There is no better marketing strategy than referral marketing, in which one of your existing customers will admire you in front of your friends. Referral marketing is one of the best ways to gain potential customers. Research shows that referrals can not only expand your customer base. These word-of-mouth recommendations are more reliable than any other form of advertising. A strong referral marketing campaign can strengthen relationships with existing customers, attract new potential customers, and grow your business.

What is Referral Marketing & How top brands use referral marketing?

What is referral marketing?

What is referral marketing?
Image source: Oberlo

Referral marketing uses word of mouth and word of mouth to develop the company’s customer base through the existing customer network. Help spread your brand. In other words, referral marketing will turn your current customers into brand advocates.

For example, recommendations can be from Instagram influencers, Reddit user posts on forum threads or word of mouth, or phone calls pointed out by my gaming friends.

Referral Channels

Referral Channels

Referral channels now do not stop at buddies and family. Since the upward push of social media, social influencers act as a valid sort of referral channel, too, so as long as the receiver trusts them, it counts.

Here are the maximum not unusual place referral channels:

  •     Friends/Family
  •     News Publications   
  •     Customer Reviews
  •     Testimonials/Case Studies
  •     Opinions Posted Online (Forums)
  •     Influencer Opinions (Bloggers, Social Media Influencers)

Significance of Referral Marketing

Significance of Referral Marketing

The use of referral marketing attracts new customers verbally. Compared with your other marketing strategies, potential customers are more likely to accept the words of their friends. 60% of marketers said that referral marketing could bring a large number of potential customers—54%. For example, suppose that the cost of each lead for recommendation marketing is low. If you have good products and services, you may have satisfied customers recommended to your business by others. When we have a good experience, we will intuitively tell all our friends the most reliable and trustworthy forms of advertising, which have been proven to come from your customers, friends, and relatives.

So basically,

Customers tell their friends how good your product is. The cost is absolutely nothing and nothing. According to Nielsen, 92% of consumers trust recommendations from friends. McKinsey believes that the recommendation affects 50% of all purchasing decisions. Referral marketing brings more than twice the revenue from paid advertising. In addition, featured customers are more loyal and generate higher profits.



We may have some biases, but the benefits of referral marketing are incredible. Although it will take some time, it is worth waiting to build relationships and build trust in the customer base. Here are some of our favorite advantages:

WORD OF MOUTH: Referral marketing provides scalable word-of-mouth. With an effective reward system, you can turn word-of-mouth marketing into a channel and increase brand awareness.

 INCREASE IN FOCUSED AUDIENCE:  In most cases, a company is founded because someone is talking about a new brand or product they have discovered. This puts the company in front of targeted, high-quality potential customers, which is the goal of most marketers. And, because these new potential customers can get to know you from trusted sources, they are more likely to test your brand.

BUSINESS REACH: The referral marketing plan is a proprietary medium that makes it a true channel for establishing contact with customers. After the referral plan is in place, it will also act as a performance channel (PPC). After deducting the initial setup cost, the bounty is only required when there are new customers. Since each new customer can generate multiple sales, your referral program can quickly expand.

INCREASES LOYALTY OF CUSTOMERS: The recommendation to become a new customer is usually from your most loyal supporter. When they receive your letter for the first time (through a friend), you are already in a good position. When you offer two-way rewards-which also means that new customers are also rewarded-their chances of becoming satisfied customers increase, which is beneficial to you. CLV).

FORM OF ENGAGEMENT: Email, social media, and customer support can be linked to referral marketing. For example, you can already send bulk emails or share content on social media. Referral marketing provides you with another reason to share information and connect with your customers on these platforms, rather than just inviting customers to join your program. You can also thank existing members of the referral program on social media and thank them for their support. Public praise is exactly the promise that customers need to recommend you to others.

Cost-Effective Marketing Strategy: Traditional marketing can be time-consuming and expensive. On the other hand, referral marketing is an inexpensive way to promote your brand and gain popularity relatively quickly. You will make the most of the established relationships.

Referral Marketing Examples

Referral Marketing Examples
Image source: ReferralCandy

Dollar Shave Club: Dollar Shave Club, a subscription-based personal care company, launched a referral marketing campaign. In 2012, Dollar Shave Club released a cheeky and humorous video on YouTube called “Our Blades Are F$#&ing Great”. As a result, CEO Michael Dubin sarcastically published his monologue. The entrepreneur also announced that more than 12,000 people signed up for Dollar Shave Club’s razor delivery service two days before the video debuted. They have 25,000 customers. The initial customers liked the advertisement so much that they told all their friends about all the advertisements and spread quickly. Five years later, Dollar Shave Club was sold to Unilever for $1 billion in cash.

ROPBOX: Dropbox is a cloud file hosting service, founded in 2007 by Drew Houston and Arash Ferdowsi. Like many other startups, Dropbox is also working hard to expand its user base. They sought search engine marketing to solve their growth bottlenecks, but this was an amazing experience. It turns out that the cost per customer is $388. At the time, Dropbox was only $99, which didn’t make any sense. In the end, they decided to take a piece of paper from the PayPal book and establish a recommendation plan. In just 15 months, they have grown from 100,000 users to 4,000,000 users! Dropbox eventually became a multi-billion-dollar start-up company, which recently applied for an IPO on the Nasdaq.    

GOOGLE: You may know that Google is the most important search engine on the Internet, but that is not all. Google is not only popular for its features, but also its referral marketing program. It starts from scratch, but the only way to build a user base is to prepare a referral program. When Google launched its new product, Google Apps for Work, Google made sure to have a referral program. They signed up for 15 dollars. The referrer also has a special link that can be used to recruit people. This is possible because users can test your new service before signing up. Its design also allows users to recommend the service to family and friends. This shows that even big brands like Google are considering developing their business through recommendation marketing.

UBER: Another technology spread through referral marketing is Uber, which applies to passengers and drivers who can hire drivers on its platform to provide them with rewards and incentives. This way, when you launch the application for the first time, your income will be higher. This is because the referenced program will take some time to be restored. In addition, Uber will also provide passengers with discounts on their first trip. In addition, they also provide free rides for friends of existing passengers and encourage their friends to check-in.