Finding an endless stream of new and loyal customers is the dream for most businesses and we've got the referral marketing statistics to show you that the dream is indeed a reality for many brands.
But, solving that ever-changing puzzle to reach the most customers that best fit your unique business can sometimes feel a little like a dog chasing its tail.
With marketing specialists regularly publishing new statistics and trends shifting all the time, it can be hard to keep up. However, one marketing channel that consistently brings in new customers and remains effective? Referrals and word of mouth recommendations.
While marketing statistics often change, the stats on referral marketing don't lie and they tell an impressive story of serious results. In this post, we've collected the latest and greatest statistics about referral marketing to tell that story.
As they say, show me the money! So let's start by covering the referral marketing statistics that show real-life examples of businesses making more money from referral programs.
Hold onto your computer screens folks because these referral marketing statistics might just blow you away.
Ready?
The mattress company Casper saw had a 7x greater ROI on its referral marketing program than the company's average marketing endeavors. Casper's referral program is by far one of the most efficient customer acquisition channels in their arsenal.
While Casper's example is one of fairly extreme proportions, it's not abnormal. Your very own referral marketing program can unleash equally high ROIs with the right marketing efforts and support.
Referral marketing can offer a 25x return on spend. Depending on the vertical, referral marketing programs offer an average ROI from 18x to 47x. Check out these industry-specific average ROI statistics:
Why is referral marketing so profitable? Let’s hash out some of the reasons below.
When people talk about a brand, it helps increase the brand's visibility and awareness. This is especially true when the conversations are positive and create buzz around the brand.
According to Adweek, 2.4 billion brand-related conversations happen in the U.S. everyday. That's a whole lot of opportunity for word of mouth marketing and word of mouth recommendations. Referral marketing feeds into brand discussions and brand awareness.
In person or online, consumers trust people they know more than paid advertisements or paid media. It makes sense — people trust their friends and family. But there are also real numbers to back it up.
Referral campaigns and programs can have the most influential role in consumers' purchasing decisions. Here are some statistics that demonstrate this:
The B2B buying process has several different stages. Depending on where you mark the beginning of your B2B buyer's journey, a referral may be at the very start. After the initial need or problem, many B2B companies say they'll start with a referral. While there are some contrasting statistics when it comes to the exact role referrals play in the B2B buying process, it's no doubt that word of mouth recommendations are important.
When it comes to cold hard conversions, referral leads are gold. Between social media referrals, high referral-based conversion rates, and a lower cost per acquisition (CPA) the stats don't lie. These customer referral marketing statistics show the conversion numbers for what referrals can do for your bottom line.
Social media has become an increasingly important channel for businesses to reach and engage with consumers. With influencers, friend referrals over social media, and social media online reviews, social networks are essential to any referral marketing strategy. Here are some statistics that demonstrate the impact of social media referrals on purchase decisions compared to traditional advertising:
A referred customer has higher and quicker referral rates than organic customers from other channels. When a customer is referred to a business by someone they know and trust, they are more likely to be interested in the product or service. These are already pre-qualified leads that are more likely to want your product and they've already heard positive reviews from people they trust. Plus, that referral-based sale is going to be way more personalized than any paid advertisement you could make because it's coming from someone they know.
We all like instant gratification and quick results for higher profits. Statistics show that referral marketing can do just that. Along with the previous statistic that referred customers convert five times faster than non referred customers, those conversions also don't cost as much.
By category, here are the CPAs that Friendbuy’s customers are achieving:
Referrals and loyalty go together. When you reward satisfied customers for talking about their good experience and bringing in other customers, they'll want to stick around. Plus, if two friends are talking about your brand and making purchases, it creates a positive cycle of repeat business. These are the numbers that prove it.
Loyal customers are the best customers. In the current market with tons of options, consumers are switching things up and trying different products more than ever. However, referred customers statistically stick around longer.
Hand-in-hand with lower churn and retention is LTV. LTV can change by increasing average order value (AOV) or having more purchases over time. In terms of referral marketing, it can do both. Referral programs build a relationship with your existing customers by rewarding them for being brand advocates and further drives repeat purchases for a higher LTV.
As they say — ask and you shall receive. Happy customers are often more than willing to share their experience and make referrals, but they're far less likely to do so if you don't ask. In this case, that means including a clear call-to-action (CTA) button on your post-purchase page. This can encourage customers to share their purchase on social media, leading to increased brand exposure and potential new customers.
However, don't limit yourself to just the post-purchase page. In fact, if you only run a post-purchase widget, you're missing 95 percent or more of potential brand advocates. Weaving in referral CTAs throughout your website and other areas of your customer journey can make a big difference. The key here is you want to make it easy for your potential brand advocates to share with friends and family.
Here's what our experience has told us performs best:
With all this talk about the benefits of referral programs, keep in mind it's not all a cake walk — there’s finesse to making a killer referral program. While each referral setup should be unique to your target audience, we've pulled some specific data that can give you a head start for creating the best referral program.
While most marketing experts see referral marketing as a high-value acquisition channel, many businesses are not getting the most out of their potential brand advocates.
And when that happens? It’s a lose-lose for everyone. Brands miss out on higher LTV customers, improved loyalty, and new, high-converting customers; current customers miss out on extra rewards and improved social standing; and friends miss out on a product that could benefit them.
Make the most of your referral marketing potential with Friendbuy’s help.