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What is the difference between customer and employee referral programs?

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Marko Zivanovic

Content Manager

Successful businesses rely on word of mouth marketing

People spreading the word about your business signifies that you are doing something right. You might even say that word-of-mouth is the best marketing strategy.

There are two ways businesses can take advantage of word-of-mouth marketing programs: customer and employee referral programs.

What is the difference between these two types of referral programs, and how do small businesses benefit from both? Let’s take a closer look.

What is a customer referral program?

This is a type of referral program where businesses offer incentives to customers for referring new customers. For example, a business might offer customers discounts and rewards for successful referrals.

Referral programs can be an effective way to generate leads and grow a customer base. Customers typically need to sign up and receive a referral link to participate in a referral program.

They can then share the link with their friends, who can use it to get discounts or other benefits the business offers.

What are the benefits of a customer referral program?

Starting a referral campaign can result in many benefits.

A referral program is a great way to reward loyal customers and generate new leads. Referred customers are often more likely to be interested in your product or service since they have been recommended by someone they trust. Statistics show that people referred by someone else have 4x more chances to become paying customers.

When people start sharing your business with friends and family on social media, this can significantly boost your business exposure and brand awareness. Research has shown that 69% of customers are willing to refer a brand to others if they have a positive experience.

This can make your lead generation much easier, and considering that people have a higher chance of converting to paying customers makes referral marketing essential for every small business’s growth.

What is an employee referral program?

An employee referral is a type of referral program where businesses offer incentives to employees for referring new employees.

For example, an existing employee can earn bonuses or rewards by referring candidates for open positions.

Even though this type of referral is much more popular for large companies, small businesses should consider this method for their recruiting strategies instead of relying on job boards.

Benefits of employee referral program?

Employee referrals can be an effective way to attract high-quality candidates, as well as improve employee retention rates. Statistics show that 45% of referred people stay longer than four years in a company, while for other employees, this number is 25%

Another huge benefit is that you can save a lot of time on your hiring process. You can rely on employee referrals to screen candidates and do some initial legwork. Research shows that hiring employees via referrals is 55% faster than through websites.

Your employees already know your company culture and values, so they are more likely to refer people who will be a good fit for the team. This can help you avoid bad hires, which can be costly for your business.

How can small businesses benefit from both customer and employee referral programs?

Small businesses can benefit from customer and employee referrals in many ways.

Customer referral programs can help you attract new leads, while employee referral programs can help you attract high-quality candidates. Both types of referral programs can save you time and money during your hiring or customer acquisition process.

Customer referral programs can also help you improve your brand awareness and boost your exposure. And because referred customers and employees are more likely to be interested in your product or service, they are more likely to convert to paying customers or long-term employees.

How to start with a referral program?

If you want to generate new customers through word-of-mouth marketing, check out the Ultimate Referral Program Guide For Small Businesses.

There you will find step-by-step explanations for creating your first successful referral program.

Marko Zivanovic

Content Manager

I use engaging words and strategic approaches to create content that converts.

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Marko Zivanovic

Content Manager

I use engaging words and strategic approaches to create content that converts.

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