Business, How To, Marketing, News

REFERRAL MARKETING STATISTICS: THE POWER OF RECOMMENDATIONS

Referrals

Referral marketing statistics are not merely the numbers but the missing pieces of a powerful puzzle, i.e., marketing. One needs to integrate the pieces to achieve the marketing goals. Marketing is all about people. In other words, the main aim of marketing is to reach your target audience. What if you do not have to put much effort into creating hard-core strategies and only ask your customers to refer you to their friends.

Referrals play an important role in your brand’s success, and every year the trends of referral marketing change. Read this blog to know more about referral marketing statistics in 2021.

WHAT IS REFERRAL MARKETING

Referrals

Image Source: invitereferrals.com

ReferralsReferral marketing forms an effective form of marketing as your customers rave about your brands in front of their friends and acquaintances. Both the parties get validation and appraisals in some of the other forms. That means no one loses but gains some of the other rewards.

  • Your customers here receive validation for recommending your brand or product whereas his form receives a recommendation from his friend (which is a trusted source).

Referral marketing does not happen organically, but the referral marketer has to influence the process so that more and more people will share about you with their friends.

Below are some of the benefits of referral marketing

  • Referral marketing employs your happy customers as your brand ambassadors or advocates. These customers pass their legacy of positive experiences on to the new customers.
  • This form of marketing is lower in costs and higher in rewards. Hence, it gives a stronger foundation for long-term strategies.
  • Referral marketing is based on and associated with trust. Once trust is established between you and your customers, it can strengthen a lifetime’s strong relationship.

WHY DOES REFERRAL MARKETING MATTER

ReferralsImage Source: invitereferrals.com

When we talk about other forms of marketing, they require a lot of effort from marketers. They need to look into the demographic factors, segment the customers, and eventually form the strategies to engage them. But referral marketing is quite different from traditional forms of marketing.

It is a win-win situation on the part of the marketers, the referrals, and referrers. For marketers, it is a cost-effective form of marketing. No matter how effective strategies you form, if your audience does not trust you, they will not buy a single product.

Referral marketing is therefore far more effective as it comes from a trusted source, and it always works. Below are some of the eye-opening facts :

  • According to a recent survey, more than 90 % of consumers trust word-of-mouth recommendations from friends, family, and earned media.
  • More than 70 % of marketers believe that referral marketing generates a higher volume of leads. Also, more than 50 % of the people say that referral marketing involves lower costs per lead.

Now that we have discussed the benefits and importance of Referral marketing, let us know the robust statistics for referral marketing, which could help you form robust strategies to attain more conversions.

WHAT ARE THE POWERFUL REFERRAL MARKETING STATISTICS IN 2021

While looking up at the statistics of referral marketing, we need to draw significant aspects of the referral marketing and then define their statistics:

  • The power of referrals.
  • Value of referral programs
  • Boost positive feedback on a loop.
  • Employee referrals stay for longer
  • Other statistics.

Let’s learn the valuable statistics under each aspect :

1. THE POWER OF REFERRALS

Referrals 

Image Source: invitereferrals.com

As stated above, referral marketing is a great form of marketing associated with building trust with the customers. The built trust helps create an immediate connection between you and your customers, and hence new customers feel more attracted towards your brand.

Below are some of the valuable statistics that show the power of referrals :

  • Referral marketing has been scored as the highest amongst all forms of sponsorships and advertisements.
  • More than 28 percent of youth and adults believe in a product that their friends recommend
  • Word-of-mouth recommendations influence more than 20 to 50 % of purchasing decisions.
  • The business earns around 70 % of the conversion rates to business companies with referrals. Also, these companies have a faster, closer time on sales (around 69%).
  • Customers who are referred to your brand are five times more likely to convert and engage with your brand than those who are not.

2. VALUE OF REFERRAL PROGRAMS

Referral marketing fetches the attention of more and more customers. Time and again, the statistics show that the customers who hail through referrals will be more likely to purchase and have more lifetime value.

Let’s see the revealing stats

  • People are four times more likely to purchase when a friend refers to them.
  • The lifetime value of the referred customers is 16 % more than the non-referred customers.
  • Referred customers have more than 30 % of retention rates, and more than 80 %of the consumers engage with the brands which have reward programs.
  • The churn rates also lower if you acquire customers through referral marketing. There is a dip of 18 % in the churn rates.
  • Referred customers help your business earn more than 16 % of profits.

3. REFERRALS FORM A POSITIVE FEEDBACK LOOP

The referrals help you get positive feedback, and that too on a loop. When your referrals share the product feedback with the other customers, they become brand advocates. It depends on how you marketize your referral program, as your referral CTAs set up a solid foundation for fetch new customers.

The conversion rates depend upon how many advocates you are engaging and what revenue you earn from sharing.

Below are some of the key statistics :

  • More than 80 % of the customers will share if they get a positive shopping experience.
  • Customers are more likely to share or refer to a friend if the sharing CTA has collaborated within their journey.
  • Customers are 16 times more likely to share when the sharing CTA appears to post their purchase.

4. EMPLOYEE REFERRALS STAY FOR LONGER

Referrals Image Source: invitereferrals.com

If we look at the past year’s scenarios, many companies shut down, and many opened up. Many organizations were looking up for the right talent, and the talent acquisition costs were also higher due to the ongoing crisis.

At this time, the employee referral program helped yield qualified and highly skilled candidates in the most cost-effective ways. Below are some of the key statistics for the same :

  • According to a recent study, employee referrals are more likely to be hired.
  • More than 80 % of the employees consider employee referrals as effective outsourcing options that can help you yield a more significant ROI.
  • You can save more than 7500 dollars on hiring an employee referral which you would otherwise invest in sourcing costs and productivity.
  • The employee sourced from the referrals stays more than four years with your company, which is almost 45 % more than the outsourced referrals through job boards.
  • The average employee referral bonus is more than 2500 dollars.

5. OTHER STATISTICS

  • According to 90 % of marketers, referral marketing has the power to attain more leads.
  • You can achieve and enhance sales revenue by more than 20 % for your traditional products and more than 100 % for the upcoming ones.
  • More than 90 % of B2B companies earn growth and success with a referral program.
  • A referral marketing software automates the reward types in your referral program and helps you grow your business at a faster rate. More than 60 % of companies have acquired new customers through referral program software. 
  • Integration with multiple platforms such as Shopify and Woocommerce helps you get more than 50 % of conversion rates through the referral marketing software.

CONCLUSION

Referral marketing has proven time and again to give you higher conversion rates than email marketing and other marketing strategies. The statistics are proof of this fact; many middle-sized companies and large corporations have adopted it and saw tremendous growth.


Shivani

 

Author’s Bio: Shivani is a content writer at InviteReferrals  & NotifyVisitors. She writes SEO articles, blogs, and guest posts for businesses to improve website ranking on SERP. She follows a balanced approach for the quality of content and its marketing. She loves to do creativity, although she had an English major in her graduation.


More on this topic:

How to Leverage Customer Referrals to Grow Your Business

Previous ArticleNext Article

Leave a Reply