Tuesday, July 24, 2012

Referral Marketing: The Stats You Need to Know

You have customers, they have friends, and their friends tend to act a lot like them. They are more likely to dress the same, live in the same place, and shop at the same stores. Social media and referral marketing are based off of the fact that your best prospective customers are often the friends of your current customers. Referral marketing uses incentives to encourage the distribution of information.

“The Wharton School of Business found that a referred customer has a 16% higher life-time value.”

“People trust friends and family more than virtually any other information source, and pay 2x more attention to recommendations that come from friends than other sources.”

With stats like that, it only makes sense that customers gained from a refer-a-friend promotion are valuable and should be treated as such. Current customers are a great resource to gain even more customers who may be interested in your products. With the popularity of social media your current customers can easily share products they like with their friends. 

“83% of satisfied customers are willing to refer products and services. But only 29% actually do.”

While this stat may be surprising, you can utilize a referral program that makes sharing easy by integrating it with social media. When all a customer has to do is click a “share with Facebook” button or “tweet this” button, sharing products and services becomes easy, especially if your customer gets some sort of incentive for sharing. There is a multitude of rewards that you can offer, like cash, third-party credit, in-store credit, future discounts, or a rebate. However, non-cash rewards seem to be the best option.

“A University of Chicago study found that non-cash incentives are 24% more effective at boosting performance than cash incentives.”

With the rise of social media, every consumer has become a publisher capable of reaching a targeted audience. Companies have a tremendous opportunity to use referral marketing to drive sales and awareness while gathering new customer insights, and increasing engagement with current customers. For more information about our referral program visit www.buzzreferrals.com and download our FREE white pages. It’s full of more interesting facts and stats.

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