The Value of Referral Marketing

“People influence people, nothing influences people more than a recommendation from a trusted friend”

– Mark Zuckerberg, Facebook.

Many companies spend huge amounts of money on Marketing & Advertising while ignoring simple, influential and cost-effective methods like referral marketing. We live in a world where brands are no longer what we tell the consumers they are, but what the consumers tell each other about brands.

The worth of word of mouth

One might wonder why, after spending so much budget on marketing and advertising their products/services, they are not getting the desired results they had hoped for. A referral is a higher quality lead considering all stages of the purchase funnel: receiving a referral is less expensive and less time consuming and therefore much more valuable. Referrals come from your partners, customers and influencers that you do business with. They know your services and are more likely to recommend you whenever the opportunity presents itself.

More often than not, we think referrals do not play a huge part in contributing to sales and overall growth of the company, but according to research, 83% of satisfied customers are willing to refer your product/service but they actually do not get the appropriate opportunity to do so. Only 29% of the 83% actually end up referring or telling someone else about your service. Incentivising and simplifying the entire referral process might therefore actually help things along, because 80% of business growth has been attributed to “word of mouth” advertising.

It has been proven that people pay 2x more attention to their friend’s recommendations, compared to other sources. People trust the opinion of those they have a relationship with. To double check or validate word of mouth referrals, it is believed that we turn to testimonials, social media or any other info sources (like Google). This proves that people are not paying as much attention to what you are saying about your own brand, but in fact what others are saying about your brand.



According to Referral Candy, word of mouth:

  • is very influential and affects 20 to 50% of all purchasing decisions: consumers rely 2 to 10 times more on word of mouth than paid advertising;
  • is effective: generates more than twice the sales compared to paid advertising, is two times more effective than radio advertisements, four times more than personal selling, seven times more than print advertisements (Katz and Lazarsfeld, 1955);
  • influences every step of the customer journey/purchase funnel;
  • incentivising word of mouth referrals pays off;
  • is more disruptive to consumer decisions: can prompt a consumer to consider a brand or product in a way that incremental advertising spending simply cannot;
  • has far-reaching momentum;
  • has variable effects (up to 50x more): a consumer is significantly more likely to buy a product as a result of a recommendation made by a family member than by a stranger

The question is, do you know how to capture this opportunity for the benefit of your own business?

How to get referrals?

These days, people have more conversations through digital mediums, this is where you need to be seen and heard for your company to generate additional business.

Manage your social media: it is not easy and it does not happen overnight. You need to build and grow your social media following through relevant and engaging content. Managing your social media is now a full-time function, not something you leave to the office receptionist to handle somewhere close to the end of each month. Do you know which platform is more relevant for your business, how do you get referrals through social media and how do you manage everything without losing sight of your core business.

Publish case studies, testimonials and reviews: these days customers say whatever they want to say about your brand. It is your duty to manage it, as it affects your brand image and ultimately your sales. Do you know the importance of your main digital source of information (your website)? Is your content relevant, and do you have visible reviews and testimonials? Reviews, testimonials or case studies on your website either refer or defers a potential customer.

Make your clients and partners public if there are no contractual agreements stopping you from doing so, this will build confidence in the minds of potential customers.

Feature your clients in your marketing content: this builds credibility.

EB Consulting

At EB Consulting we can assist you with your content marketing needs: from your digital brand strategy to your social media, and right through to online copy and content writing.

Learn more about what we do.


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