Man is a social animal. He has always shared his experience through word of mouth. From the ancient world when we were gatherers, man would pick fruits and vegetables and communicate how they tasted orally to others. This prevented many others from eating poisonous and bad tasting foods.
But as the world became more developed, we didn’t throw away this ancient trait, we just moved beyond fruits and roots and now share our experiences about products and services.
Word of mouth review is one of the most trusted review systems today. Simply because people tend to believe people they already trust. Statistics show that customers are 4 times more likely to buy when referred by friends.
And when you combine this information with the fact that most customers today don’t trust brands and hence disdain traditional advertising, you get a sense as to why many businesses are hopping on the referral marketing train.
Referral Marketing is a step higher than the natural process of word of mouth. It involves spreading the word about a product or service through a business’ existing customers, under a structure provided by the business.
With referral marketing, businesses can reward customers for referring others, increase their chances of getting customers via word of mouth and measure the results of their efforts.
There are many reasons your business needs to take referral marketing seriously but let’s discuss these 3 basic ones –
1. Return on Investment – there are many ways to market your business, but leveraging referral marketing simply a great investment. According to the New York Times, 65% or 2/3rd of new customers come from referral marketing. That’s results no other marketing campaign can guarantee. If you factor in the relatively lower cost it takes to run a referral campaign, then you get a sense of the huge upside your business can enjoy.
2. Generate Quality Leads – Many businesses have to comb through hundreds of leads to get a few qualified leads. But with referral marketing, one critical advantage is that it generates quality leads for your business without the stress. This also means that it ensures that a higher number of such leads go on to buy your products and services than leads generated from other forms of marketing. This is true for the simple reason that customers who refer others know those in their network who are the right fit for your business. Beyond this however, the Harvard Business Review reports that the lifetime value of a referred customer is 16 percent higher than that of non-referred customers. So, it’s a better deal all around.
3. Increased Marketing Reach – Referral marketing goes where traditional advertising cannot go. It filters into customer’s organic conversations via word of mouth or social media and reaches customers who disdain traditional ads and does it faster than any other form of advertising.
Now, what is keeping you from implementing referral marketing for your business? You can easily set up a referral marketing campaign with ease on your own or using a third party referral platform like Referral Candy. Whatever way you go about. Not implementing a referral marketing campaign would be a serious disadvantage to your business. It is a stress-free process that can run automatically, seriously think about it.