Effective Customer Acquisition With Referral Marketing
For the second time this year (and in history), social media has beaten out search as the top source of referral traffic to web content. Industry leaders are capitalizing on this trend by giving their customers a voice. To do this, they are implementing referral marketing campaigns using SaaS tools from Shopsocially, Extole, ReferralCandy or one of many other options.
Referral marketing is not a new trend in customer acquisition. In fact, it’s actually one of the oldest forms of advertising out there – commonly known as “word-of-mouth” or “earned” advertising. As our customers’ social networks continue to grow, their voices and our potential pool of referable contacts increase exponentially. Here are a few statistics that demonstrate the power of referral marketing:
- Customers trust recommendations from friends and family more than any other form of advertising – Neilsen
- 83% of consumers are comfortable making a referral after a positive experience, but only 29% actually do – Texas Tech
- Customers are 4x more likely to buy when referred by a friend – Neilsen
- A referred customer spends 13.2% more than a non-referred customer – Marketing-Schools.org
- The lifetime value of a referred customer is 16% higher than a non-referred customer – American Marketing Association
- Offering a reward increases the likelihood of referral, but the reward size may not matter – American Marketing Association
Looking at this data, it is clear that customer referrals are powerful in growing your customer base and increasing sales. How does your business encourage customer advocates to use “word-of-mouth” advertising for new customer acquisition?