Relationships & Referrals

Let’s play a game of “Who Do You Trust?” Those paid results at the top of the Google, or your sister? That banner on YouTube, or your best friend from college?

Okay, this is an easy game. We all trust our family, friends, and even strangers more than we trust advertisements and brands. We’re influenced by recommendations, reviews, testimonials, social chatter, and, most importantly,?referrals.

83% of the people who had a great experience with your product or a service are willing to refer your product or a service to their friends and family. But, only 29% of the people actually do.

Why do only 29% recommend a brand? Before we dig deeper into this, lets talk about what is referral marketing?

Referral marketing aims to incentivize existing customers and brand advocates to tell others about a brand’s products or services. It has proven time and again to be an effective mechanism to acquire high-value clients at a low cost.

For some companies,?65% of sales?happen through referral marketing. Referred customers have a lower customer acquisition cost (CAC). Referred customers have a lower churn rate. Referred customers have a higher customer lifetime value (CLV).

So, the question is why only 29% of the happy customers refer their friends and family to a brand?

Because most brands don't have a referral marketing program in place. They don't ask their current clients for referrals in a scaleable way. People are busy and they have other things on their minds so even if they were very happy with their purchasing experience from you, they won’t think to send you their testimonial or referral unless you ask.

Referral marketing does not always need to do all of the heavy lifting by itself. In fact, when it is?used in tandem with an effective loyalty program?the results can be even more substantial. It all comes down to brands having a clear relationship marketing strategy that deepens the connection with their customers and improves the likelihood of increased sales over time. Within this relationship marketing strategy is where referral and loyalty programs will reside.

Brands need a comprehensive strategy around relationship marketing (Referrals & Loyalty). It has to be embedded into brands marketing and advertising DNA.