I bet you’ve heard the phrase “talk is cheap.” Well, not when it comes to marketing. Word-of-mouth is a powerful tool, which, if used correctly, can skyrocket your sales. In fact, referral marketing can take your business to the next level way faster than any other marketing campaign!
2. Referral marketing statistics to show you why trust matters – 92% of consumers trust referrals from people they know.
(Source: Annex Cloud)
According to referral marketing stats, only 33% of customers believe in online ads.
59% of US shoppers trust offline recommendations while 49% consider online word-of-mouth as highly credible.
Consumers trust their friends’ recommendations seven times more than conventional advertising.
When considering the purchase of a product, 84% of shoppers trust recommendations from family members, friends, and colleagues.
Trust is the essential pillar of every business. If you can prove you are reliable and trustworthy, your customers will appreciate it and tell other people about you. They, in turn, will tell someone else and so on.
According to these stats, having a referral program has its benefits. Still, you would be amazed at what percentage of sales professionals ask for referrals – only 11%! So, unless you have an idea about an adequate referral program, you can simply ask your customers to refer your business. Even one new customer is better than none.
4. The power of referral campaigns and programs – 65% of new business comes from referrals.
According to 78% of marketers, referral marketing produces “good” or “excellent” leads.
Referral programs in ecommerce can achieve wonders for your sales – you can increase your revenue by 10%-20% for traditional products and up to 100% for emerging ones.
Referred customers are five times more likely to take advantage of your referral program than non-referred customers.
According to referral marketing stats, 86% of B2B companies with a referral program experience growth.
So far, there isn’t a single downside to having a referral program – it can boost your leads, sales, and the overall growth of your business. The stats above prove it without a doubt. Having a referral program can open all sorts of new horizons.
5. The impact of social media on your small business referral program – social media posts published by friends influence 81% of US shoppers’ purchase decisions.
Yup, it’s 2019, and social media is more powerful than ever. You simply can’t afford to neglect this channel in your marketing efforts. Even if you do – your customers and competitors don’t. Social media plays a vital role in word-of-mouth marketing and is an excellent source of referrals.
6. Referral campaigns and marketing – referred customers have an 18% lower churn than customers acquired by other marketing means.
An offline word-of-mouth impression can increase your sales by at least 500% compared to a paid advertising impression.
In general – people don’t trust companies. What they do trust are other people. Especially close ones. As you can see from the stats above – a referred customer is more valuable than a customer obtained through any other marketing means.
8. Referral revenue, rates, and their impact on sales – referred customers can increase your profits by at least 16%.
(Source: Harvard Business Review)
The average referral rate across all industries is about 2.3%. The highest referral rates are for gadgets and electronic devices – 3.4%.
Customers who found your business through word-of-mouth spend about 200% more than other customers.
A 10% rise in word-of-mouth recommendations (on and offline) increases sales by between 0.2%-1.5%.
When the marketing department manages a referral program, companies have a three times bigger chance to achieving their revenue goals. Still, only 10% of them assigned referral campaign management to that department.
So, what is a good referral rate? – If you manage to achieve more than 2.3%, you can consider it a success. For that to happen, entrust your referral program to your marketing staff. After all, that’s what you pay them for, right?
9. Conversion rates in a referral-based business – B2B companies with referrals achieve 70% higher conversion rates.
Referral marketing creates between three and five times more conversions than any other marketing channel.
Undoubtedly, conversion rate is one of the essential metrics that show the success of your marketing efforts. According to the above referral marketing statistics, referral marketing can skyrocket your conversion rates.
10. Do companies with referral marketing need to offer incentives for referring? – 70% of people open emails from a company in search of a deal or a coupon.
(Source: Campaign Monitor)
A referral incentive program could incite more than 50% of people to refer new customers to your business.
A discount code or coupon for liking or following the brand’s page – 35%.
Access to limited-time offers and exclusive deals for sharing products on social media – 35%.
Discounts on products for referring other customers – 20%.
Yeah, I know, it sounds like – “Hey I’m Johnny, and I was referred to you by Jimmy. Now give me something. And give Jimmy something, too, while you’re at it.” Still, that’s exactly how the game works, ladies and gents.
Anyway, a suitable referral incentive program can do wonders for your business. The stats mentioned above prove it.
11. How do I get referrals from existing clients? – people are 16 times more likely to share if you have a CTA button on your post-purchase page.
The chances of customers sharing your company/products are four times bigger if the sharing experience is on the same page instead of a dedicated landing page.
A picture of the referring consumer’s face increases the rate of conversion of their referrals by more than 3%.
Social media drives about 31% of the websites traffic.
These simple tips can help you increase your brand awareness and attract new customers. Combine them with a referral incentive program, and you are good to go.
12. What results and feedback can a referral business expect? – more than 50% of companies with a referral program rate their sales as “highly effective.”
(Source: Influitive and Heinz Marketing)
According to referral marketing stats, referred customers are 18% more loyal than non-referred ones.
Businesses with referral programs in place experience an average of 69% faster time to close. Furthermore, they also get a 59% higher lifetime value and 71% higher conversion rates of their clients.
83% of customers are more likely to refer new customers after positive user experience.
As you can see, referred customers are precious. They are already at your front door, knowing they’ll buy your products/services. All you have to do is invite them in. Furthermore, they are more likely to stay.
13. Do referral programs work? Success stories that prove the value of referrals – Thanks to Airbnb’s referral program, the company has almost doubled its total number of consumers each year since 2012.
The Dropbox referral program increased signups by a mind-blowing 60%. In the first 18 months alone, there were more than 2.8 million referral invites. Today, 35% of the company’s signups come from the referral program.
Paypal’s referrals accounted for the company’s 7%-10% daily growth. Yes, you read it right – daily!
Thanks to its referral program, Koodo managed to reduce their CPA by 167% and got almost 75,000 new customers in two years.
For every dollar it spent on their referral program, Tesla got $42 back. Moreover, a quarter of their sales in Q4 2015 came from referrals.
T-Mobile also has a successful referral program, although it doesn’t announce the results. Still, its share price jumped from $40 to $60, which is a sufficient indicator of the program’s enormous success.
In case you were still wondering if having a referral program is a good idea, cast your doubts aside. These real-life examples prove the efficiency of referral marketing. If these success stories inspired you – go ahead and create your own.
You know people talk, right?
Well, now you know how to make them talk about your business.
Furthermore, you know why this matters and what benefits your business can reap.
So go ahead, use the knowledge you’ve gained from these referral marketing statistics and make your business stand out.
Bottom line – a referral is the highest honor a business can receive from a customer.