Word of mouth has given good results in sales for centuries. People have always trusted a program product referred to them by those who tried it, and the chances of completing the purchase have always been much higher. This concept is not new only today; we have modern referral programs that are more important than companies realize. In addition to that, influencer marketing has given a special boost to referral marketing programs. If a person you admire and follow on Instagram likes a product, the chances are that you will google it and purchase it. These referral marketing statistics are here to help you understand this concept better. Read on.
Referral Marketing Statistics (Editor’s Choice)
- People are four times more likely to buy a product referred by a friend. (DCR Strategies)
- Referred customers have a 37% higher retention rate. (Invesp)
- 83% of customers are eager to refer something after a positive experience. (SaaSquatch)
- 31% of the overall traffic to websites originates from social media. (SaaSquatch)
- The referral marketing software market will reach $713.3 million by 2027. (Globe Newswire)
- 84% of B2B decision-makers begin the purchase process with a referral. (Influitive)
- 91% of B2B buyers make decisions based on word-of-mouth. (Referral Rock)
- The average conversion rate for B2B referrals is 11%. (Zuberance)
General Referral Marketing Stats
1. 85% of millennials trust referral advertising the most.
A recent survey of referral marketing scored high across the demographics as one of the most trusted forms of ads. Besides most millennials, 83% of both Gen Z and Gen X trust this advertising the most. Following that, 80% of boomers and 79% of silent gen trust referrals.
2. 28% of millennials won’t even try a product if their friends have not recommended it.
Refer-a-friend marketing improves brand credibility. For instance, almost one-third of all millennials won’t even try a product if their friends don’t approve of it. According to referral marketing statistics, when customers refer brands to their network of friends and family, it’s double effective. Word-of-mouth marketing influences 20-50% of all purchasing decisions.
3. Referred customers refer five times more than non-referred customers.
The consumer world is full of ads and brand placements. Hence, word of mouth is a more personalized way to navigate through them as a customer. Also, the referred customers are more likely to refer the brand than ones obtained via brand ads or product placements, referral stats show.
4. People are four times more likely to buy a product referred by a friend.
When friends recommend a brand to consumers, many referrals buy the product. Namely, 92% of people trust recommendations from friends and family way more than all other marketing forms. In the US, 49% of consumers named friends and family their top source of brand awareness.
5. The lifetime value for referral customers is 16% higher than for non-referrals.
According to referral marketing statistics, LTV for new referrals tends to go much higher than for non-referrals. The rise of referral marketing has a lot to do with the expansion of digital rates channels with which customers interact. Before, customers shared their thoughts on the purchase with their peers. Now the audience is much wider, thanks to digital channels.
6. Referred customers have a 37% higher retention rate.
Customer retention is among the top priorities for each company. Yet, not many organizations leverage the power of a referral program for this purpose. Namely, the average referral rate directly correlates with customer retention rates. Referral marketing statistics show that customers referred by other customers are more likely to be loyal to your brand and spend more money.
7. 81% of consumers will probably engage with brands that have loyalty programs.
Loyalty programs play an essential role in customer retention. For 75% of consumers, loyalty programs are part of their brand relationship. Around 44% of members are happy with how loyalty programs work. They can even boost referral rates.
8. Referred customers register 18% lower churn than the rest.
Referral stats show that customers coming through recommendation programs are more loyal to the brand. In many cases, the difference between referred and non-referred customers is much higher in terms of benefits for the business, such as customer retention.
9. Referred customers are 4.5 cents per day more profitable than others.
The difference in profits between customers who come through referrals and the rest is much higher across different demographics and times of acquisition. Also, the average contribution margin of non-referred customers is 30 cents per day, while those coming from referral programs have a 7.6 cents per day higher margin (25% increase). Referral marketing statistics indicate that this difference is the highest during the first year after the acquisition.
10. 83% of customers are eager to refer something after a positive experience.
Despite the willingness of most consumers to promote a product or a service after a positive experience, only 29% do it. However, that’s where the company’s referral program steps in. Selecting the right referral program software is really important. Only after adapting it to the company's needs can a brand start its successful referral marketing, statistics indicate.
11. Consumers are four times more likely to share content when CTA is integrated into their journey.
A well-thought-out referral journey should not rely on a hidden landing page in the depths of a company’s website. Instead, it should have a call to action integrated along the customer’s journey. This way, customers will share a product more often. Further, when CTA appears on the post-purchase page, customers will be 16 times more likely to click on it and share it.
12. 31% of the overall traffic to websites originates from social media.
Consumers are relying on social media a lot, looking for guidance in their shopping process. The referral percentage coming from this channel accounts for significant traffic to companies’ websites. Hence, as referral marketing statistics reveal, it’s important to integrate your referral programs with options to share on social media. However, companies need to educate consumers about referral programs and properly present the value of sharing the product with their friends on social media platforms.
13. Marketing teams manage referral programs in only 10% of companies.
Referrals work best when set in the domain of marketing teams. It’s mainly because they work directly with all the brand touchpoints and can devise campaigns to bring in more new customers than in other sections. Other than that, when marketing manages these programs, companies are three times more likely to achieve the revenue targets, referral marketing stats confirm.
14. Only 14% of consumers who visit a company via referral perform any kind of action.
The referral conversion rate for users who visit businesses through referral programs is not as high as it should be. However, the average quantity of invites generated through referring customers is 2.68.
15. In 2020, gifts and occasions were the business sector with the highest referral rate increase of 229%.
Among the top three business fields that registered an increase of referrals in 2020, home and garden took the second spot, with 83%. Beaty segment is third with 64%.
16. 50% of referral programs use dollar credit as a reward.
According to referral marketing statistics, most referral programs use dollar credits to incentivize customers. Besides that, 17.6% use gift cards, while 9.8% offer percent discounts to their customers.
17. The referral software market will reach $713.3 million by 2027.
With a CAGR of 15.5% until 2027, the referral software market is bound to experience strong growth. The main driver behind this growth is the increased use of referral marketing strategies by big brands. In fact, according to referral marketing statistics, several prominent brands and companies are leveraging referrals to attract more customers.
18. In Q1 2020, 42.6% of social media referrals happened on Facebook.
Facebook is the number one platform in terms of referral share. In 2020, it dominated other social networks, with 85% of brand followers more likely to refer a product or service to others. Further, 33% of its users confirmed they had been convinced to buy something thanks to a post from a friend.
B2B Referral Statistics
19. 84% of B2B decision-makers begin the purchase process with a referral.
B2B referral marketing is crucial to companies boosting their operations. Referrals convert faster but also have a higher customer lifecycle value. What most organizations lack in this respect is the formal process of referrals.
20. Referrals grew by 425% during the first lockdowns in 2020.
During the initial wave of lockdowns in 2020, companies relied on digital self-serve models to expand their customer base. With in-person meetings out of the question and the growth of video conferencing, it was inevitable for the shift to work to referrals’ advantage. In fact, B2B referral statistics show that 91% of buyers used this self-serve model even a year after the pandemic.
21. 87% of frontline staff agree that referrals are vital for successful B2B sales.
Besides frontline staff, 82% of sales leaders, followed by 78% of marketing experts, also confirmed this. The latest info suggests that all relevant B2B sales stakeholders agree that the referral conversion rate is higher than the average. Equally, 71% of frontline sales staff, followed by 75% of sales leaders and 70% of marketing experts, also share this belief.
22. 91% of B2B buyers make decisions based on word-of-mouth.
According to referral statistics, the majority of B2B buyers are influenced by word-of-mouth and recommendations. In fact, 88% of B2B decision-makers rely solely on them for information. Further, colleagues’ recommendations are the most likely factor to influence 61% of IT buyers’ decisions.
23. 89% of B2B marketers consider customer testimonials the most effective content marketing strategy.
Content marketing has been on the rise. Making customers happy drives revenue and produces testimonials that result in new sales. Referring customers are a valuable asset to a company. Customers' positive words motivate others, so most B2B marketers opt for testimonials and case studies (88%). However, B2B referral statistics show that it’s not easy to get customers to participate in a case study or leave a testimonial.
(Content Marketing Institute)
24. Only 30% of B2B companies have a referral program in place.
Despite its confirmed efficiency, most companies in the B2B segment don’t have a formal referral program. On the other hand, 55% of B2Bs with a program mark their sales efforts as highly effective, unlike 35% without one. Similarly, 51% B2Bs with referral programs claim good maintenance of sales pipelines, as opposed to 32% without one, B2B referral statistics show.
25. Referrals are 36 times more valuable than a simple call.
Referrals have not only more impact on swaying a customer than a cold call, but they're also four times more valuable than a web lead. Further, one offline word of mouth drives sales five times more than one paid ad, resulting in higher referral revenue. Finally, referral marketing generates up to five times higher conversion rates than other channels.
26. 61% of B2B purchasers claim third-party sites and recommendations play a more critical role in sales than conversations with company sales teams.
The enterprise sales process is starting to look more like consumer shopping, referral marketing statistics confirm. So most buyers tend to investigate more about a product from business partners, third-party websites, peers, or any other channels.
27. The average conversion rate for B2B referrals is 11%.
Marketo's study has shown that the referral conversion rate is the highest compared to other marketing channels. Partner-generated leads follow with 4.5%, inbound leads with 3.8%, and paid marketing with 3%. On the other end of the spectrum is the lowest converting channel — the email with 0.55%, referral marketing stats demonstrate.
28. 73% of B2B executives would rather work with sales experts referred to them by someone they know.
Similar to buyers, B2B executives are also more likely to trust recommendations and referrals. So aside from 73% who prefer to work with sales professionals recommended to them by someone they know, 76% prefer vendors recommended to them the same way.
29. 91% of customers are happy to give referrals.
Despite the eagerness of customers to share recommendations about a product, very few salespeople ask for them. Namely, only 11% do, referral stats reveal. However, considering the great power of referral marketing, it should become a more common thing.
(The Marketing Blender)
30. Over 45% of B2B technology buyers are between 25 and 34 years old.
Around 73% of millennials in B2B purchase technology for their companies, while 33% are sole decision-makers in the process. Having this in mind, most millennials use smartphones for research and decision-making. Plus, it’s important to know that most millennials rely on word-of-mouth before making a decision.
31. 60% of B2B buyers claim the mobile played a vital role in their latest purchase.
According to referral statistics, 70% of B2B buyers significantly boosted their mobile usage over the last couple of years. Moreover, 60% expect to continue with increased mobile use. Namely, mobile marketing can accelerate B2B purchase time by 20%.
32. 55% of B2B purchasers look for information on social media.
Online referral marketing is a major thing for B2B buyers. For instance, confirm that 72% of B2B buyers use SM to look for desired services and products. Therefore, social media act as an important factor in increasing company’s visibility and engagement with potential clients, referral marketing stats confirm.
33. For 92% of B2B marketers influence marketing is the most effective at reaching audiences.
Influences are one of the common forms of referral-based marketing. Namely, studies have confirmed that content created and shared by influencers has 11 times higher ROI than an average display ad in a year. However, it’s a long-term investment, and companies shouldn’t expect results within the first six months. As a matter of fact, 60 days is the minimum lead time for researching influencers and launching campaigns.
Healthcare Referral Marketing Statistics
34. 66% of internet users search online info on medical issues and diseases.
Although organic search is crucial for online visibility and contact with customers, so is referral content. One of the important referral marketing examples is healthcare. Patients will use Google to get answers prior to reaching out to healthcare providers. So it’s important to tap into that potential with good online referrals.
35. Referrals in healthcare have an average conversion rate of 7.2%.
Conversion referral rates are among the highest in healthcare compared to all other marketing channels. About 39.2% of conversions in this field occur over the phone since patients use them to search for detailed info on medical treatments, referral marketing statistics show.
36. 68% of word-of-mouth patients named online reviews the number one influence on doctor selection.
Online reviews have become vital for medical practices. Hence, this sector started engaging more inshow. Positive and negative reviews play a key role in a patient’s decision to choose a doctor.
37. 68% of consumers form an opinion based on reading one to six reviews.
Patients trust online reviews almost as much as a personal recommendation (84%). Further, 74% of consumers stated that positive reviews made them trust a practice even more.
The Bottom Line
Word of mouth is a simple and too effective tool to be thrown away easily. Nowadays, many industries are struggling to recover from COVID-19’s impact, so any purchase is important, referral marketing stats confirm. With referral marketing programs, businesses like beauty, fitness, food and drink, and gifts, are more likely to attract new customers. Hence, you must consider this if you want your company to prosper and boost its revenues.
Referral Marketing FAQ
Do referral programs work?
Customer referrals are indeed a solid and effective marketing tool. In fact, 83% of online respondents believe in referrals made by their family or friends. In these cases, the customer referral conversion rate is 3% higher than the industry’s average of 3.64%.
Why are referrals important?
According to referral marketing statistics, there are several reasons why referrals matter to businesses. First, when someone purchases something from a company prompted by a customer referral, they will probably spread the word if their experience is positive. In many cases, customer referrals go viral. Additionally, the cost to the company is non-existent.
What percentage of business comes from referrals?
92% of consumers trust referrals from those they know. As a result, 65% of new business opportunities come from recommendations and referrals. Further, 82% of small businesses said that most of their new business originates from referrals, referral stats show. These are particularly important for companies that don’t have significant marketing budgets.
How effective are customer referrals?
Aside from 37% higher retention rates, 81% of consumers prefer brands with reward programs. Further, customers obtained through a referral have an 18% lower churn rate than others. Finally, these customers bring 16% more in profits to the company.
What is the conversion rate of referrals?
This channel has the highest conversion rates of all acquisition methods. Namely, referrals have a 3.74% conversion rate, referral statistics suggest.
How much more likely are referrals to close?
Referral programs are important for faster sales closing. So B2B companies that utilize referrals have 70% higher conversion rates. Moreover, they register a 69% faster close time.
How is referral value calculated?
To calculate customer referral value, you must multiply the customer lifetime value by the number of referrals generated. Afterward, divide it by your company's referral costs. One of these values generates CRV (customer referral value). Unlike CLV, It requires a rigorous, comprehensive methodology to be calculated.
Are referred customers more loyal?
A recent study has confirmed that the customers coming from referrals are 16-24% more loyal on average. Hence, your brand must interact with customers through referral programs, referral marketing statistics confirm. It is so because the total number of referrals is directly proportional to the chances of conversion, confirm.
- DCR Strategies
- Globe Newswire
- Referral Rock
- Annex Cloud
- Finances Online
- Content Marketing Institute
- The Marketing Blender
- Blue Corona
- Ruler Analytics
- Patient Pop
- Transaction Agency
- Annex Cloud