If you are a business owner, you are probably often thinking of ways to engage with new customers. We know about all of the traditional ways to reach out to new customers and what the ROI is for each method. Some advertising methods are more effective and have a higher ROI than others but it should not be surprising to know that Customer Referrals are the most affordable and have the highest ROI of all advertising methods. Customer referrals have been around as long as business itself. Think about what you do when you have a great or even bad customer experience, you tend to tell others. The Small Business Administration states that there are approximately 31.7 million Small Businesses in the U.S. Various marketing studies and survey’s estimate that approximately 92% of those businesses rely on referrals for new business.
I wanted to share some amazing industry statistics concerning referral marketing and how beneficial it can be very beneficial to a small business owner (Part 1 of 2):
- 92% of consumers trust referrals from people they know.
- Customers referred by other customers have a 37% higher retention rate.
- 65% of new business opportunities come from referrals and recommendations.
- 82% of small businesses claim referrals as their main source of new business.
- 91% of people in the US would share exclusive offers and good deals with friends and family.
- 83% of consumers say they are willing to refer your business after a positive experience.
- Referred customers’ lifetime value is 16% higher than non-referred customers.
- Consumers are four (4X) times more likely to purchase or engage a business when referred by a friend.
- Referred customers can increase your profit margin by 25%.
- Referred customers convert at a rate that’s 30% higher than leads generated from other marketing channels.
What’s fascinating is that many small business owners do not have a formal customer referral program. It could be due to a lack of time, resources or expertise. There are tons of software companies that can sell you software to implement on your existing business website but what if your company doesn’t have a website or you don’t have the time or expertise on how to install and run? What is also fascinating is the amount of potential lost business due to not giving your customers a way to refer to you other than passing along a phone number. Remember the WIIFM blog? It talks about “What’s In It For Me?” When you offer your current customers a reward for sharing their valuable contacts, customers are much more likely to refer to your business if they consistently have a great customer experience.
Why does all of this matter? Customer Acquisition is the #2 pain point for small business owners in the U.S., only behind lack of cash flow. That point proves that customer referrals can make or break your business. Small business owners need a easy to use and intuitive app-based marketing tool that allows them to offer powerful referral marketing campaigns without the time, expertise or large investment commitment. The foundation of any business is to solve a must solve pain point for their customers. I’ve created Dealium to help solve the customer acquisition pain point for my customers. My customers will be able to use a handy and very informative RROI (Referral Return on Investment) Calculator on the Dealium website and app that will be able to estimate what the costs and rewards will be of their desired customer referral programs.
Dealium is a SaaS B2B Referral Marketing Technology Platform that directly connects small businesses with new customers through our proprietary algorithm-based referral code sharing technology incorporated with the customer’s SMS, Email & Social Media. Dealium creates brand awareness, brand exposure & new customer acquisition opportunities for our business subscribers while allowing their customers to save time, money & oftentimes frustration searching for reputable local small businesses.
Look for Part 2 of the fascinating statistics on customer referrals in our next blog.
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