Categories: Referral Marketing

38 Referral Marketing Statistics that Will Make You Want to Start a RAF Program Tomorrow

If you’re not yet leveraging the power of word of mouth marketing, here are some referral marketing statistics that will change your mind and make you want to implement a refer a friend program tomorrow.

“One customer, well taken care of, could be more valuable than $10,000 worth of advertising.”  – Jim Rohn

Referral programs are a bigger deal than some companies may realize. Every day, billions of recommendations happen just because someone likes a product or a service and tells someone, who then tells someone else, who in turn tells someone else–it’s human nature to talk about things we like. Chances are your satisfied customers are talking about your brand right now, but are you giving their advocacy the attention it deserves? These referral marketing statistics will help you evaluate where you stand.

To discover how to implement a truly optimized refer a friend program, don’t miss out on our white paper, The Step-by-Step Guide for a Powerful Referral Program.

Referral Marketing Statistics: The Power of Word-of-Mouth

  • The Word of Mouth Marketing Association reports that every day in the United States, there are approximately 2.4 billion brand-related conversations. People frequently talk about the products and services they enjoy, and the companies who offer them.
  • 92% of consumers trust referrals from people they know – Nielsen
  • People are 4 times more likely to buy when referred by a friend – Nielsen
  • 77% of consumers are more likely to buy a new product when learning about it from friends or family. – Nielsen
  • 81% of U.S. online consumers’ purchase decisions are influenced by their friends’ social media posts versus 78% who are influenced by the posts of the brands they follow on social media. – Market Force
  • 43% of consumers are more likely to buy a new product when learning about it from friends on social media. – Nielsen
  • 85% of fans of brands on Facebook recommend brands to others. – Syncapse
  • 84% of consumers say they either completely or somewhat trust recommendations from family, colleagues, and friends about products – making these recommendations the information source ranked highest for trustworthiness. – Nielsen

  • 74% of consumers identify word-of-mouth as a key influencer in their purchasing decision. – Ogilvy/Google/TNS
  • 1 offline word of mouth impression drives sales at least 5x more than 1 paid, and much more (as much as 100 times more) for higher-consideration categories. – WOMMA
  • Word of mouth is the primary factor behind 20% to 50% of all purchasing decisions. – McKinsey
  • 49% of U.S. consumers say friends and family are their top sources of brand awareness.
  • 71% of consumers are more likely to make a purchase based on social media referrals.
  • On social media, 58% of consumers share their positive experiences with a company, and ask family, colleagues, and friends for their opinions about brands. [SDL]
  • Consumers rely on word-of-mouth 2x to 10x more than paid media. – Boston Consulting Group
  • 55% of consumers share their purchases socially on Facebook, Twitter, Pinterest and other social sites.
  • 59% of Pinterest users have purchased an item they saw on the site, 33% of Facebook users have purchased an item they saw on their news feed or a friend’s wall.
  • Word-of-mouth has been shown to improve marketing effectiveness by up to 54%. –  MarketShare

In our most recent case study, a footwear client got a 10:1 ROI, a 20% growth in their email list, and a 38% increase in orders over one year thanks to our Sharing and Referrals and Social Login solutions!

Read on below for more referral marketing statistics…

Other Resources

Referral Marketing Statistics: The Role of Incentives

  • More than 50% of people are likely to give a referral if offered a direct incentive, social recognition or access to an exclusive loyalty program. –  Software Advice
  • 39% of respondents say monetary or material incentives such as discounts, free swag or gift cards greatly increase their chances of referring a brand. –  Software Advice
  • 70% of email readers open emails from a brand or company in search of a deal, discount, or coupon. –  Campaign Monitor
  • 65% of consumers say that receiving rewards impacts their frequency of purchase.
  • 79% of people say their primary reason for “liking” a company’s Facebook page is to get discounts. –  Market Force
  • 64% of consumers say that rewards impact how much they spend.
  • 69% of consumers say that they’re more likely to try a brand if it gives rewards.

Referral Marketing Statistics: The Results

  • Referral Marketing generates 3-5x higher conversion rates than any other channel.
  • Customer Referral programs can bring an average of 20,000 new email addresses per month – Annex Cloud
  • The lifetime value of a new referral customer is 16% higher than your average customer. –  Wharton School of Business
  • The Lifetime Value of a referred customer is 25% higher than that of other customers – Wharton School of Business
  • When specific case studies about referral software were analyzed, researchers found a 10% increase in WOM (off and online) translated into a sales lifts between 0.2 – 1.5%. –  MarketShare/ Keller Fay Group
  • Referred customers bring you 25% higher profit margin.
  • A referred customer is 18% more loyal than a customer acquired by other means.
  • Referred customers are 4 times more likely to refer more customers to your brand.
  • Customers referred by other customers have a 37% higher customer retention rate.
  • Customer acquisitions through referrals spend 200% more than the average customer.
  • Robust advocacy-marketing programs are achieving significant revenue gains—10 to 20 percent for established products and up to 100 percent for new products.
  • One of Annex Cloud’s referral marketing clients saw a 9.7% increase in conversion. – Annex Cloud
  • Another one of Annex Cloud’s clients saw an average of $100,000 in monthly revenue just from referral orders – Annex Cloud

Want to make sure you’re on top of your customer acquisition game? Our white paper, Customer Acquisition in 2018: 12 Solutions to Ignite the Buyer Journeyis a must-read!

Looking to start your own referral marketing program? Get in touch with one of our marketing specialists today or request a demo of our referral program software!

Featured Resources
Share

Recent Posts

  • Advocate Marketing
  • Customer Advocacy
  • Customer Engagement
  • Customer Lifetime Value

5 Best Advocate Marketing Practices to Build Customer Advocacy with Loyalty

Following the best advocate marketing practices powered by a robust advocacy marketing strategy can help you to transform your loyal…

1 day ago
  • Customer Engagement
  • Customer Loyalty
  • Hotel Loyalty
  • ROI

Hotel Loyalty Program Is Proven to Grow Your Hotel Business by 50%

When American Airlines launched its rewards program (AAdvantage) in the early 1980s, it gave rise to rampant loyalty programs in…

2 days ago
  • Customer Engagement
  • Customer Loyalty

7 Common Mistakes Leading to Creation of Unsuccessful Loyalty Programs

Despite having the best strategic planning in place, when your customer loyalty program does not produce the expected results in…

2 days ago
  • customer journey
  • Customer Lifetime Value
  • Customer Loyalty

How to Launch a Reward Loyalty Program With Right Efforts?

The incredible potential of a customer reward loyalty program in boosting customer retention capabilities and enhancing overall customer lifetime value…

2 days ago
  • Customer Engagement
  • Customer Lifetime Value
  • Customer Loyalty

Top 5 Strategies & Benefits of Tiered Loyalty Program

Providing a definitive edge over the benefits typical customer loyalty programs bring along, a tiered loyalty program is focused at…

3 days ago
  • B2B loyalty programs
  • Customer Engagement
  • Customer Loyalty
  • Loyalty KPI
  • Referral Marketing

Launching a Loyalty Program and Measuring its Success

There is no argument over this – Acquiring customers is good, but retaining customers is better. A popular statistic says…

4 days ago

Get More From Your Customers
Annex Cloud's customer marketing platform provides fully integrated Customer Loyalty, Referral Marketing, and User Generated Content solutions.