5 Refer a Friend Marketing Myths, Debunked

von Sean Ogino |

5 Refer a Friend Marketing Myths, Debunked

One of the gravest drawbacks of the internet is it has an incredible power to inform you as well as misinform you. No one and nothing, from celebrities to e-commerce tech, is immune from rumors. The fierce competition today in retail means that it’s vital to clear the air of misconceptions about refer a friend marketing.

Referrals are an extremely valuable tool for many businesses, as consumers are on average four times as likely to buy when they’re referred by friends. Referred customers spend 13% more than others, and have a 25% higher lifetime value. So, let’s set the facts straight!

Myth 1 – Only young or tech-savvy people will participate in an online referral program.

The common understanding is that a digital referral program isn’t the right fit for older consumers, but there is hardly any truth in this thinking. Though it is true that younger people (18-34 years) are somewhat more likely to go online to review or recommend a product or service, the percentage of people above age 35 who do so isn’t dramatically different. In fact, the variance is only 7% as far as results between the age group starting at 25 years old and extended up to age 64 are concerned.

refer a friend use by age group

The fact is people don’t “go” online. They live online. The tech environment is making people habitual internet users as for so many facets of everyday life, people need to be digitally connected. The mere 7% variance is a proof that age is not a barrier.

Indeed, marketers who discount their audience’s comfort technology are losing out on valuable new customers!

Myth 2- Rewards are not that important in refer a friend marketing.

Though it would be an ideal to have people who are referring your products to their friends without expecting anything, the truth is we don’t live in a perfect world. If you want your customers to send referrals and if you want referred people to become customers, you need to offer a worthy incentive.  The reason behind this is people who refer your products believe they are helping you in getting more customers and they expect you to value their efforts. According to Nielsen’s 2016 referrals survey, 88% of all Americans would like some sort of incentive for sharing products through email or social media.

Besides, it’s just not enough to reward a person with some branded merchandise or a low-value gift card. It has to be significant and meaningful. The reward mirrors what customers are worth to the company or business. If a customer senses that they are not truly appreciated, then they possibly won’t become referrers.

Myth 3 – Refer a friend marketing programs run themselves.

It’s not that difficult to create a referral program. It requires a very little participation of IT or marketing team. The most important thing is its promotion and perception which it carries with itself. If it doesn’t reach your audience, it will gather dust by sitting idly. If you are not a big shot in your respective industry, it can take 15 marketing impressions to percolate your message into the periphery of your target audience. Therefore, to get your happy customers to engage with a referral program and start making referrals, you need to market it to them

It doesn’t matter how simple your referral program is, there will be people who will have doubts about it. All referral programs need a support system devoted to control and resolving these issues. It directly pinpoints towards the point that refer a friend marketing programs need an entire functional ecosystem and don’t run on magic. Check out our post about maintaining your referral program to learn more.

Myth 4- Happy customers will just refer businesses without being prompted.

While some satisfied customers will refer friends, not all think to do so. Indeed, in a Texas Tech study, 83% of respondents said they would be willing to refer new business to a company they trust, but only 29% said they actually do so.

Furthermore, when customers make referrals on their own, there’s no transparency. With a complete referral program, businesses can easily track who is referring to whom, identify their strongest advocates, and change their tactics accordingly.

Myth 5- Refer a friend marketing is just as effective as other types of marketing.

This is perhaps the most unfounded myth that has popped up. Those who believe in it are not aware of the fact that 82% of Americans seek recommendations when considering a purchase. Again, there is another survey that suggests 84% of people are more comfortable taking advice from another satisfied customer or colleague. Now, what is the authenticity quotient of other media? Only 62% of consumers say that they trust TV ads and only 50% believe in paid search results. As referrals come from a person who is in your close vicinity, it carries an unquestionable authenticity. That’s the prime reason why referrals generate greater ROI than other channels and convert higher quality customers.

If you have a well thought out referral program with space for flexibility, it can easily become your most trusted silver bullet. You can trust the business acumen of Mark Zuckerberg, who’s stated, “People influence people. Nothing influences people more than a recommendation from a trusted friend. A trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising.”

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