What is referral marketing?
Referral marketing, often known as word-of-mouth marketing, is a strategic approach used by businesses to tap into the power of satisfied customers and brand enthusiasts. It involves encouraging these loyal supporters to actively recommend your products or services to their personal networks.
This cost-effective marketing method leverages the trust and credibility existing customers have with their friends and family, making it a potent tool for acquiring new customers and boosting brand growth.
What are referrals?
Referrals are a marketing strategy that encourages existing customers to recommend your product or service to their network of friends, family, or colleagues.
If a customer is happy with your product or service, they’ll tell their friends and family about it—and if those people like what they hear, they might become customers too. Your customers are your biggest fans, so why not let them be your marketers?
Why is referral marketing important?
Referrals are one of the most effective forms of marketing. They’re also one of the most cost-effective, because you don’t have to spend lots of money on advertising or marketing. In fact, they’re so effective that some studies show that referral programs are more effective than social media advertising…
Why? Because people trust their friends more than they trust ads.
And yet, only 15% of companies actually have referral programs in place. One reason for this is that they don’t work if they aren’t done right. This is why we’ve created a guide with everything you need to know to get it right the first time.
Why should you consider a referral program?
65% of new business comes from referrals
People are 4x more likely to buy when referred by a friend
Consumers rely on word-of-mouth 2-10x more than paid media - a Boston Consulting Group study shows that 66% of the respondents consult friends and family, and 50% consult customer opinions online before purchasing. This is 2 to 10 times more often than they consult the media, and more than they refer even to company websites…
Referrals and customer loyalty: A loyal customer is one that is likely to keep recommending your business to others, so it’s important to make sure that you have a system in place that encourages this behaviour.
## Do referral programs increase customer loyalty?
Referral programs wield a powerful influence over customer loyalty. When customers are referred to your business by a friend or associate, studies show they’re 18% more likely to remain loyal.
Benefits of referral programs
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Enhance Brand Awareness: Referrals can enhance your brand awareness by increasing your reach and opening up new opportunities for sales.
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Build relationships with existing customers by rewarding them for recommending your business
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Increase purchases by making it easy for new customers to enjoy the benefits of your product or service
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Cost-effective & profitable: a form of marketing where customers do the work for you
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Keep retention rates high: Referrals help keep customers engaged with your company, which leads them to stay longer than they would otherwise.
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Effective: Referrals can drive more revenue because referred customers tend to be more engaged with your brand than non-referred ones.
