As well as being the single most effective form of marketing, customer referrals can also save you money when it comes to budgeting for your marketing strategy. Yes big-budget blockbuster ads will catch your audience’s attention, but in such a competitive landscape, the return doesn’t always justify the cost. Let’s take a look at why referral marketing is an economical gem for your business.
1. It’s Earned
When a customer recommends you to a friend, they do so out of choice. They don’t work for you, you don’t pay their salary, they are generating earned media for your brand essentially for free. Of course, offering a small incentive can encourage a customer to refer you, but this cost is minimal in comparison to a paid ad campaign. As long as your product is up to scratch, then your customers will become your influencers voluntarily, and with 83% of us trusting the recommendations of friends and family, their word is gold. Free gold.
2. It Targets Organically
Referral marketing accesses a look-a-like audience inherently without the need to pay through the nose to creep through the social media data of your potential customers. You’re not going to recommend a great baby buggy to your friends who don’t have kids, but you will talk about it with other parents at the next baby swim class. Getting access to such a custom audience through paid media can become expensive, referral marketing saves money by capitalizing on the organic relationship that your existing customers have with your potential new customers. The similarities in demographic mean they share a lot of qualities that make them the perfect match for your brand.
3. It Encourages Retention
Growth through acquisition is one thing, but strong, robust, sustainable growth comes from customer loyalty. Referred customers have a 35% higher retention rate, they tend to spend more and are generally more loyal due to hearing about your brand from a trustworthy source. When you get consistent repeat business from your existing customer base then you don’t have to spend so much on attracting the “one and done” customers who buy once and are never seen again.
As the most effective and cost-efficient form of marketing available, encouraging customer referrals is fast becoming an important part of the business marketing strategy. Like an economical car, it goes very far but needs very little, and in these challenging times, anything that will work hard and save money is good for business.
Your customers are your hardest working brand ambassadors, let’s get them talking!