importance of referral program

If You Don’t Learn The Importance Of A Referral Program Now, You’ll Regret It Later

Looking to drive more sales towards your business? Here’s why the importance of a referral program is vital

Today, business owners are continually struggling with which marketing strategy to tackle next. But as many know, many marketing habits can be pricey and useful for only a short period. So, how do you attract new customers without having to change your strategy every few months? YOUR CUSTOMERS are the answer.

Have you ever thought to yourself just how vital your existing customers are? Did you know that acquiring a new customer is six to seven times more expensive than retaining a current customer? It’s much more cost-effective to market your existing customers than to find new ones. Ahh, now I have your attention!

While your marketing plan may be working now, that business model will not be sustainable forever. Luckily, I’m here to help.

The key to expanding is growing your customer base. What I’m saying is eventually you’ll need to run new marketing campaigns to attract new customers, but when you’re always creating and executing new campaigns the work is extremely time-consuming for something that could only possibly work.

This leads us to a powerful marketing technique -a referral program. It is, and continues to be, one of the most effective ways to generate new business and acquire new customers for big purchases. It involves naturally occurring recommendations along with current targeted efforts.

looking for the importance of a referral program

Here’s why you should know the importance of a referral program

·        85% of consumers trust online reviews as much as personal recommendations.

·        88% of people trust online reviews written by other consumers as much as they trust recommendations from personal contacts.

·        Positive reviews help 73% of consumers trust a local business more.

·        30% of people believe that responding to reviews is a factor when judging local companies.

·        81% of consumers’ online purchase decisions are influenced by their friends’ social media posts.

Also, I bet you didn’t know that 92% of consumers trust recommendations from friends and family more than any other form of marketing? While only 33% trust online ads? And the best part is these referrals and recommendations are coming from YOUR satisfied customers, people that have learned to trust you and the products or services that you offer.

This is why you need to implement customer acquisition strategies that won’t break the bank.

Remember when I said you should really appreciate the current customers you have? Well, you should, and this is why – a customer referral program is one of the best ways to implement customer acquisition strategies without using your entire marketing budget.

Your campaigns will leverage your existing customers to bring in new business. All you have to do is set up the program, the rest of it will do the work itself.

Now, don’t get ahead of yourself though, it’s not as easy as it sounds. The hard part is figuring out which referral program works best for you, and which program gets your customers excited enough to participate.

Whether this is your first time around doing this, or if you are trying to improve your current referral program I’m here to help you get some sales, and here’s how –

Your Current Customers Come First

looking for the importance of a referral program in a shopping cart

First, and foremost before you get started on anything, you need to make sure your existing customers are taken care of. This strategy will not work if your current customers aren’t satisfied. 89% of businesses said customer experience is a key factor for customer retention and loyalty.

Customer service is key; it should be the top priority for any organization. As a business owner you, as well as your employees should know how important customer service is to your success.

According to research, 68% of customers say they left a company because they believe the brand didn’t care about them. Don’t let this happen to you! Put your customers as your top priority, let them know you care.

Happy customers will benefit you tremendously, and with happy customers come great referrals. More than 80% of customers say they are willing to make referrals if they are satisfied by the company’s customer service, but unfortunately, only a smaller percentage actually does give those referrals which leads us to more tips about your referral program below.

Offer Referral Incentives

cat meme asking for the importance of referral program

Incentives, incentives, incentives. I can’t say it enough. People love free stuff, discounts, you name it. All for one referral or review? It somehow becomes a lot easier for them then…trust me.

You have to put yourself in their position for a minute. Sure you have your favorite brands, and it might come up now and then as to why they should shop there, but would you ever actually spend a ton of your time trying to bring them new business? Didn’t think so.

However, what if your favorite brand offered credit, discounts or a reward for this approach? Would that change your mind? Most likely.

Put yourself on the other side, if you’re a new customer and someone referred you to this company would you try them out if an incentive was offered? Most likely.

The most successful customer referral programs offer incentives to both current as well as new customers. It’s a win-win for all.

Be sure to consider your ROI

Does this make sense from a financial standpoint? If you’re spending money without getting a return on your investment, this apparently isn’t working. However, the great thing about referral programs is that unlike other campaigns, they cost a lot less.

Be smart. Don’t put a ton of time and money into other campaigns that will last for a short period…if they even last at all. Instead, work hard on your referral program, and find those incentives that will encourage sales without depriving you of your profits.

Take a look at Uber. Uber offers free rides. Send your friends to Uber and they’ll receive free rides up to $20 if they are new customers.

Do your research, know your margins and you will crush your ROI. If it works, you can make adjustments to translate higher profits for your business.

It Should Only Grow From Here

showing the importance of a referral program in growth

Once you’ve got these new customers to buy something from you, you want to keep them around.

You were able to get referrals and offer incentives to your existing customers, so why not add a bunch more to your list?

You shouldn’t waste any time at all. Remember why they are here, through a recommendation or referral. They already have a positive outlook of your brand, so let’s keep it that way!

So what’s next after they have made their first purchase after you offered an incentive and someone referred you to them?

They key is to make sure by staying and being loyal to you it ALSO benefits THEM. Remember, prioritize your customers before anything? They have purchased something from you, so they are now YOUR customers.

It’s crazy to think how successful a customer referral program can be. Think about how successful you would be if each new customer referred just one new customer.

And then imagine all of those new customers also referred a friend. Can you see how quickly this could turn into a sales-driving formula for your company?


Businesses rely on their customers, but they thrive off of NEW customers. But, in order to receive new customers, you have to spoil the current ones that you have this is why you should know the importance of a referral program. With high average acquisition costs, you need to focus on cost-effective marketing campaigns, and leveraging your existing customers is doing just that. If you’re a marketer, I highly recommend reading more about this topic by reading a few of these books below. 

Generating Business Referrals Without Asking: A Simple Five Step Plan to a Referral Explosion

The Referral Engine: Teaching Your Business to Market Itself

The Connector’s Way: A Story About Building Business One Relationship at a Time

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David Fallarme

Learn more about the importance of a referral program with the following article 

The Unbelievably Easy Way A Customer Referral Program Can 10x Your Business