7 major Advantages of Referral program

Posted by Rashmi Singh on

When you hear the words ‘Game of Thrones’ do you remember where did you hear about it first? I bet it was a friend who could not stop raving about this great show on HBO. How he would tell you that he has never seen anything as good as this. His nonstop blabber about Game of Thrones might have either made you cut off from him or pushed you to start watching it. The chances of the latter are more. You liked the show or not is a different story. There are no statistics available online but I can guarantee that more than 50 per cent of Game of Thrones’ viewers started watching the show because someone referred the show to them. The whole point of this story is that referrals do work.


Why referrals?

Customers in general love to share photos, posts, memes, jokes within their social network. If they like anything they want to pass it on to their close friends via WhatsApp, Facebook, Twitter etc. Same goes for online shopping. If customers buy something online and happen to like it, they will share it on their social media feeds. That will tempt other people to inquire about it.

Therefore referrals are the easiest and cheapest way to get your existing customers to market your product to new customers. Anytime you see a youtube video reviewing products you can check that such videos always provide you with referral codes. The reason is that this not only helps the one advertising the product but also the one buying the product through that referral code. Referred customers are, on average, 4.5 cents per day more profitable than other customers.

 In the words of Mark Zuckerberg


‘’People influence people. Nothing influences people more than a recommendation from a trusted friend. A trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising.’’


Advantages of referrals:

  • People trust referrals: Research suggests that people are 4 times more likely to buy a product if is referred to them by a friend or a relative. Referrals not only go a long way they establish credibility which no amount of branding can. To quote Erik Qualman ‘’Consumers are taking ownership of brands, and their referral power is priceless.’’
  • Benefits all the participants - Referral is probably the only marketing tool that benefits the merchant, referrer and the referee.
  • Referred customers are more loyal: Studies suggest that customers who come via referral are more likely to stay as compared to those who are acquired through other channels
  • Word of Mouth Marketing: Referral is basically word of mouth marketing with incentives for both the parties involved.
  • Helps track data: Online referrals involve a special code that is generated for the referrer. One customer might get you 30 new customers with word of mouth advertising but without a referral code, there is no way of finding out. With referrals, you can find out which customer has been a valuable asset and reward them for the same. You can also find out which product is being referred the most and which product is being purchased the most via referrals 
  • Customize referrals: Online referrals also give you the option to customize the discounts or rewards on them. If there is a product you want to advertise you can offer more credits/rewards on it.
  • Easy to manage: Online marketing campaigns require a lot of effort in terms of spending, monitoring social media platforms. In referral campaigns, half of the job is done by the referrer and referee.

Referral programs are a must for customer acquisition. They are also the cheapest and quickest way to get new customers to buy a product. When it comes to offline shopping only the referee gets a discount when he/she mentions a specific reference. But in online shopping merchants have the opportunity to reward both parties.