Introduction
Referral marketing is a method of promoting products or services to new customers through referrals, usually word of mouth. Such referrals often happen spontaneously but businesses can influence this through appropriate strategies.
Referral marketing is a process to encourage and significantly increase referrals from word of mouth, perhaps the oldest and most trusted marketing strategy. This can be accomplished by encouraging and rewarding customers, and a wide variety of other contacts, to recommend products and services from consumer and B2B brands, both online and offline.
Benefits of referral marketing
Low or no customer acquisition cost :
Viral loop :
More profitability :
Customer loyalty :
Higher contribution to margin :
Higher retention rate :
On whether customer referral programs are worth the cost, the study says that it records “a positive value differential, both in the short term and long term, between customers acquired through a referral program and other customers. Importantly, this value differential is larger than the referral fee. Hence, referral programs can indeed pay off.
Have you realized of any more benefits of referral programs, then leave a comment below.
