A referral program , often referred to as modern word-of-mouth marketing, is a piece of marketing magic that encourages customers to advocate on behalf of your brand. Unlike traditional referral programs that involve online reviews or customer survey forms, modern referral programs allow customers to share their brand experiences with their network using easy-to-use tools like referral links or codes and get rewarded for doing so. With referral programs, you’re not just asking your existing customers to refer random customers. That’s something your marketing team can do all day long. Here, you’re getting customers to think gambling database about people who might benefit from your product or service and attracting genuine leads . You may be wondering, why would a stranger engage with your brand?
Because they trust the person referring them to the product or service and are more likely to act on their recommendation, right? Even if they’re not your customer yet, a recommendation from someone they know makes them trust your brand and intuitively create a positive customer experience . But what makes referral programs the most reliable form of marketing? Well, the data speaks volumes.
According to Finance Online, customers are 18% more loyal, have a 16% higher lifetime value , and spend 13% more than their non-referral peers. What’s more, 9 out of 10 customers trust peer recommendations. They are more likely to engage with your brand if it’s recommended by their peers. Moreover, during the COVID-19 outbreak, referral programs have grown by a whopping 425% as companies rushed to move online and reach their target markets. Global brands like Dropbox , Slack , Uber, and many more are actively using referral marketing to attract customers . If you’re looking to use referral programs, you should read the next section to better understand what features should be included in your referral programs.