Referrals play an important role in scaling a business’ revenue given that they are the most effective form of advertising today. Referral campaigns come straight from consumers who have already used a product or service they trust endorsing to friends or family.
One of the core marketing principles for generating leads is ensuring your clients are the biggest advocates for your products or services. A happy consumer can do wonders for your business. As indicated by Nielsen's Global Trust in Advertising Report, a little over 80% of consumers in sixty countries trust user-recommended products and services.
However, there is a catch to a consumer spreading the good word about your business. Keep in mind that not always will your customers refer you to people for your outstanding products or services. You will need a well-planned customer referral program to offer your consumers and build upon your client base.
If you're keen on creating a cost-effective business strategy that promises profitability, do not overlook or ignore customer referrals. Here are a few benefits:
- People Trust Referrals: A study by BzzAgent shows that brand advocates are 70% more trusted as a good source of information for potential consumers. Reviews and strong recommendations are considered more reliable than advertorials. Given this degree of trust, the audience referred by friends or family is four times more likely to make a purchase.
- Enhanced Customer Retention: Customers who take an interest in referral campaigns are more likely to continue patronizing your business. Since acquiring new customers is costlier than retaining existing customers, this is the top advantage of referral campaigns.
- Referred Clients Come Convinced: Referred clients are more like pre-qualified leads who are already convinced of your product or have a positive outlook on it. Since a relative or friend refers them, they are more likely to become a promoter than a non-referred customer.
- Great Value for Money: Although offering discounts or gifts does incur a cost, it sure is much less than running advertorials. You can save much more by structuring your referral program into a reward-based plan. This will benefit you in accruing more leads and not giving away an instant discount or gift for every referral.
- Increased Involvement: Encouraging customer engagement reinforces your online worth. Also, it expands the odds of potential growth in revenue. A consumer who refers his/her friends and family is bound to visit your store or website to look for newer offers and deals. A client who often comes back to your site is more likely to make a purchase, too.
- Customer Tailored Referrals: Referral campaigns tend to be user-friendly and easy to customize. You can alter a referral campaign to experiment or add more incentives, knowing that it would thrill your target audience. Unlike an advertorial, you can choose to analyze a customer’s buying habits and offer bigger discounts or gifts.
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