Why your company should have a referral program in place
Referral programs provide added value and a variety of strategic benefits for a business to increase growth, profitability, and overall success.
5 key benefits of effective referral marketing are:
- Builds Community – “Word-of-mouth produces at least 5 times more sales than paid advertising.” Effectively utilizing a referral program builds a community of brand advocates that actively promote your business. Loyal, repeat customers feel personally connected to a business. When they contribute to the success of a brand by bringing in new business and sales, loyal customers recognize that they are an essential part of the community. This sense of belonging increases their drive to see a brand thrive.
- Trust – “92% of respondents reported that a positive recommendation from a friend, family member, or someone they trust is the biggest influence on whether they buy a product or service.” ― Paul M Rand, Highly Recommended: Harnessing the Power of Word of Mouth and Social Media to Build Your Brand and Your Business. Word of mouth marketing greatly impacts a brand’s perception and growth. Authentic reviews and experiences via word or mouth from a close connection are more impactful than social media ads. A close friend or family member will share an unbiased review and are less likely to mislead a buyer. Referral programs highlight that loyal customers choose to spend their own hard earned money with a brand and encourage them to share their positive experiences, proving to referrals that the business is trustworthy.
- Improved Conversion Rate – “According to B2B marketers, the average conversion rate for referrals is 11%. For comparison, the average conversion rate across all industries is 2.35%. Referred leads have a 30% higher conversion rate than contacts acquired by other marketing means.” Properly leveraging referral programs connects more ideal customers to a brand. Conversion rates from referrals versus leads from other marketing strategies have a higher rate of conversion.
- Increased Cost Savings – “Referred customers increase profit margins by 25%.” Referral programs are a cost effective strategy for gaining new business. By establishing an effective incentive program, businesses will see a higher ROI versus marketing campaigns on social media.
- Boosts Engagement – “55% of people share their new purchases on a social network.” Referral programs drive traffic to a brand’s website and social media accounts. By increasing engagement, brand’s improve their overall online presence through retweets, shares, and more sales.
Referral programs provide added value for any company through increased conversion rates, improved online presence, and a higher ROI. Want to join a strong referral network to increase your business? Watch the video below to learn more about Elite Vivant’s Referral Program, how to join our network of go-getters, and discover solutions for your brand.
We hope that these top 5 benefits of referral marketing help you elevate your own referral program strategies!
Quotes and data taken from: