Referral Marketing: What is it + Why is it Important?


What is Referral Marketing?

Referral marketing taps into the reach of your customers, partners, employees to incentivize them to advocate for your brand by referring their friends, family and professional network. By offering attractive rewards and a variety of automated and scalable referral sharing methods, you open the doors up to new potential customers by extending the trust that current customers, partners and employees have for your brand to include their personal and professional network.

Customers, partners, and employees like to feel that these advocacy efforts are appreciated. By providing rewards for referrals it increases engagement and participation, making it the perfect recipe for getting them to refer your brand. Referrals tend to be a much more targeted initiative because those referring know their audience well, which in return allows your brand message to spread more effectively.

Bottom line – referral marketing has the potential to be your most powerful marketing tool when implemented effectively.

Why should I care?

Don’t believe referral marketing can be applied to your business? Think again. Here are some numbers that will have your customers referring away:

  • Prospects are 400% more likely to buy a product recommended by someone they know. (Source: Nielsen)
  • 53% of B2B companies are planning to invest in technology to support customer advocacy efforts in the next 12 months. This is a critical area where technology helps companies get the scale they need to extend the essential contribution of their customer advocates in the market. (Source: SiriusDecisions)
  • 74% of consumers identify word-of- mouth as a key influencer in their purchasing decision. (Source: Ogilvy, Google, and TNS)
  • A referred customer is 18% more loyal than a customer acquired through a different method, spends 13.2% more than a non-referred customer and has a 16% higher lifetime value. (Source: Harvard Business Review)
  • Over 50% of people are likely to give a referral if offered a direct incentive, social recognition, or access to an exclusive loyalty program. (Source: The B2B Marketing Mentor)
  • People trust their friend, family and professional network’s opinions. 82% of U.S. consumers trust recommendations from people they know. (Source: Nielsen)
  • Leads generated from referrals convert 4X better than marketing leads. (Source: emarketer)

Okay, this sounds good. But how do I implement it?

These figures demonstrate referral marketing’s potential to deliver powerful results when implemented effectively. From a B2C referral program that has customers referring friends and family for increased loyalty, to a B2B referral program that empowers customers and partners to increase quality lead generation and ROI, using referral marketing programs are a great way to add a powerful marketing initiative to your business.

Another key factor in any successful referral program is the ability to deliver incentives immediately. By automating and scaling referrals to avoid breakage in attribution and distribution of rewards to referring customers, partners, and employees it increases engagement and participation in referral marketing programs. With digitally automated and instantaneous rewards, customers have the satisfaction of receiving digital rewards in real time.

And while we have seen examples of companies who successfully made their own referral program, here are some business that have excelled at developing solid generalized advocacy, referral, and review platforms that work: Ambassador, Amplifinity, Extole, Friendbuy, InfluitiveReferral Rock and Referral SaaSquatch.


Written by Kasia McCormick

Kasia and Zeus squareKasia may be a fresh face on the Tango Card marketing team but her background in hospitality and PR make her the total package when it comes to telling Tango Card customers’ stories and organizing our customer advocate program. She also blends perfectly on the marketing team, where the two main themes are German Shepherds and tequila.

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