84% of people trust recommendations from people they know, that’s more than any other source. Your Customers are a great opportunity for lead generation, so why not try launching a Referral Program? Here are three reasons why you should consider a referral program for your business.
1. Referred Customers Spend More
A recent Harvard study analyzed the performance of 10,000 accounts of a Company that offered a Referral Program, they found “that referred customers are, on average, about 18% more likely than others to stay… and they generate 16% more in profits”
Numerous studies have found similar results; referred customers have a longer lifetime value & spend more which more than accounts for any referral reward provided to the Advocate.
2. Only Pay for Success
The typical referral program rewards the Advocate & their Friend after the Friend becomes a Customer, this significantly de-risks this marketing strategy vs. other campaigns. For example, with the typical advertising strategy (ie. pay per click or impression-based), the outlay is based on a goal such as getting the lead to view your website or submit their information. With referral programs, you define the conversion mechanism and therefore can de-risk the cost of this strategy. In addition, the overhead & technology cost of implementing referral programs is minimal.
3. People are talking about your service, incentivize them!
Since the introduction of smartphones & social media, there’s been a secular shift in the way people interact. Potential Consumers & your customers are always in contact & leveraging local expertise or knowledge of friends, family & co-workers to influence their decision making. By offering a referral reward, you have the ability to incentivize this behaviour which can lead to a significant increase in revenue.
Referral Programs can generate significant ROI with little upfront cost. If you have any questions about how a referral program can work for your business, please let us know!