Considering referral marketing for your business? Smart move.
Referral marketing is a proven, highly cost-effective tactic to generate highly qualified leads, get customers, and boost awareness.
Plus, referred-in customers are proven to be 37% more loyal than other customers.
Gigaom Research sums it up this way: “Brands that invest in referral can gain a competitive advantage over those investing elsewhere.”
Top 10 Facts about Referral Programs
Here are the top 10 facts about referral marketing programs:
1. People are 4X more likely to buy when referred by a friend. Did you know that 2 out of 3 Millennials block ads? Most people don’t trust or even pay attention to ads, but referrals get people to buy. (source: Neilsen.)
2. Referrals are the most effective form of lead generation for B2B marketers. Fifty percent of B2B marketers said referrals delivered the largest number of qualified leads for their company ahead of email (48%), live sales visits (46%), direct marketing (25%), and white paper downloads (20%). (source: Chief Marketer)
3. Customer referrals can drive stunning profits. A study published in the Harvard Business Review showed that referred customers are 18% more loyal, 16% more profitable, and that companies earned 60% on referral rewards. (source: “Why Customer Referrals Can Drive Stunning Profits,” Harvard Business Review.)
4. Referral marketing is a proven customer acquisition tool. In a study, 27% of marketers said they get more than half of their new customers from referral marketing. (source: “Workhorses and Dark Horses, digital tactics for customer acquisition” Gigaom Research.)
5. Referral marketing provides multiple marketing benefits. In the same study, marketers cited four key benefits of referral marketing: acquisition (31%), conversion (31%), retention (26%), and awareness (23%). (source: “Workhorses and Dark Horses, digital tactics for customer acquisition” Gigaom Research.)
6. Referred-in customers are more loyal. Referred-in customers have a 37% higher retention rate than other customers. Depending on much customers pay for your products or services, and how long they typically stay, this means that referral programs can generate millions in dollars in revenues for your company. (source: Deloitte)
7. When friends refer, people buy. Word of Mouth is the primary factor behind 20%-50% of all purchase decisions (source: McKinsey)
8. Referral marketing is one of the lowest-cost lead gen channels. B2B marketers rated “referral/advocate marketing” as the third lowest-cost lead gen tactic, behind only social media (not paid ads) and email marketing (house list.) (source: “Cost-per-Lead by Channel, according to B2B Marketers”, Software Advice.)
9. Referral marketing also delivers among the highest in quantity and quality leads. In the same study, B2B marketers rated referrals as “very high in quality and quantity” along with trade shows and events and email marketing (house list.)
10. Conversion rates for referrals are almost 4X higher than any other marketing channel. In a Marketo study of its customers, B2B marketers said the average conversion rate (lead to opportunity) was 11% for referrals. Following referrals are partner-generated leads (4.5%), inbound leads (3.8%) and paid marketing (about 3%.) The lowest-converting channel was email (.55%.) (Source: Marketo.)