When you think about it, the act of telling someone about a great experience whether a life experience, job experience or a purchase experience is powerful. People love to hear about good experiences because they want to experience it themselves. We all have, probably regularly, had someone ask “Hey, do you know a good electrician, handyman or painter?” That’s because we trust that people will steer us in the right direction while also helping us save time and money. For businesses there are, obviously, different ways of getting in front of a potential new customer, but referrals just speak to us differently.
Here are some statistics on referrals:
- 92% of consumers trust referrals from people they know.
- Friends’ social media posts influence the purchase decisions of 83% of US online shoppers.
- Consumers referred by a friend are 4X four times more likely to buy.
- When referred by other customers, people have a 37% higher retention rate.
- B2B companies with referrals experience a 70% higher conversion rate.
- Referred customers’ lifetime value (LTV) is 18% higher than that of non-referred customers.
- Referral leads have a 30% higher conversion rate than leads from any other channel.
- On average, it costs 7 times more to acquire a new customer than it does to do business with an existing customer.
Sources: Adweek, Annex Cloud, Alignable, Saasquatch, Entrepreneur, Forbes, Wharton University, Think with Google, Harvard Business Review, Extole, Campaign Monitor, Extole, Influitive, Hine Marketing and Entrepreneur Magazine
What’s interesting is that the simple act of referral doesn’t require a fancy ad campaign, print ads, radio spots or billboards because referrals are something we seek out. When we are looking to complete a project such as having a ceiling fan installed or have a basement remodeled, we always go to friends and family first to seek out a referral before we undertake the arduous take of searching for the right people to do the job. Now that you have read this blog article you will probably consciously realize how referrals are so ubiquitous in society. Referrals are what small businesses rely upon to acquire new customers every single day so keep recommending your friends and family to the estimated 31.7 million small businesses in the US.
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