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Why Peer-to-Peer Marketing Works

If you’ve watched Amazon Prime’s LulaRich, the tale of the multi-level marketing company, LulaRoe, you probably noticed that the key to acquiring multiple levels was recruiting like-minded people, whose interest had already been piqued by customer reviews. (And, if you haven’t watched it yet, keep this in mind when you do.)

This got us thinking. Why was this peer-to-peer (P2P) marketing approach so successful? Why does having someone relatable—a peer—sharing the personal experiences they’ve had with your brand, resonate with customers? Plus, how does P2P marketing compare to its highly effective counterpart, influencer marketing?

Read on to see if these #ads are just #fads.

What is Peer-to-Peer Marketing?

Peertopeermarketing.co says P2P marketing is essentially turning your brand’s stakeholders (customers, partners, employees, investors, etc.) into additional marketing channels. The first step is appealing to your existing customers to encourage them to share authentic reviews of your products, their shopping experiences, or both.

Really, P2P marketing is an evolution of word-of-mouth marketing. We’re all familiar with the word-of-mouth marketing story: a customer told his friend who told her friend who told their friends about their experience with your brand and now your product is selling like hotcakes. Not only does this increase sales, but it’s free advertising. The dream, right?

Peer-to-peer marketing is just an extension of this. But, instead of purely organic, literal word-of-mouth diffusion, brands actually encourage customers to take to various platforms and share their experiences. After all, 92% of consumers around the world trust the recommendations of their friends and family.

Encouragement from brands can come in a variety of different forms. Typically, this could include incentives like bonus rewards points in a loyalty program, a unique coupon code, or a free product sample. And, while these benefits may improve the customer-brand relationship, these techniques are meant to elicit genuine, authentic reviews, not force positive ones.

Why does Peer-to-Peer Marketing Work?

The key term here is authenticity. Peer-to-peer marketing is more genuine than most other marketing channels. “Peers” don’t need to be shoppers’ best friends, either. Just getting a product review from a real person, rather than an ambiguous brand or unrelatable celebrity, builds trust. In fact, 91% of people regularly or occasionally read online reviews, and 84% trust online reviews as much as a personal recommendation.

“Millennials and their Gen Z brethren are interested in authenticity, not salesmanship. They have diminished brand trust compared to past generations, and they want insights from people whose lives are like theirs — not from people who have additional privileges.” – Entrepreneur.com

The combination of highly valued reviews paired wIth younger generations—particularly Gen Z—flocking to social media for inspiration has created the perfect platform for shoppers to share their genuine experiences with products or brands.

The (Social) Proof is in the Pudding

As defined by TechTarget, “Social proof is the influence that the actions and attitudes of the people around us (either in real life or online) have on our own behavior. The ‘proof’ element is the idea that if other people are doing it (or saying it), it must be correct.” The benefit of using existing customer feedback as social proof in your marketing efforts is that your existing customers are likely pretty similar to your potential customers.

By putting customer reviews in your emails, for example, you’re creating social proof. In the example below, Bite, a sustainable toothpaste brand, is showing their email subscribers that their peers enjoyed their products by featuring direct quotes from existing customers. This is an excellent example of how brands can harness peer-to-peer marketing to make it work in their marketing strategies.

Bite Peer-to-Peer Marketing

To double-down on social proof, Bite includes reviews from both well-known publications and customers. Source: ReallyGoodEmails.

Social media can provide a direct line of communication for shoppers to connect directly with one-another. Potential customers can connect with customers who have purchased your products in the past, getting social proof straight from the horse’s mouth. That line of communication is not as open, if open at all, for connecting directly with your brand’s product designer or a celebrity influencer.

How does P2P Compare to Influencer Marketing?

We’ve touched on it already , but peer-to-peer marketing is rooted in the idea that potential customers will see themselves in the person reviewing your product, making them think, “Hey, if they like this, I’ll like this too.” Influencer marketing, on the other hand, loses a lot of that relatability.

When celebrities and influencers with dedicated social followers tout their favorite products through advertising channels or social posts accompanied by the now-required “#ad,” it shows shoppers that these “rave reviews” are being paid for, making it hard to know how the influencer actually feels about the product.

Ditch Deception

The Federal Trade Commission required “#ad” be tacked on to social posts that were paid endorsements because it’s deceptive to pass paid posts off as organic. Michael Atleson, a staff attorney for the FTC’s Bureau of Consumer Protection said, “Many consumers rely upon influencer recommendations in making purchasing decisions, and they should know when a brand paid an influencer for an endorsement, because it affects the weight and credibility the consumers may give to that endorsement.”

While brands can, and should, encourage reviews and reward customers who provide reviews and create user-generated content, it’s not an outright ask to speak fondly of a product in exchange for payment. Peer-to-peer marketing takes all reviews into account—the good, the bad, and the ugly. With not-so-favorable reviews, you can reach out to customers who have provided negative feedback, figure out how to fix the problem, or take the issue to your product team for future improvements, further strengthening your relationship with that customer, and showing potential customers that your brand listens.

Positive and negative feedback

Netflix asks for feedback, whether positive or negative, from viewers to help them improve their overall customer experience.

Peer-to-peer marketing becomes an asset for your brand, your existing customers, and potential customers. Be sure you’re taking advantage of this user-generated content in your cross-channel marketing strategy.

Weaving P2P Into Cross-Channel Marketing

Getting customers to talk about your products (yes, positively and negatively) is a win for your brand. Not only do you have direct feedback from the people using your products—free focus groups, anyone?—but you have a wealth of new content that can be shared through your various marketing channels, creating social proof.

To explore how a true cross-channel strategy can be implemented in tandem with peer-to-peer marketing, schedule an Iterable demo.

 

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