Why referral program?
Word-of-mouth marketing is a form of marketing that relies on people to spread the word about a product or service to their friends, family, and social networks.
This can be done through face-to-face conversations, online reviews, or simply telling people about it. Because people trust the recommendations of their friends and family more than advertising, referral programs can be an incredibly powerful marketing tool.
When it comes to referral programs, businesses have a lot to gain. In fact, research has shown that word-of-mouth is one of the most effective ways to acquire new customers. But among acquiring new customers, there are a lot of benefits that businesses can enjoy by implementing a referral marketing program.
Check out 12 incredible benefits that you can get from boosting your customer referral program.
1. Increased Customer Lifetime Value
Customer referral programs are one of the most effective ways to increase sales and grow your business. After all, referred friends are more likely to become loyal customers. And loyal customers are essential for any business because they spend more, refer their friends, and provide valuable feedback.
But what many businesses don’t realize is that referred customers also have a higher lifetime value. In other words, they’re not only more likely to make an initial purchase, but they’re also more likely to continue doing business with you for years to come.
As a result, customer referral programs not only increase sales in the short term but also help to build long-term relationships with your best customers.
2. Boost brand awareness
If you’re looking for a way to boost brand awareness and get new customers, a referral program is a great option.
By offering existing customers a discount or incentive for referring new customers, you can encourage them to spread the word about your business. And with social media, it’s easier than ever for people to share recommendations with their friends and followers.
As more people learn about your brand and its products or services, you’ll have a better chance of attracting new customers and growing your business.
Should small businesses care about brand awareness?
For local businesses, brand awareness is essential. With limited resources, it’s important to focus on marketing activities that will have the biggest impact. And while online advertising can be effective, it can also be expensive.
Referral programs offer a cost-effective way to boost brand awareness and attract new customers. By capitalizing on the power of word-of-mouth, you can reach a larger audience without breaking the bank.
3. Get more high-quality leads
As a business owner, you’re always looking for ways to get more high-quality leads. A great way to do this is through referrals. Referred people are more likely to convert than leads that come from other sources, and they’re also more likely to be happy with your product or service.
You can set your referral program to direct people to a landing page. This makes it easy for them to sign up for your email list, follow you on social media, or even instantly become your paying customers.
Whatever solution you choose, you are adding people with high-buying interest to your funnel that will most likely become paying customers at one point in time.
4. Increased sales
This word-of-mouth marketing can be extremely effective in driving sales, especially if you offer a discount or incentive for referrals. Since leads are coming through friendly recommendations, they’re more likely to convert into paying customers.
But there is also another side of referrals. When you offer some kind of incentive or special to customers that refer people, you are also encouraging those customers to visit your business once again and redeem a special offer.
5. Save on marketing costs
One of the most significant advantages of referral systems is that they may save you a lot of money on marketing efforts. With a referral program in place, you can tap into your existing customer base to help promote your business.
This process is much cheaper than traditional advertising, and it also allows you to reach a wider audience. So if you’re looking for a cost-effective way to market your business, referral marketing is a way to go.
For example, if you are looking to make your customer acquisition as effective as possible, you should combine referral marketing with email marketing – the most cost-effective marketing channel. By doing so, you will be able to generate high-quality leads and loyal customers with minimal effort.
If you need ideas on this topic, check out our Ultimate guide to refer-a-friend emails that get referrals.
6. Improved product quality and innovation as a result of customer feedback
As any business owner knows, customer feedback is essential for improving the quality of your product or service.
But did you know that a referral program can actually help you get even more feedback from your customers? By rewarding customers for referring new business to you, you can encourage them to provide even more valuable feedback about your product or service.
This feedback can then be used to improve the quality of your product or service, which can lead to increased sales and more loyal customers.
7. Enhanced company reputation
Online reputation is everything these days. When customers refer their friends and family to your business, they are essentially vouching for your products or services. This act of customer loyalty can go a long way in building trust and goodwill toward your business.
In addition, referral programs can also serve as an effective marketing tool. By offering rewards for referrals, you can encourage customers to spread the word about your business to their social networks. As a result, referrals can be a powerful tool for enhancing your business reputation.
8. More social media followers and interactions
One of the best benefits is that it can help you gain more social media followers and interactions. With the referral process in place, you can ask your current customers to share your brand with their friends and followers. In return, they get a discount or some other type of incentive.
This referral type of marketing not only helps you attract new customers but also helps you build relationships with your existing customers. And as we all know, social media is all about building relationships.
When you have a referral program in place, it shows that you’re willing to go the extra mile to engage with your customers and provide them with value. As a result, you’ll see an increase in social media interactions and followers.
Plus, your customers will be more likely to share positive reviews and testimonials about your brand, which can only further enhance your reputation.
9. The ability to capture valuable customer data
As referrals are coming in, you will collect data like phone numbers and emails. Depending on what referral program software you are using, you can customize what data you want to collect from your referrals.
This data can be extremely valuable as it can help you to better segment your customers and send more personalized campaigns. And in today’s competitive marketplace, the more personalized your marting efforts are, the better your chances to stand out from the crowd.
10. Greater customer loyalty
Customer loyalty is more important than ever. And one of the best ways to encourage loyalty is through referrals. When customers feel like they are part of a community or are being rewarded for their efforts, they are more likely to stick around.
By offering customers a discount or other incentive for referring new business, companies can quickly build up a loyal following. And as word-of-mouth marketing becomes increasingly important, referral programs are an essential tool for any business that wants to stay ahead of the curve.
11. The ability to give back to the community
As a business owner, it’s always gratifying to give back to the community that has supported you. With a referral program in place, you can do just that.
Each time a new customer comes your way as a result of a referral from one of your current customers, you can donate a portion of the sale to a local charity or non-profit organization. Not only does this help to build goodwill for your business, but it also allows you to make a difference in your community. It’s a win-win for everyone involved!
12. The ability to connect with customers on a personal level
When you run a referral program, you’re not just asking your customers for business — you’re asking them to put their faith in you. And that takes a lot of trust.
Fortunately, there are plenty of rewards that come with running a referral program, one of the most important being the ability to connect with customers on a personal level. When customers make referrals, they’re essentially vouching for your product or service.
They’re saying that they believe in what you’re doing, and they want their friends and family to experience the same level of satisfaction that they did. In other words, referrals give you the chance to create lifelong fans who will not only continue to do business with you but will also be happy to recommend you to others. And that’s the best kind of marketing there is.
What do you need to know before you implement a referral program in your business?
When you are creating a referral program, it is important to make sure that it is automated.
The last thing you want is to keep track of everything by yourself or to assign it to your employees.
In today’s world, where everything is in digital format, you can’t expect that people will have the same engagement with referral cards. You need software that you can use to automate the program for you and create a better experience for your customers.
If your small business is a gym and you want to grow it with referrals, learn how to start a gym referral program.
Ready to see these benefits in your business?
As you have seen, you can greatly impact your business growth by focusing on word-of-mouth marketing.
Remember that a referral program should not be an afterthought. You will need to put some time and effort into creating it and making sure that it is well-designed. But once you do, the benefits will be well worth it!
