When it comes to advertising, nothing beats referral marketing. Customer referrals are when companies encourage clients to spread the word about their products or services and share their positive experiences. This marketing method is so effective because we tend to trust people who are close to us more than brands. When you hear about a great company, you’re much more inclined to become a customer knowing other people enjoyed their services.
Here’s a list of 30 referral statistics that prove why customer referrals are key to your marketing strategy, especially for small businesses that rely on local customers.
The Power of Word of Mouth
1. Referrals are 36x more valuable than a cold call and 4x more valuable than a web lead. (InsideSales.com)
2. One offline word of mouth impression drives sales at least 5x more than one paid ad. (WOMMA)
3. Referral marketing generates 3-5x higher conversion rates than any other channel. (Annex Cloud)
4. The lifetime value of a new referral customer is 16% higher than your average customer. (Wharton School of Business)
5. 65% of new business comes from referrals. (New York Times)
6. Word of mouth is the primary factor behind 20% to 50% of all purchasing decisions. (McKinsey)
7. Every day in the U.S., there are approximately 2.4 billion brand-related conversions. (Word of Mouth Marketing Association)
8. 91% of B2B referrals influence customers by word of mouth. (Think Impact)
9. Online and offline consumer conversations and recommendations account for 13% of consumer sales, on average, which represents $6 trillion in annual consumer spending. (WOMMA)
10. In higher price-point categories, word of mouth’s impact is almost 20% of sales. (WOMMA)
11. Purchase decisions are 54% driven by word of mouth. (WOMMA)
12. 78% of marketers stated referral marketing produces “good” or “excellent” leads. (Software Advice)
13. 60% of marketers state that customer referral programs generate a high number of leads. (Forbes)
Friends and Family Referrals
14. Friends and family are the top sources of brand awareness for 49% of U.S. consumers. (Jack Morton)
15. People are 4x more likely to buy when referred by a friend. (Nielsen)
16. 92% of people trust recommendations from family and friends more than all other forms of marketing. (Nielsen)
17. 49% of U.S. consumers say friends and family are their top sources of brand awareness. (Jack Morton)
Referrals from Social Media
18. 85% of fans of brands on Facebook recommend brands to others. (Syncapse)
19. 81% of U.S. online consumers make financial decisions to purchase or donate based on influence from friends’ social media posts. (Market Force)
20. 40% of U.S. moviegoers value recommendations posted by friends or family on social media. (Nielsen)
21. 87% of buyers go out and look for advice before choosing a product or service. (BuyerSphere)
22. More than 50% of buyers seek such advice from their social media contacts. (BuyerSphere)
23. 43% of consumers are more likely to buy a new product when learning about it on social media. (Nielsen)
24. 79% of U.S. consumers who have “liked” a brand on Facebook did so to receive discounts or other incentives. (Market Force)
25. 75% of Instagram users will purchase a product or tell a friend when they get inspired using the app. (Review 42)
Referrals from Incentives & Rewards
26. Non-cash incentives such as prepaid cards are 24% more effective at boosting performance than cash incentives. (University of Chicago)
27. Offering a reward increases referral likelihood, but the size of the reward does not matter. (American Marketing Association)
28. 83% of consumers are willing to refer after a positive experience, yet only 29% actually do. (Texas Tech)
29. Leads from referrals have a 30% higher conversion rate than leads from other marketing methods. (Finances Online)
30. 86% of B2B companies with complete referral programs experience revenue growth. (Heinz Marketing)
Also Read: Guide to Creating Engaging Consumer Promotions with Prepaid Rewards
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