3 minute read
Regardless of the size of your business, or the industry you happen to be in, one goal you have in common with all other organizations is growth. A lot of factors contribute to achieving this goal, from improving customer service, to attracting and retaining top talent, to finding the most effective ways to market your brand. One of the most effective, yet often overlooked, growth mechanisms for business is a customer referral program. Here’s why:
Referral programs boost sales.
77% of consumers say they are more likely to purchase a product that is recommended to them by friends or family. 79% of people say they trust online reviews as much as personal recommendations. If you’ve got a swarm of satisfied customers that are out there spreading the word about your brand on your behalf, you’re more likely to land new customers as a result.
Referral programs build trust.
What do most successful brands have in common? They’ve established a sense of trust amongst their customers and prospects. Think about Apple. Why do you think people camp out for days just to be the first to purchase the latest Apple device? Because it’s a brand that they’ve come to know and trust. A 2013 study revealed that 79% of consumers trust a brand more after reading online reviews and recommendations – something a referral program will naturally do for you.
Referral programs deliver valuable feedback.
You can’t achieve growth without correcting problem areas in your business and fostering those things that are bringing you the most success. One of the most effective ways to identify these areas is to ask for feedback. Not only can brand ambassadors provide their own opinions on what is and isn’t working, but they can also offer valuable insight as to what’s being said about your brand within their own networks.
Referral programs are cost effective.
While there is, of course, some expenditure on client referral programs, the ROI has shown to be positive, making them more than worth the investment. Unlike other types of marketing, you have a much better chance of landing new customers through referral programs because they are more personal and targeted. The reward you offer, in fact, doesn’t even have to be all that valuable. According to the American Marketing Association, just offering some type of incentive increases the likelihood of a referral.
Referral programs offer a channel for testing new products and services.
Part of business growth is expanding your product or service offering. But how can you know what will work and what won’t? When you have a collection of loyal customers at your disposal, you’ve got an instant test market at the ready.
Referral programs produce more valuable clientele.
Customers that are referred by others have a higher overall value and tend to have greater retention rates than those obtained through other sources. In fact, referred customers boast around a 25% higher lifetime value and have about an 18% lower turnover rate. Landing valuable customers – and more importantly – keeping them is the ultimate key to business growth.
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