Referral marketing is an avenue for building trust with new customers of all ages. It makes people more likely to consider purchasing from your brand and creates an instant connection between you and your new customers. It’s also key to building a customer-led growth strategy that lowers customer acquisition costs (CAC).
Marketing may be about people, but numbers drive decision-making. Let us help you build the case for investing in referral marketing with some referral statistics that support the connection between referral marketing and successful customer-led growth.
The Effectiveness of Referral Marketing
Referral marketing is a highly effective way to drive conversions across industries:
- 82% of B2B sales leaders agree that referrals provide them with high-quality leads. Additionally, 49% of B2B tech vendors say utilizing referrals is their most effective marketing strategy.
- In contrast to referral marketing, traditional cold calling in B2B sales is only effective in 1 out of 50 attempts. That’s a 2% success rate.
- Word-of-mouth marketing has been proven to increase the effectiveness of B2C marketing efforts by 54%.
- 82% of GenZ and 91% of Millennial consumers rely on friends and family for advice on purchasing decisions.
- 28% of millennials say they won’t try a product if their friends disapprove of it.
Referral Statistics Around Lowering CAC
Customer-led growth is one of the most cost-effective and sustainable ways to increase your customer base. Because consumers trust their friends and family regarding product recommendations, you can acquire more customers without burning through your marketing budget.
- Greater than 75% of B2B buyers consult three or more sources before they make a purchase decision. This highlights the importance of establishing a robust network of satisfied customers who can act as advocates for your brand.
- In another study, 93% of survey respondents were willing to trust a brand recommended by a friend or family member, while only 38% were willing to trust an ad for that same brand.
- 20% of your advocates drive 80% of your referrals, which means that a minority of your advocates are highly influential or effective in generating referrals.
Referral Marketing – The Best Practices You Need to Know
Written by veteran referral marketers, this guide will help you optimize your referral marketing program and supercharge growth.
Referral statistics Around Increasing LTV
Customers are expensive to obtain, so increasing the lifetime value of each new customer can make a massive difference to the company’s bottom line. Referral programs help build brand loyalty and increase the value you get from each new customer:
- Acquiring a new customer can cost 5-25 times more than retaining an existing customer.
- The lifetime value of referred customers with similar demographics was 16% higher than that of non-referred customers, and the churn rate was 18% lower.
- Six in ten customers will spend more on purchases from brands they’re loyal to.
- Brand advocates and referred customers make more frequent and expensive purchases. In fact, their average order value (AOV) is 150% higher than other customers.
- Customers who are referred to your brand are up to 5x more likely to use your referral program than customers who weren’t. This creates a positive feedback loop and consistently draws even more customers to your referral program, so the magic of all that social approval just keeps getting passed on.
Extole Can Help You Optimize Your Referral Program
We’re not just pulling data from the internet. Extole commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) from using our product.
They quantified the costs and benefits of our referral programs and found that the composite organization using our software experiences :
- A 282% ROI over three years
- Time savings of 90% for marketing team members
- An 80% reduction in unqualified redemptions
- A 150% increase in average order value for referred customers
- A 75% year-over-year increase in converted leads
Want to learn more about what Extole can do for you? Check out our online walkthrough.
