if people want to try out referral candy or they want to know more, what do they do? They can just go to referral candy dot com. And they will be able to see all the information about how it works and how to get started. And then we also even have kind of content. I’ve produced some of the content, some of the videos that explain how are full of candy works. So they can actually connect with me over there as well. If they have any questions, any closing thoughts for us today? Gonna bring him back to uh what we’re talking about earlier in reform marketing.

I learned recently that I think it was on a survey on e-marketer that e-commerce stores in 2021 were paying more in Facebook ads than they were earning on net profit, which means that Facebook is making more money from e-commerce stores than e-commerce stores are making themselves. Diversifying customer acquisition is crucial, improving customer retention is even more crucial, and referral marketing, which is a performance based channel, it’s something that can help, so I recommend anybody who’s listening to this. Honestly, it doesn’t really matter what industry you’re in. If you’re on e-commerce, it’s probably easier. There’s probably more systems around, but any other industry that you might be working on, figure out what’s the best way for you to implement some sort of referral marketing system on your company. Well, thank you for that. And for all the people listening, can you review the links in the description. And Raúl, thank you for being a great guest today. Yeah, thanks for having me.