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Why You Need a Referral Program

by Lindsey Winsemius - Posted 2 weeks ago


Have you been running ads and not getting the results you want? Need more customers but aren’t sure how to find them?

Let’s talk about one of the best ways to get more customers in today’s post-pandemic, highly digital world:

Referral Marketing


What is referral marketing?

Referral Marketing is leveraging referrals, such as implementing a referral program, to attract more people to your business and increase your sales. It uses the power of satisfied customers and incentives to turn your customers into brand advocates.

Why is a referral program so important to your business?

Marketing competition is fierce.

Vying for the limited attention spans of consumers amid the colossal noise of the digital world is a huge challenge.  For years, the amount of content on the Internet has grown as exponential rates, making the ability to reach potential customers more and more challenging.

And that was before the pandemic accelerated some of these trends.

Pandemic changes to referral marketing

Pandemic Referral Marketing

You’ve probably noticed, like we have, that one of the results of the Covid 19 pandemic was an increase in digital marketing competition. Many companies dramatically increased their digital marketing efforts when people were stuck at home. 

As a result, we’ve seen an increase in digital advertising costs. Content marketing, already an over-saturated medium, grew even more, particularly livestreaming.  

Marketing mediums are oversaturated.

Getting your brand noticed by customers requires creativity, time, and financial investment. Even mediums that were relatively innovative at the beginning of the pandemic, such as livestreaming, have become saturated with brands and individuals, desperately trying to connect with an increasingly distracted, cynical audience.

People are less trusting of traditional marketing.

Its hard to trust anything we see online these days. This is especially true for brand messages, where we all know they have the ulterior motive of convincing us to buy their product or service.

What do people trust?

Their friends and family.

Referrals are the most powerful marketing tool.

In the US, 49% of shoppers get introduced to brands or products/services by their family members and friends. (Miller, n.d.) That means nearly half of US shoppers are finding new businesses through referrals from people they trust. 

And we saw during the pandemic, when people are looking primarily online to buy, and feeling stressed out, they are going to turn even more to people they trust.

During the first wave of lockdowns, referrals grew by 425%. (King, 2021)

Consumers are already recommending products and services to their friends and family. Why not encourage them to do more by offering incentives through a referral program?

Instead of spending money on increasingly expensive ad space that many consumers won’t trust anyways, invest in a referral program.

Referral leads are more likely to become sales

Trust is a key factor in determining whether or not people are going to buy. 92% of consumers trust the referral or recommendations of people they know personally. (Chua, 2021) And the easiest way to build trust in your brand is by being recommended by a source that potential customers trust. If your best friend loves a product and tells you about it, you know they are a trustworthy source. 

A referral program encourages people to rave about your products, because it is mutually beneficial. They can recommend a product they love to their friends, and also receive a reward for it.

Consumers that see your products online may hesitate to make a purchase for many reasons. Perhaps they’re not sure of the quality of the product. They’re not sure about the shipping experience. Maybe a friend has recommended another brand. 

But if a customer comes to your website or sees your products because they’re told by a friend to check out your brand, the trust is already established. They don’t need to read reviews or worry about the experience. Someone they trust already told them what they needed to know.

Referred customers are more loyal.

Referred customers are 4 times more likely to refer your brand to others. (Ross) Paying it forward is a powerful motivator. Many customers that are happy with a brand that was referred to them, will want to pass that along to others. Encouraging referrals through a referral program is the first step in a chain reaction.

And by rewarding referrals, you’re going to keep customers thinking of your brand in a positive light, and keep them referring.

Referred customers have a 37% higher retention rate compared to other customers gained through other marketing channels. (Ross)

And every time a customer gets rewarded, either in cash or points they can spend, they will think of your brand. This will keep them loyal to your brand over others. They will also be reminded to buy that product or service they love.

How to get started with a referral program.

Now that we’ve talked about WHY you need a referral program, let’s go over how you can get started.

Referral program basics

Keep it simple


A successful referral program doesn’t have to be complicated. In fact, keeping it simple is important to success.

Don’t make customers jump through hoops. The easier you make it to refer someone and earn the promised reward, the more likely people are to participate. No complicated rewards, levels, bonuses, or anything like that. If they refer a new customer, they will receive the promised reward in a timely manner.

Offer your customers what they want.

The reward needs to be relevant, appealing to your audience, and rewarded in a timely manner to be effective.

Would your audience prefer cash rewards? Free products / services? Upgrades to their service? Any reward can be effective if it fits your audience. You know your audience best, so pick a reward they will appreciate and makes the most sense for your business model.

Reward both referrer and referee.

Sweeten the pot by offering something special for your new customer that was referred. You’ll make it much easier for your current customers to send more people to your business if you offer something to both. For example, Dropbox’s referral program offered upgraded storage space to both the referrer and the referee. 

This will give your customers a really good reason to start a conversation with others about your products or services. “Hey, would you like free upgraded storage? Try Dropbox using this referral code.” It is a no-brainer.

Take your referral program to the next level.

If you really want to exponentially grow sales, you need a structured referral program.

The right software, like TitanAffiliate, makes setting up and tracking referrals simple. It automates the process, so you can easily manage the program through your website.

Studies show structure referral programs will increase your sales. 86% of businesses with structured referral programs have experienced revenue growth within a two-year period. (Williams)

From coupon codes to a full affiliate program, TitanAffiliate can be tailored to fit the referral program your business needs to grow.

It doesn’t cost anything to talk with us, so contact us today for a free consult. 





Additional References

  1. Annex Cloud. (n.d.). Winning over millennials with referral marketingAnnex Cloud. Retrieved April 6, 2021.
  2. Borowski, C. (2017, October 30). B2B demand generation benchmark reportSoftware Advice. Retrieved April 1, 2021.
  3. Chua, D. (2021, March 10). Infographic: Why referral marketing is awesome [2021 update]ReferralCandy Blog. Retrieved April 1, 2021.
  4. Domingues, B. (n.d.). Why millennials are the best to refer your brand? Get The Referral. Retrieved April 6, 2021.
  5. Droesch, B. (2019, April 29). Smartphones are the overwhelming driver of social referralseMarketer. Retrieved April 1, 2021.
  6. Durfy, L. (2019, January 10). Employee advocacyPostBeyond. Retrieved April 1, 2021.
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  13. Jankowski, P. (n.d.). Quick: What are they saying about your brand? Forbes. Retrieved April 1, 2021.
  14. King, S. (2020, April 1). 5 industries booming in sales & referrals during the COVID-19 pandemicMention Me. Retrieved April 6, 2021.
  15. King, S. (2021, February 12). 5 industries (still) thriving in the coronavirus lockdownMention Me. Retrieved April 6, 2021.
  16. Lu, S. (2020, December 21). The five most effective marketing tactics during the COVID-19 pandemic according to business-to-business (B2B) technology vendors worldwideStatista. Retrieved April 1, 2021.
  17. Mallon, S. (June 6). Reaching millennials through referral marketingInvitebox. Retrieved April 6, 2021.
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  20. Miller, G. (n.d.). 42 referral marketing statistics to convince you to start a RAF programAnnex Cloud. Retrieved April 1, 2021.
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