42 Referral Marketing Statistics That Will Make You Want to Start an RAF Program Tomorrow

Referral programs are a bigger deal than some companies may realize. If you’re not yet leveraging the customer acquisition power of word-of mouth-marketing, here are some referral marketing statistics that will change your mind and make you want to implement a refer a friend program tomorrow.

Every day, billions of recommendations happen just because someone likes a product or a service and tells someone, who then tells someone else, who in turn tells someone else—it’s human nature to talk about things we like.

Chances are your satisfied customers are talking about your brand right now, but are you giving their advocacy the attention it deserves? These referral marketing statistics will help you evaluate where you stand.

To discover how to implement a truly optimized refer a friend program, check out our Refer a Friend capabilities, then contact one of our experts.

Referral marketing statistics:

The power of word-of-mouth

• The Word-of-Mouth Marketing Association reports that every day in the U.S., there are approximately 2.4 billion brand-related conversations. People frequently talk about the products and services they enjoy and the companies who offer them.
• 92% of consumers trust referrals from people they know – Nielsen
• People are 4X more likely to buy when referred by a friend – Nielsen
• 77% of consumers are more likely to buy a new product when learning about it from friends or family. – Nielsen
• 81% of U.S. online consumers’ purchase decisions are influenced by their friends’ social media posts versus 78% who are influenced by the posts of the brands they follow on social media. – Market Force
• 43% of consumers are more likely to buy a new product when learning about it from friends on social media. – Nielsen
• 85% of fans of brands on Facebook recommend brands to others. – Syncapse
• 84% of consumers say they either completely or somewhat trust recommendations from family, colleagues and friends about products. These recommendations make the information source rank highest for trustworthiness. – Nielsen
• Customers are fast turning to their trusted social media platform for guidance. According to Shareaholic, social media accounted for nearly 31% of new business.
• HubSpot states that nearly 78% of consumers admit being influenced by the posts of the favorite brands they follow on social media to buy a product.
• 39% of customers will prefer giving feedback about your business on social media. –JobsinMarketing

The buzz that builds brands

• 74% of consumers identify word-of-mouth as a key influencer in their purchasing decision. – Ogilvy/Google/TNS
• 1 offline word of mouth impression drives sales at least 5x more than 1 paid, and much more (as much as 100X more) for higher-consideration categories. – WOMMA
• Word of mouth is the primary factor behind 20% to 50% of all purchasing decisions. – McKinsey & Company
• 49% of U.S. consumers say friends and family are their top sources of brand awareness.
• 71% of consumers are more likely to make a purchase based on social media referrals.
• On social media, 58% of consumers share their positive experiences with a company and ask family, colleagues, and friends for their opinions about brands. – SDL
• Consumers rely on word-of-mouth up to 10X more than paid media. – Boston Consulting Group
• 55% of consumers share their purchases socially on Facebook, Twitter, Pinterest and other social sites.
• 59% of Pinterest users have purchased an item they saw on the site, 33% of Facebook users have purchased an item they saw on their news feed or a friend’s wall.
• Up to 54% improvement in marketing effectiveness has been demonstrated through word-of-mouth. – MarketShare

The role of incentives

• More than 50% of people are likely to give a referral if offered a direct incentive, social recognition or access to an exclusive loyalty program. – Software Advice
• 39% of respondents say monetary or material incentives such as discounts, free swag or gift cards greatly increase their chances of referring to a brand. – Software Advice
• 70% of email readers open emails from a brand or company in search of a deal, discount or coupon. – Campaign Monitor
• 65% of consumers say that receiving rewards impacts their frequency of purchase.
• 79% of people say their primary reason for ‘liking’ a company’s Facebook page is to get discounts. –  Market Force
• 64% of consumers say that rewards impact how much they spend.
• 69% of consumers say that they’re more likely to try a brand if it gives rewards.

The results

• Referral marketing generates 3-5X higher conversion rates than any other channel.
• Customer referral programs can bring an average of 20,000 new email addresses per month – Annex Cloud
• Referred customers have a 16% higher lifetime value compared to non-referred ones. – Harvard Business Review
• When researchers analyzed specific case studies on referral software, they identified a 10% increase in WOM (offline and online), translating into a 0.2–1.5% sales lift. –  MarketShare/ Keller Fay Group
• Referred customers bring you a 25% higher profit margin.
• A referred customer is 18% more loyal than a customer acquired by other means.
• Referred customers are 4X more likely to refer more customers to your brand.
• Customers referred by other customers have a 37% higher customer retention rate.
• Customer acquisitions through referrals spend 200% more than the average customer.
• Robust advocacy-marketing programs are achieving significant revenue gains—10 to 20% for established products and up to 100% for new products.
• One of Annex Cloud’s referral marketing clients saw a 9.7% increase in conversion. – Annex Cloud
• Another one of Annex Cloud’s clients saw an average of $100,000 in monthly revenue just from referral orders – Annex Cloud
  

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Want to make sure you’re on top of your customer acquisition game? Launching or optimizing your own referral marketing program is a great next step? Get in touch with one of our experts today or request a demo of our referral program software.