All the statistics about referral marketing have been confirmed after reviewing a report that included data from over 2,000 referral programs and more than 100,000 customer referrals. Referral programs are more than just a channel for customer acquisition. They allow businesses to harness the power of word-of-mouth referrals. Referral programs are the fastest-growing marketing channel. Here are some trends to help you understand why your customers prefer.
Instant Customer trust
Your customers talk about your products and business to their friends every day. Referred friends can trust up to 88% because they have heard about your business through word-of-mouth recommendations. Trust is the key to building lasting customer relationships. Referring to customers is the best way to build trust. Referral marketing is a win-win situation if you offer a reward to customers who refer qualified leads.
Plug-and-play software makes it easy to create a referral program. Referral software that doesn’t require any code is easy to use and launch. We love referral software because it is customizable and can integrate with other programs to automate your program.
High Qualified Leads
Referred customers are 18% loyal and have a 16% greater lifetime value. They also spend 13.2% more, according to research. Referral programs are a great way to get high-quality leads by spreading word-of-mouth among like-minded customers.
92% of people trust recommendations made by people they know. This compares to 37% who trust search engine advertisements and 24% who trust online banner ads. Although paid-for media has become more costly, the return on investment for marketing investments is not affected by this increase. Referral leads, on the other hand, have a 30% higher conversion ratio than any paid-for channel. A referral program that is well planned will result in 86% growth of revenue within 2 years.
A Rapidly Evolving Marketing Channel
Although Facebook, Instagram, and Google have been the most popular advertising platforms, their cost-per-click continues to rise, sometimes as high as 23%. The CPC has increased, but the return on investment has not changed. Referral marketing, on the other hand, is a dynamic marketing channel that has been statistically proven to reduce the cost of customer acquisition as well as increase the lifetime value of customers.
Referral marketing has been a key to many success stories like those of Dropbox, Airbnb, and Uber. Referral marketing has shown massive growth at very low costs, so now is the right time to get on board.
Closing the Referral Loop To Increase ROI
You’ve spent money to build a customer base with paid-for media. It was an expensive investment. You can get a return on investment in advertising by closing the referral loop. Referring friends to a referral program and lowering the CPC can reduce your CPC by up to 34%. This ensures that customers acquired via paid-for media are rewarded for their investment.
Let’s take an example: If you spend $20 on an Instagram advertisement to attract a customer, and then ask the customer to refer a friend to earn $5, your CPA will go from $20 to $12.50 since you have acquired two customers.
What are the Risks of Running a Referral Program?
There aren’t any. Referring customers to your business will only allow you to recognize them when they are qualified. Referral programs are based on how successful they perform and reward customers when a prospect becomes a customer.
Referral programs move your business costs from before customer acquisition to afterward. You only pay for the reward once you have acquired a new customer.
Tips to Make Your Referral Program a Success
Referral software is great for building and running your program. However, your customers’ willingness to refer friends will determine your success. These three tips will help you get as many referrals as possible.
Incentives and reward with attractive incentives
Referral programs that perform well offer both an incentive and a reward. Giving back makes people feel good. Customers will refer friends more often if they know that the people they refer to will also get something. Double-sided referrals are more popular than single-sided ones.
Be sure to reward the right person.
Reward the person who does the most work during the referral process. Referrals to potential leads are more common than you might think, especially when it comes to B2B referrals. When a lead converts, it is often the company that receives the reward, and not the person who referred them. It is important that the person who referred the lead gets the reward, and not the business.
Make your Referral Program visible
For every opportunity that presents itself, you should promote your referral program. Your referral program will be more popular the more people know about it. Increase visibility for your referral program. Let as many people know about it as possible and encourage them to refer friends.
Building a referral program used to be difficult, expensive, and time-consuming. Referral software makes it much easier to create a referral program in-house. The best referral software integrates seamlessly with your existing system to automate your referral program. Marketers and business owners can now create, design, and launch a referral program without having to write a single line of code.
These research findings will help you understand why running a referral program is the best way for qualified leads to your business. We hope that you enjoy them. Download the complete European Agency Partner Referral Factory report on referral marketing trends to get more information.