All the statistics about referral marketing are accurate after reviewing a report that contains findings from over 2,000 referral programs. Referral programs are more than a simple customer acquisition tool. They give businesses the power to rely on word-of-mouth referrals. Referral programs are the fastest-growing marketing channel according to several trends. Find out why referred clients buy faster, spend more, and stay longer.
Instant Customer Trust
Your customers tell their friends about your brand, business, or products daily. Up to 88% are more likely than not to trust the person who referred them because they have heard about you through their friends. Trust is the foundation of lasting customer relationships. Referrals are the fastest way to build customer trust. Add a reward to every customer who refers a qualified lead, and you’ve got a recipe for success in referral marketing.
Referral software that is easy to use
Anyone, anywhere, can now run a referral program using plug-and-play referral software. The No-Code Referral Software is an easy-to-use solution for building, launching, and managing your referral program. We love referral software for its fully customizable ability and often offer integration features that automate your program.
Leads with high qualifications
Referred customers have an 18% higher loyalty and a 16% greater lifetime value. They also spend up to 13.2% extra. Referral programs can generate high-quality leads through word-of-mouth referrals from customers with similar interests.
92% of people believe recommendations from friends and family, while only 37% trust ads on search engines. 24% trust banner ads online. Although paid media costs are increasing, marketing returns need to reflect this. Referral leads convert at a higher rate (30%) than paid-for leads. In addition, 86% of businesses with a well-planned program for referrals will see a rise in revenue over the next two years.
Rapidly Evolving Marketing Channel
Facebook, Instagram, and Google are the most popular advertising platforms. However, their cost per Click continues to rise, sometimes up to 23 percent. The return on investment remains unchanged, even though the CPC is increasing. Referral marketing, on the other hand, is a marketing channel that has been proven to reduce the cost of customer acquisition and increase the lifetime values of your customers.
Want More Proof?
Referral marketing has been vital to many companies’ growth stories, including Dropbox, Airbnb, and Uber. Referral marketing has shown massive growth for a low cost. Clearly, now is the right time to take advantage of this wave.
Close The Referral Loop to Gain Greater ROI
You’ve already used your budget to build a client base through paid media. Close the referral loop to reclaim your advertising investment. Referral loops can be closed by lowering CPCs up to 34% and allowing customers acquired via paid media to refer friends through a referral program. The cost of paying for media to reach customers is repaid.
This example will help you understand what we mean: If you spend $20 on Instagram ads to acquire a customer and then ask them to refer a friend to receive a $5 reward, your CPA increases from $20 to $12.50 because you now have two customers for the value of your total spend.
What are the risks of running a referral program?
There are none. You can only run a referral program if you reward your customers for referring qualified people. Referral programs are based on performance and reward customers who refer new prospects only when they become customers.
Referral programs shift the cost of your business from before to after acquisition. You only pay for rewards once you’ve acquired a new customer.
How to Make Your Referral Program a Success
Referral software can make building, running, and managing your referral program easy. However, the success of your program will ultimately depend on how willing your customers are to refer others. Read the following three tips to ensure you get as many referrals as possible.
Offer an attractive incentive and reward.
Referral programs that are most successful offer both an incentive and reward. Giving makes people feel good. Customers are more likely to refer friends if they know they will receive something. Double-sided programs are more popular than single-sided ones.
Be sure to reward the right person.
Reward the person who has done the most in the process of referral. Most often, especially when it comes to B2B referrals and customer referrals, the referral process begins with an individual referring a lead. When a leader is converted, the company and not the person who referred it often receives the reward. Ensure that the person referred to the information gets rewarded, not the company.