Top Reasons Why Referral Marketing Should Feature in Every Marketer’s Strategy

Acquiring new customers is among the toughest challenges for all businesses. There are very few methods as effective as referral marketing, which relies on recommendations by existing users regarding their satisfaction with the brand experience to others to permit marketers to build credibility and increase their conversions. While word-of-mouth recommendations happen organically, marketers initiate and direct referral marketing programs. Besides having a superior ROI, referral marketing has many other advantages, among which the following are prominent:

Makes Recommendations Scalable

While most brands love positive word-of-mouth since it increases conversions, it is an organic process and the outcome of everything a business does to satisfy customers. Marketers cannot control to directly influence the process, which is why they use referral marketing programs. With a well-crafted referral marketing campaign, brands can reach larger and more elusive sections of their target audiences that they may not have been able to access with conventional marketing. Marketers can increase the number of referrals by controlling the campaign and not leave to grow organically.

Gets More Qualified Leads

Unlike conventional marketing that targets potential customers without knowing which of them are interested in the product or service, referral marketing aims at those actively seeking products of the same category as yours or are facing issues that your products and services can effectively address. Satisfied customers participating in a referral marketing program will discuss your product or service with those actively looking out for them. It means that you have a better opportunity for converting them. Administering a channel using a referral marketing software application to deliver qualified leads consistently is a jackpot for brands. It is not only because of their higher volumes but also the transaction values are higher.

A Pay-Per-Performance Marketing Channel

Another big advantage of a referral marketing campaign is that while it creates more opportunities to interact with potential customers, you can scale it as you wish because you own it. However, regardless of how big or small, your campaign is, you have the comfort of having to spend only for referrals that result in conversions. It makes cost control and measuring the return on investment much easier.

Better Customer Loyalty 

It is much more difficult to acquire a new customer using conventional marketing and advertising strategies than generating a lead using a referral program. It is because trust and credibility are implicit when someone you know and depend on recommends a brand to you that they have experienced. Since these leads are in a more ready-to-believe-and-convert frame of mind, they also tend to receive the product or service better and become more loyal customers. According to Forbes, referral marketing yields higher customer satisfaction.


As if the benefits discussed above were not enough, one of the most compelling reasons for brands to engage in referral marketing is its cost-effectiveness. Since it is word-of-mouth based, it is far less expensive to use your existing customer base to plug for your brand than traditional push marketing initiatives to attract new customers. Moreover, you incur costs only for the performance achieved and not for the effort.

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