Refer a Friend

When it comes to acquiring new customers, one of the most powerful sources of leads is through referrals – good old fashioned word of mouth. Referral marketing is considered to be one of the simplest and least glamorous types of marketing, but one of the most effective. After all, most people are going to be more influenced by products their friends or family promote rather than a paid advertisement.


Some interesting statistics (1):

  • 65% of new business comes from referrals
  • Customers are four times more likely to buy with referrals from friends and family
  • Referred customers spend an average of 13.2% more than regular customers.
  • The Wharton School of Business found that a referred customer has a 16% higher life time value

With statistics like that, it only makes sense for businesses to double down on referral marketing.

Wikipedia provides an example of how referral marketing helped Dropbox boost its consumer base: In 2009, Dropbox rewarded both their existing and new customers with additional storage space when a new customer signed up for the Dropbox service through a referral. All the referred customer had to do was sign up for the basic free account. The referral program increased their signups by 60%. Referrals account for roughly 35% of their daily signups, as of April 2010 (2)

So what are the benefits of referral marketing?

Referral marketing is a relatively less expensive customer acquisition channel. It brings down marketing costs, which is always appreciated by businesses with even smaller marketing budgets.

Prospects are generally easier to convert into paying clients. They are typically less price sensitive as well.

This strategy is easier to implement compared to other modes of promotion.

Above all, implementing a referral program can optimize your business sales cycle, producing qualified leads that will convert to more sales.


Most importantly, how do you generate these referrals?

Generating referrals is not complicated but it does take a bit of work. Here are a few best practices that all businesses should embed in their marketing plan

Constantly ask for referrals: In the midst of delivering excellent service and regularly thereafter, don’t forget to ask for referrals. It is safe to assume your clients would be happy to refer you, but make sure you inform them to let you know if they are uncomfortable doing so.

What do you need while choosing a Referral Marketing Software?

Partner: Identify and create relationships with noncompetitive businesses and people who serve your market and partner with them. Have them automatically refer you to their clients and watch your business grow

Make it easy and be transparent: Make it easy for your customers to refer you. You can put links to review sites on all your communication or maybe just include surveys that do not require your clients to spend too much time. Also be transparent with your customers. Let them know exactly how you are going to use the names they give you. Once you have gained their trust, referrals become easier.

Incentives: Give your customers an incentive for referring clients to you. For example if your customer provides you with 5 sales, offer them a discount or a free item on their next purchase.

get more referrals

Show appreciation: Whenever you see a customer provide frequent referrals and especially if the referrals turn into sales, make sure you show your appreciation. It could just be a thank you note or a small token of appreciation. This will keep you in their good books and they will keep sending more referrals your way.

Reciprocate: If you know people that may need the products or services your customer offers, make referrals to your customer.

With the rise of social media, every consumer has become a publisher capable of reaching a targeted audience. Companies have a tremendous opportunity to use referral marketing to drive sales and awareness while gathering new customer insights, and increasing engagement with current customers Digital communications and social media has become a facilitator of word-of-mouth marketing; and it’s now much easier to refer.

There is a wealth of untapped, potential business that can be generated simply by implementing a successful referral marketing plan.