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Why is referral marketing awesome? Simply put, humans are wired to understand referrals, this infographic suggests.
It all stems from our tendency to share experiences with our friends, this says. And friends intuitively understand this sharing. “We’re wired to!” the infographic from ReferralCandy says.
It even gives us a cute cartoon illustrating how everyone wins with referral marketing.
See Oglaf there was so impressed with the work of the Balthazar that he is the de facto blacksmith Oglaf refers people to when they need the services of a blacksmith.
The blacksmith, out of a good heart and maybe also recognizing this is another opportunity to make another advocate for his business, gives Daelus, the person Oglaf told to go to Balthazar, a discount.
Since Oglaf caused business to pick up for Balthazar, Oglaf gets a reward.
Everyone wins in this scenario: Balthazar gets more business, Oglaf is rewarded, and Daelus gets a discount.
However, how does this translate to modern-day business?
According to ReferralCandy, most people who love your product do not refer it to their friends.
It says here that 83 percent of satisfied customers are willing to refer products and services but only 29 percent of them actually do.
What’s happening here? I thought we were wired to share and understand referrals?
According to this, this is where a business owner can do something.
“Good marketing is about deliberately influencing the process,” it says. Don’t leave marketing to chance.
Simply mentioning “sharing how much you like our product to your friends” can mean a lot to boost referral marketing.
“Referral Marketing is deliberately encouraging your customers to tell their friends about you.”
Why should you actively inspire customers to be your advocates?
The infographic has some pretty convincing data on why you should.
First is that referred customers are less likely to leave. That is, they have stronger loyalty. Interpreting this more, it could mean that referrals are more likely to give a business or product a friend has referred a chance in making its case.
Furthermore, people pay twice more attention to recommendations from friends.
Another is that 92 percent of consumers trust recommendations from people they know. Naturally, we think the people close to us will not mean us any harm and would not recommend any product they feel or think is inferior, harmful or not worth it.
Not only do referrals pay more attention and are more trusting, they also bring higher profits. According to this, referred customers bring 25 higher profits.
According to Etsy’s Matthey Stinchcomb, 90 percent of the businesses growth is from word of mouth.
“Referral Marketing simply works. It helps you attract customers who are more loyal and profitable,” this says.
However, why aren’t all businesses doing this then?
It’s because of scale, the infographic suggests. It’s harder to do referral marketing if you have thousands, tens of thousands, hundreds of thousands or millions of customers.
With that said, what options are there for businesses to still do referral marketing?
According to ReferralCandy, businesses can use custom-built solutions. With a better business, profits roll in and you can afford to hire a specialist.
Another option, is to use a referral app since a lot of people (your customers) carry smartphones around.
Infographic from ReferralCandy
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