Do you have a referral system in place?
One of the best compliments a business owner can receive is a referral. I know some times it can be a bit uncomfortable to ask your customers for a referral but if they're satisfied with the service and or products you've purchased, then they should have no problem referring them. Are you asking your customers for referrals? There's no better person to market your products and services than your own customers. Did you know that "92% of consumers trust referrals from people they know" – Nielsen and that "People are 4 times more likely to buy when referred by a friend" ?– Nielsen
Start thinking about putting a process in place to ask for referrals from your clients and or customers. For example, create an email to send out to customers or clients after the purchase transaction or whenever the customer utilizes your services.
Here are 38 Statistics from Social Annex that may change your mind on putting a referral process in place:
Referral Marketing Statistics: The Power of Word-of-Mouth
The Word of Mouth Marketing Association reports that every day in the United States, there are approximately 2.4 billion brand-related conversations. People frequently talk about the products and services they enjoy, and the companies who offer them.
92% of consumers trust referrals from people they know – Nielsen
People are 4 times more likely to buy when referred by a friend – Nielsen
77% of consumers are more likely to buy a new product when learning about it from friends or family. – Nielsen
81% of U.S. online consumers’ purchase decisions are influenced by their friends’ social media posts versus 78% who are influenced by the posts of the brands they follow on social media. – Market Force
43% of consumers are more likely to buy a new product when learning about it from friends on social media. – Nielsen
85% of fans of brands on Facebook recommend brands to others. – Syncapse
84% of consumers say they either completely or somewhat trust recommendations from family, colleagues, and friends about products – making these recommendations the information source ranked highest for trustworthiness. – Nielsen
74% of consumers identify word-of-mouth as a key influencer in their purchasing decision. – Ogilvy/Google/TNS
1 offline word of mouth impression drives sales at least 5x more than 1 paid, and much more (as much as 100 times more) for higher-consideration categories. – WOMMA
Word of mouth is the primary factor behind 20% to 50% of all purchasing decisions. – McKinsey
49% of U.S. consumers say friends and family are their top sources of brand awareness.
71% of consumers are more likely to make a purchase based on social media referrals.
On social media, 58% of consumers share their positive experiences with a company, and ask family, colleagues, and friends for their opinions about brands. [SDL]
Consumers rely on word-of-mouth 2x to 10x more than paid media. – Boston Consulting Group
55% of consumers share their purchases socially on Facebook, Twitter, Pinterest and other social sites.
59% of Pinterest users have purchased an item they saw on the site, 33% of Facebook users have purchased an item they saw on their news feed or a friend’s wall.
Word-of-mouth has been shown to improve marketing effectiveness by up to 54%. – MarketShare
In our most recent case study, a footwear client got a 10:1 ROI, a 20% growth in their email list, and a 38% increase in orders over one year thanks to our Sharing and Referrals and Social Login solutions!
Referral Marketing Statistics: The Role of Incentives
More than 50% of people are likely to give a referral if offered a direct incentive, social recognition or access to an exclusive loyalty program. – Software Advice
39% of respondents say monetary or material incentives such as discounts, free swag or gift cards greatly increase their chances of referring a brand. – Software Advice
70% of email readers open emails from a brand or company in search of a deal, discount, or coupon. – Campaign Monitor
65% of consumers say that receiving rewards impacts their frequency of purchase.
79% of people say their primary reason for “liking” a company’s Facebook page is to get discounts. – Market Force
64% of consumers say that rewards impact how much they spend.
69% of consumers say that they’re more likely to try a brand if it gives rewards.
Referral Marketing Statistics: The Results
Referral Marketing generates 3-5x higher conversion rates than any other channel.
Customer Referral programs can bring an average of 20,000 new email addresses per month – Social Annex
The lifetime value of a new referral customer is 16% higher than your average customer. – Wharton School of Business
The Lifetime Value of a referred customer is 25% higher than that of other customers – Wharton School of Business
When specific case studies about referral software were analyzed, researchers found a 10% increase in WOM (off and online) translated into a sales lifts between 0.2 – 1.5%. – MarketShare/ Keller Fay Group
Referred customers bring you 25% higher profit margin.
A referred customer is 18% more loyal than a customer acquired by other means.
Referred customers are 4 times more likely to refer more customers to your brand.
Customers referred by other customers have a 37% higher retention rate.
Customers acquired through referrals spend 200% more than the average customer.
Robust advocacy-marketing programs are achieving significant revenue gains—10 to 20 percent for established products and up to 100 percent for new products.
One of Social Annex’s referral marketing clients saw a 9.7% increase in conversion. – Social Annex
Another one of Social Annex’s clients saw an average of $100,000 in monthly revenue just from referral orders – Social Annex