What You Didn’t Know About Referral Marketing (with Statistics)
There are many types of marketing methods out in the professional world, but how do you know which method to focus on? Is it direct marketing? Internet marketing? Referral?
There is an innumerable amount of marketing methods and strategies (many are compatible), but this article is going to focus on how referral marketing can aid your business, and why a new focus on referrals can be beneficial to the growth of your business.
You have the opportunity to capitalize on referral marketing, and here’s why you should do it.
Why Referral Marketing?
Here’s a powerful statistic for you: according to the New York Times, 65% of new business comes from referrals.
Based on this information, it’s safe to assume that the majority of your new business isn’t going to come from the efforts of your advertising department but rather the mouths of your current and returning customers. And they aren’t even being paid to do it!
Furthermore, according to Nielsen, an information-gathering company, you are 4 times more likely to buy when referred by a friend.
I repeat: People are four times more likely to buy when being referred from a friend. Not a salesperson, not a CEO, and not from some stranger from Minnesota.
Think about it though. If you were in the market looking to buy a particular product or service and your friend recommended you to a specific company, wouldn’t you take them seriously?
We all try restaurants based on our family or friend’s experience, and watch movies that they can’t stop talking about. You probably wouldn’t search any further because your friend is a trusted source.
What This Means For You
This means that there is an already important component of referrals in your company, whether or not you focused your efforts on referrals. Referrals have been around for ages; many people, by now, are familiar with the definition of a referral.
Instead of working on installing new marketing methods, why not improve areas of your marketing plan that were inherent in your company? No matter how big or small a company is, every company is going to have a chance if their customers are providing a referral to someone else.
Word of Mouth Marketing
Referrals include a marketing tool called word of mouth marketing. Historically it was used in person, but with the internet age among us word of mouth can be passed along on and offline.
Have you ever been caught taking about a brand or a product? You have just participated in word of mouth marketing. Why not get people talking about you and your company? It creates buzz, awareness and leaves customers feeling familiar with your company.
WOMMA, the Word of Mouth Marketing Association, tracks online and offline buzz and focuses on how businesses can use word of mouth marketing to specifically aid in business ventures. Word of mouth is an important tool in any business, and 90% of small businesses considered word of mouth marketing very important as one of their marketing tools. Here are some other fascinating facts shared in WOMMA’s infographic:
It’s all here. People can’t stop using word of mouth! 9 out of 10 people mention brand names at least 60 times a week in day to day conversation, no matter if it’s online or in person, and 66% of that conversation is positive feedback.
Here’s the one of the biggest fact of them all- 59% of people say that a driving force in their purchase decision is based on… word of mouth.
Bringing It Back to You
At the end of the day, it’s all about your company. What can you do to increase your referrals? What can you do to increase the buzz about your company, get people to use word of mouth marketing?
Set up a referral system where customers know they will be rewarded. It acts as incentive to refer, and increases the awareness of referrals in general. The population would never have voted in American Idol if they didn’t know they could and by what method. The same principle applies for referrals.
Having a referral system set up can get you proper referrals that will generate business to your company. Now, setting up a working, credible referral system isn’t the easiest mission to arrange.
Luckily, you don’t have to do it alone. VouchFor provides an effortless system to increase referrals for your company, all statistically proven and easily traceable for your convenience- you’ll be able to see the results for yourself on how well referral marketing went for you.
Get started right away on improving your referral system. Check out our features and see what would work best for your company’s needs.
We’d love to hear from you. How has word of mouth helped grow your business?
- Posted 16 January, 2012