What is Referral Marketing?

Have you ever heard someone share about how they managed to land a coveted deal with just one right introduction? Well, with referrals, that someone could be you.

A referral is the process of an existing customer giving you a recommendation of a company or product you can use. In simpler terms, it’s a word of mouth promotion.

If you find that your business has a lack of referrals, it might be a sign that you may not be reaching out to existing customers and offering them enough new services, products, or solutions.

To see how it can help you build your business, continue reading this article.

Why are Referrals important for my business?

As a business owner, it’s crucial to know that referrals can drive your business forward. They’re the most powerful way of marketing your product, service, or business — and they can turn you into an industry expert and industry leader.

Referrals also act as a fantastic customer acquisition tool. Customers are bound to trust people that they know more than the brands itself. This means with referrals, getting customers in would be slightly more painless.

In this article, we have compiled a list of 38 statistics to show you the power of referrals.

Word-of-mouth Awareness

Word-of-mouth can increase the effectiveness of marketing efforts by 54%.
Word-of-mouth recommendation plays an important role in 80% of all B2B and B2C deals.
74% of consumers identify word of mouth as a key influencer in their purchasing decisions.
91% of B2B referrals influence customers by word of mouth.
88% of potential customers of B2B businesses seek word of mouth assurance before making a financial decision whether or not to purchase from the business.
Word of mouth generates more than 2x the sales of paid advertising in some industries

Attracting New Business

84% of B2B decision-makers start the buying process with a referral.
Referrals account for about 65% of new deals of the company.
27% of sales reps claim they get more than 50% of new clients through referrals.
The use of referrals majorly influence the sales for over 55% of businesses.
86% of B2B companies with a referral program experience growth.
82% of SMB owners cite referrals as the primary source of new business.

Better Quality Leads

Referral leads convert 30% better than leads generated from other marketing channels
78% of B2B marketers say that referral programs generate either good or excellent leads.
54% say that referral programs have a lower cost-per-lead compared to other channels.
B2B referrals provide 30% more leads that generate revenue for the business as compared to other forms of marketing.
78% of the B2B referrals create viable customer leads for the business.
82% of B2B sales leaders believe that referrals generate the best leads.
Referrals account for 65% of companies’ new business.
69% of B2B frontline sales personnel, 70% of sales leaders, and 67% of marketers believe that referred leads close faster than other leads.
60% of marketers claim that referral marketing generates a high volume of leads.
Referrals are 36x more valuable than a cold call and 4x more valuable than a web lead.

High Conversion Rates

B2B companies with referrals report a 69% faster close time on sales.
B2B organizations with referrals encounter a 71% higher conversion rate.
According to B2B marketers, the average conversion rate for referrals is 11%.
Referrals produce the highest lead-to-sale conversion rates.

Highly Qualified Customers

Customers acquired through referrals have a 16% higher lifetime value
Customers referred by other customers have a 37% higher retention rate.
Every referred customer makes an average of 2.68 people
Referred customers can increase your profit margin by 25%.
Customers acquired through referrals spend 200% more than the average customer.
92% of consumers believe referrals from somebody they are acquainted with.
Consumers referred by a friend are 4x more likely to buy.
Referred customers are 18% more loyal than non-referred ones.
B2B buyers are 5 times more likely to engage when someone else introduces them to your company.
Referred customers have an 18% higher rate of becoming long term clients as compared to the non-referred ones.

Build Trusted Relationships

76% of B2B executives prefer to work with vendors who have been recommended by someone they know.
73% of B2B executives prefer to work with sales professionals who have been referred to them by someone they know.