The Power of referrals and warm introductions

“Talk is not cheap.” when it comes to marketing. Word-of-mouth is a powerful tool and referral marketing can take your business to the next level way faster than any other marketing campaign!

If you don’t have a referral program in place, maybe the stats below will make you consider creating one.

• 92% of consumers trust referrals from people they know.
• Friends’ social media posts influence the purchase decisions of 83% of US online shoppers.
• Consumers referred by a friend are four times more likely to buy.
• When referred by other customers, people have a 37% higher retention rate.
• B2B companies with referrals experience a 70% higher conversion rate.
• Referred customers’ lifetime value (LTV) is 16% higher than that of non-referred customers.
• Referral leads have a 30% higher conversion rate than leads from any other channel.
• Referrals account for 65% of companies’ new deals.

Below are 13 statements supported by statistics on why a referral marketing programme will be great for your business. 

1. Word-of-mouth general statistics - there are 3.3 billion brand mentions in 2.4 billion brand-related conversations every day in the US. –(adweek)

• Word of mouth affects the purchase decision of 54% of consumers. It’s the most influential psychological driver for purchases.
• Excellent customer service will incite 55% of consumers to recommend a company.
• Friends and family are the top sources of brand awareness for 49% of US shoppers.

2. Klt (know like and trust is key 92% of consumers trust referrals from people they know, like and trust  (Source: Annex Cloud)

• 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.

Klt is the foundation  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.

Imagine your customers’ trust as a small snowball - it can turn into an avalanche, given the right conditions.

3.The value of customer referrals -84% of B2B decision-makers start the buying process with a referral. – (Source: Saasquatch) 

• Customers referred by a friend or other customers have a 16% higher lifetime value than non-referred ones.
• According to referral marketing statistics, 14% of users who land on a referral page take action.
• Word-of-mouth recommendation plays some part in 80% of all B2B and B2C deals.
• The average referring customer invites an average of 2.68 people.

4. The power of referral campaigns and programs– 65% of new business comes from referrals. (Source: Entrepreneur)

• According to 78% of marketers, referral marketing produces “good” or “excellent” leads.
• Referral-based marketing can obtain about 20,000 new email addresses a month.
• 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.

A referral program – will boost your leads, sales, and the overall growth of your business. 

5. Social media posts published by friends influence 81% of US shoppers’ purchase decisions. (Source: Forbes) 

• 43% of people are more likely to buy a product if their friends recommend it on a social network.
• 58% of consumers share their positive user experiences or seek advice for a brand on social media.
• 55% of people share their new purchases on a social network.
• Referral advertising on social media influences 71% of consumers.
• Social media referrals boost sales – 59% of Pinterest users bought a product they saw on the site. The same goes for 33% of Facebook users.
• 85% of a brand’s fans on Facebook will recommend that brand to others. Still, 79% of all followers who “liked” the page did so because of discounts or other incentives.
• Brands’ posts on social media have an impact on 78% of their followers.

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. (Source: Wharton University)

• Word-of-mouth increases marketing efficiency by up to 54%.
• Referred customers are four times more likely to refer others to the same business.
• 67% of US shoppers are more likely to buy a product that friends or family members shared on social media or email.
• The most effective methods for referral advertisement are copy/paste (78.1%), email (17.3%), Facebook (3.9%), and Twitter (0.7%)

In a nutshell – the word-of-mouth recommendation is the foundation for your business to grow.

Referrals  – they spread the word about your brand and create a spiderweb of potential clients.

7. How referrals impact customers’ purchase decisions – 74% of consumers consider word-of-mouth the primary factor behind their purchase decisions. (Source: Think with Google)

• Customers referred by a friend are four times more likely to buy.
• 77% of consumers are more likely to buy a new product if their friends or family recommend it.
• According to referral marketing statistics, referred customers have a 37% higher customer retention rate.
• An offline word-of-mouth impression can increase your sales by at least 500% compared to a paid advertising impression.

People deal with people - specially 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%.
• According to referral marketing stats, referred customers can increase your profit margin by 25%.
• 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.

9. Conversion rates in a referral-based business – B2B companies with referrals achieve 70% higher conversion rates. (Source: Extole)

• Referral marketing creates between three and five times more conversions than any other marketing channel.
• 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.

The rubber hits the road when a prospect turns into a sale .

The sales cycle - in my view - can be segmented into 3 buckets

Leads

Proposals

Sales

The rubber hits the road - when you convert those proposals into a sale - 

And of course once the sale happens - create a superb customer experience and service - so they can refer you on . (Referron) .

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.
• 69% of customers are more likely to try a brand if the company gives rewards.
• 39% of consumers believe direct incentives – such as money, discounts, or free swag can significantly increase the chances of referring a business.
• 88% of US shoppers would like a reward for sharing a product on social media or via email. The same goes for 95% of 18-34-year-olds. 77% of them want money, while 18% want free swag for referring.
• According to referral marketing statistics, 64% of customers believe rewards have an impact on how much they spend.
• The most effective incentives for the best referral rate on social media are:
1. A discount code or coupon for liking or following the brand’s page – 35%.
2. Access to limited-time offers and exclusive deals for sharing products on social media – 35%.
3. Discounts on products for referring other customers – 20%.

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 (Source: Extole)

• 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.

Make it super easy for a customer to refer you . 

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.
• 82% of SMB owners cite referrals as the primary source of new business.
• 83% of customers are more likely to refer new customers after positive user experience.

Referred customers are gold. 

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. (Source: Entrepreneur)

• 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.

Conclusion

A referral is the highest honor a business can receive from a customer.

We at BBG have built our business around the concept of 

Word of Mouth Marketing, 

• Building KLT (know like and trust ) between members and their guests 
• Making you  a Centre of Influence - and a “college of knowledge” - with you target market , customers and alliance partners
• Using a simple app - Referron - that enables you to easily share your business card - and be able to easily refer within 3 taps of your phone - and track , measure and reward that referral! 

Why not join one of our forums as a guest and see how we roll https://www.bbg.business

Ps feel free to connect with me on referron, download the app, upload your profile - and make a referral to someone that you know like and trust - https://members.referron.com/bsivc

This is a great step towards the creation of your referral marketing programme - and it’s free