In the pack of multiple marketing tactics, referral marketing is one of the most trusted marketing practices. This kind of marketing employs word of mouth referrals to get new clients and encourage them to become your customers. Offering incentives and rewards can encourage customers to recommend your products and services to their friends and family.
However, why do you need to have a dedicated program for referral marketing? Having a proper program makes it easier for your customers to recommend your products or services. Thereby, you can identify the opportunities and let your business grow and expand.
Any platform that enables people to share information with others is meant to expand. Let’s take the example of Facebook. Facebook’s U.S. advertising revenue went up from 8.03 billion U.S. dollars in 2015 to 14.89 billion U.S dollars in 2018 with a referral program in place.
Ultimately, about 82% of consumers tend to seek referrals from others before making a purchase decision. Thus, considering having a referral program for your business is a great option.
Significance Of A Referral Program
Following are some of the key reasons why a referral program is important:
Referrals suggests why people should choose your brand
A study has found that 28% of millennials won’t buy a product or subscribe to a service if their friends don’t approve. Thus, you need a referral program that suggests to people why they should choose your brand.
However, non-cash incentives in a referral program are 24% more effective than cash incentives, revealed a study by the University of Chicago. Customers who receive such gifts tend to refer products at a faster rate. Thus, identifying and creating customer advocates goes a long way.
It improves the rate of customer retention
“Improving customer retention by 5% can result in increased profits of 25%-95%” -Brain & Company.
In the context of this fact, it has been seen that customers who participate in referral programs are more likely to stay with your brand. Thus, you can effectively improve the rate of customer retention through a well-planned referral program.
It expands the marketing scope
Referrals can boost your marketing by enabling you to reach a potential audience easily and faster. For instance, if one person refers your product to five of his colleagues, then it’s more likely that each one of them then refers it to the other five people. This can go on, and more people will get to know about your brand.
It boosts Return On Investment (ROI) value
Discounts and gifts that you offer incur a small price compared to the potential profit you could make with referral marketing. You can award points for every referral and exchange gifts and discounts for these points. Thereby, you don’t need to spend much on your referral program. It ultimately boosts your ROI.
It is simple to execute
Referral programs demand less time and effort for their execution. You just need to have a system that will automatically track your client’s referral activities.
You can consider using the referral program software that makes it seamless for your clients to use. Further, you can also use a simple referral program spreadsheet to maintain the referral program reports.
It becomes easier to develop trust and credibility about your brand with the help of referrals. Thus, referral programs are used extensively by various organizations ranging from startups to well-established brands. Moreover, they are among the most affordable and effective marketing strategies. Thus, it is crucial that your business have a dedicated referral program. Now, get the exposure and recognition that your brand deserves through an effective referral program.
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