Every business needs to attract new customers. Doing so, though, can be time-consuming, challenging, and, at times, expensive.
If you want to gain more customers quickly, enhance brand loyalty, and increase sales, you should implement a referral marketing program. Referral marketing can help you regularly bring in new customers while boosting repeat purchases from existing customers.
Entrepreneur Scott Crockett, CEO of Everest Business Funding, details some of the biggest perks of referral marketing for your business.
Perk #1. You Will Get More People
Perhaps the biggest hurdle of marketing is reaching the right people who will become future customers. Even with highly targeted digital marketing campaigns, it can be challenging to convince people to make a purchase.
Referral marketing harnesses the power of your current loyal customers to spread the word for you. It’s word-of-mouth advertising at its best.
Your loyal customers likely know at least one other person who might love your products or services. A referral marketing program will incentivize your customers to market your business on your behalf so you can expand your customer base.
Perk #2. You Will Attract Better Customers
The simple truth is that some customers are more valuable than others. Those who make repeat purchases and become true “fans” of your company are the ones you want to attract the most.
Customers referred to your company by someone they know are proven to be these “better” customers. The main reason for this is they come into their relationship with you having a positive view of your company. Their family member, friend, or colleague wouldn’t have referred them to you with negative words.
Studies have found that, on average, customers referred to a company hold a lifetime value that’s 25% higher than other customers.
Perk #3. You Will Increase Customer Retention
When you reward customers, you are building even more loyalty and trust within them. Referral marketing allows you to reach new potential customers while at the same time boosting how your current customers feel about you.
Customers who participate in a referral program are more likely to continue purchasing from your company. It’s widely known that retaining customers is much more cost-effective than attracting new ones. So, any program you can institute to keep your current customers coming back for more is immensely valuable.
Perk #4. You Will Get Excellent ROI
All marketing has an associated cost. Referral marketing’s worth comes from the rewards you give the people who suggest your company to someone else. This might be a discount on future purchases, special perks, or gifts.
As Scott Crockett explains, though, the Return on Investment (ROI) is often considerably higher than that of other forms of marketing. A big reason is that the cost for this type of marketing is significantly lower than that of different forms.
Whatever reward you end up giving to customers for referrals will pale in cost compared to the amount you might spend on a digital advertising campaign, for example.
About Scott Crockett
Scott Crockett is the founder and CEO of Everest Business Funding. He is a seasoned professional with 20 years of experience in the finance industry. Mr. Crockett’s track record includes raising more than $250 million in capital and creating thousands of jobs. Scott has founded, built, and managed several finance companies in the consumer and commercial finance sectors.