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Top 8 benefits of Referral Marketing

Studies show that businesses get 65% of customers from referral marketing. These customers spend 13.2% more than regular consumers.


A referral programme is a common growth marketing tactic. It seeks to encourage a brand’s existing customers to recommend their products or services to friends and family. It aims to elevate natural word of mouth lead generation by supplying customers with discounts or rewards in return for a referral.


While referral marketing does require more hands-on promotional efforts and an incentive of rewards to get customers to take part. There are many benefits of referral programmes, let us take you through our top eight…

Customers Trust Referral Marketing

The people you know and trust are much less likely to mislead you, so of course you listen closely to their reviews and recommendations. So will your potential customers. Referral marketing is the leading driver behind 20-50% of all purchasing decisions. With almost 30% of all internet users using ad blockers,  referrals are a mass trusted method that needs to be used to gain more growth.


People are 4 times more likely to buy from a business when a friend has referred them. This is why you should be ensuring your current customers are satisfied. And that they are spreading the word about their positive experience with your business. With a great review from friends, people are more likely to choose your e-commerce store over competitors.


This will improve customer acquisition in itself, but business owners can go one step further and tap into an untouched marketing resource. Pairing satisfied customers with an attractive referral program.

An Improved Retention Rate

Your customer retention rate is the percentage of customers the brand has retained over a given period of time. Once you acquire a customer, retaining them is what makes all the difference. Customers who take part in referral programs are more obliged to stay with your business, therefore increasing your retention rate. From a marketing perspective, engaging new customers is usually more costly compared to retaining your already existing ones. 


Customer retention is important to websites for various reasons. For instance, research shows that keeping existing customers costs less than attracting new customers and that the cost for acquisition on a per-customer basis is much more than that of customer retention.

Increased Reputation

Referred customers already have a positive opinion of your company because they’ve been referred by a trustworthy source. Customers that have been referred by a friend, family member, or colleague have a lifetime value that is 25% higher than that of other customers. 


Increasing referrals means increasing satisfied customers and increasing your reputation. It can also lead to a spike in positive online reviews. Which in itself can improve your conversions and leads from other sources.

Cost Effective Marketing

Referral marketing is the least expensive marketing strategy that brands use to grow their customer base. It can also be the most sustainable.


Referral marketing relies on word of mouth and your existing customers. Meaning your marketing costs can be cut down dramatically. It is less expensive pushing marketing efforts towards your existing loyal customer base than it is to market to a brand new audience. You can promote your referral program through existing marketing efforts. And your incentive is your only primary cost! Plus a customer’s recommendation of you is much more persuasive than any ad you could pay for.

Loyal Customers Will Multiply

It’s a lot easier to gain and keep a lead through your customer’s inner circles than it is to acquire a single new customer from other channels. A referral request creates a sense of trust, and that can create customers that are advocates for your brand. Referred customers are proven to be sustainable leads that stay with your business longer than other types of customers.


Referral marketing quickly generates more satisfied customers, ensuring a continuous cycle of repeat customers and referrals. Referrals generate more referrals – a self sustainable model.

Increased Brand Awareness

Not only will referral marketing increase brand awareness in your customers inner circles, most referral systems provide customers with an option for marketing on various social media platforms.  55% of customers share their purchases on social sites like Instagram, Facebook and Twitter. While 71% of customers are making purchases based on social media referrals. 


Most potential clients probably own at least two social media accounts. Your brand will be able to receive a boost in online social media presence due to your happy customers and devoted audience. Social media doesn’t just work for promotions and free advertising. Referral marketing resulting in potential customers ending up on your social pages can help customers get to know your brand story and improve your overall reputation. Many modern consumers want to align themselves with brands that have a strong backstory and a positive influence. 85% of consumers agree that they prefer a more authentic and honest brand.


By using your social media to proudly tell your story, whilst also allowing your own customers to tell your story through consumer generated content, makes that story through referrals resonate more strongly in the general consumer market.   

Build on Existing Relationships

As mentioned earlier, referral programs reward your current customers too. It’s a win-win. Offering products or services at a discounted rate or giving them something for free, drives repeat sales. It always pays to reward happy, satisfied customers.


It’s just human nature to refer our favourite products to those we know and trust. So having a system in place to build solid relationships with your current customers is one of the most important marketing strategies you can have. And a good referral relationship reflects positively on both sides.

Builds Your Email List

When you offer audiences a discount for signing up to your email newsletter to receive, some people are going to sign up just to save a few extra pounds. Ecommerce businesses who use email receipts and confirmation emails have a better chance at promoting their referral program within those emails. A customer is more likely to open an email from you than a potential prospect. Therefore these transactional emails have a higher open-rate than standard email newsletters. 


This is the perfect chance to promote your referral program and get that customer to come back again with a fresh discount. And, of course, a friend. This way, the cycle restarts, that friend will then sign up and refer to another friend who will sign up. The cycle continues to spin.

Contact our team today for your free digital consultation.

A few quick questions and a scan of your brands online profile, then our digital strategy experts will combine their findings and send you a recommended plan of action to hit your business goals online.

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