Referral Programs Work (Here’s Why)
Where do you go when you need a product or service? Most likely, you ask a friend or colleague for a recommendation, read the online customer reviews, and do a quick Google search. And that’s not just you!
Among marketing and sales tactics, referrals are the undisputed kings. In a referral program, customers get rewards and incentives by introducing their family and friends to a business. This way, businesses can promote via word-of-mouth, and acquire new and loyal customers fast.
Referral programs are not only effective but create the highest ROI. They’re based on a consumer’s loyalty and trust and derive the best customers. According to Nielson, people are 4x more likely to make a purchase when referred by a friend.
In this article, we will discuss four reasons why referral programs work. So, let’s get started!
Why Referral Programs Work?
Word of Mouth is Trusted
As we discussed earlier, word of mouth is one of the best marketing techniques that don’t cost a thing. People trust their loved ones and their opinion. If your friends say it works, then you will trust them more than the company or a random stranger on the internet.
Don’t take our word for it! According to a survey report by Nielson, 83% of respondents trust the recommendations of their friends or family, completely or to some extent.
Referrals are Endorsements that Your Clients are Happy
What does it tell you about a company when it’s referred? It’s a stamp of approval or endorsement that the product or service works. If you’re getting referred clients, then it shows that your business is doing well.
When a customer is making a recommendation, they have to explain exactly why they like your business. They remind customers why they choose your company in the first place.
Referred Clients are More Valuable
There are multiple customer acquisition channels like organic search, paid search, direct traffic, etc. Some would argue that you can acquire more clients through other channels.
However, referred clients are unique!
They already have a positive attitude about the business and keep an open mind. They know the benefits, drawbacks, and are making an informed choice. According to Deloitte, referral customers have a 37% higher retention rate. They’re here to stay!
Referral Marketing Equals to Increased Customer Engagement
Referral programs increase customer engagement and provide your business with a strong online presence. Here’s why! The first thing that a referred client does is visit the business’s website and check out its social media pages. Most people do so to check out and use their referral discounts. Increased traffic means increased engagement and an increase in potential revenue.
And let’s not forget the value of good customer feedback. A few good feedbacks can skyrocket your business and a couple of bad ones can ruin it.
Referral Programs Work
Market studies, survey reports, and even personal experience tell us that referral programs work. Referral marketing strategies are being used in a variety of organizations ranging from startups to conglomerates. They’re trusted, affordable, and are known to work.
Once you’ve gained a client, make sure that your business maintains the standards and has a good customer support team. They came with a positive mindset. Now, it’s up to you whether they will stay or not!
