5 impressive facts about referral marketing you should know

By: Alan Duncan

2015 was the year of content marketing, and 2016 the year of influencer marketing. So what’s 2017 all about?

Well, you might have heard of referral marketing. It’s one of the most cost-effective forms of marketing that uses word-of-mouth to reach new audiences.

Why is it so powerful? Because referral marketing leverages the power of authentic customer experiences. Today, 84% of millennials do not trust advertisements. This lack of trust means shoppers are no longer interested in brands that are aggressively marketing and advertising. Instead, consumers are looking to purchase from businesses that reward loyalty.

This means businesses need to engage with consumers, which takes more time, making it harder for online retail companies to convert new visitors into paying customers.

And with word-of-mouth still being the number one method of recommendation, it’s become essential for companies to start marketing themselves heard through the voice of their own customers.

Here are 5 reasons why referral marketing is one of the most powerful tools any online retail business could find out there.

It helps you build trust

Consumers are more likely to go through a considerable amount of research before making a decision and buying from an online retail website; so this is more likely to make the customer journey longer, and way more competitive. Referral marketing can shorten the customer journey and help consumers make a purchase decision faster.

The trust deficit between consumers and businesses encourages people to rely on their family or friends’ opinions more than anything else. Indeed, in 2017, 82% of people admitted consulting their friends and family and sought recommendations before purchasing from an online retailer they’d never bought from before.

Earning a customer’s trust can take a while, but with referral marketing, you’re acquiring new customers more quickly, and they’re more likely to trust you. Why? Because people trust that their friends are not sending them to a sub-standard business.

This means that when someone is referred, your existing customer is helping you build trust instantly, making the chances of acquiring a new customer much higher.

It’s easy to implement

According to RewardStream, 25% of businesses say that they don’t have the time to implement a referral marketing program, and 29% of companies say that they don’t have the resources.

Referral marketing software is one option. It’s developed so you don’t have to worry about starting from scratch, coding, or about tracking your customers. And while software can be pricey, there are many options for most budgets.

The great thing about referral marketing is that it can be implemented throughout all your channels. Chances are, your business is already using email marketing, social channels, or social proof to communicate or promote itself anyway, so whether you opt for third-party software or an in-house  solution, referral marketing can be easily integrated within your existing marketing campaigns.

Customer reviews, testimonials, bloggers, emails or social media all play a major part in building profitable referral channels. Asking people to refer your business to their friends or family, or to review your brand after they’ve purchased from your online retail site is easy. By leveraging the opinions of your customers through referral marketing, you’re more likely to turn existing customers into loyal ones, and to acquire new customers too.

Fabletics displays reviews on a dedicated page as part of an organic referral marketing campaign


Did you know that nearly half of digital buyers say that reading customer feedback on social media influences their buying journey? Finding ways to make it easier for your customers to share their opinions about you directly on social media is one of the best ways to market your online retail company via a third party.

Making your products and experience unforgettable and going for a ‘wow effect’ is more likely to get your customers to recommend you on social media.

Birchbox makes share-worthy packaging that is shared all over social media, including Instagram and Facebook.

Birchbox Instagram referral marketing can be more effective on third-party accounts


It’s cost-effective

Referral marketing is one of the most cost-effective types of marketing. Why? Well simply because you’re promoting your referral program to your existing, loyal customers, rather than trying to turn prospects into customers yourself.

Customers will listen to you more than your prospects will, they will be more likely to open your emails and read your social posts, especially if they’ve been satisfied with your service in the past.

Referral marketing also helps you save money by making the most of the channels you are already using. Improving on-site/app promotion at every touch point of the customer journey, email marketing, social media marketing, content marketing - it’s only a matter of optimising an existing channel.

Airbnb lets you refer and invite friends with an easy personalised code, directly on their app and website!
Easy to find, easy to use!


No need to go out of your way to reach customers, no need for PPC ads or banners, simply add your referral campaign to your existing tools.

Businesses that have a referral marketing program experienced 86% more revenue growth over a two-year period than those without a referral campaign. Referral marketing not only keeps your CAC (customer acquisition cost) low, but it boosts revenue by improving retention from both existing and new customers, increasing the bottom line in the long run.

It helps you target a specific audience

One of referral marketing’s biggest assets is, without a doubt, precision targeting.

Your customers know their friends and family well enough to understand whether or not they’d be interested in your service or product. By letting your own customers promote your brand, you’re not only targeting an audience similar to your current customers, but you’re also spreading your brand message quickly and more effectively.

Uber's in-app referral 

Referral marketing is a more targeted approach that allows your business to acquire the right type of people, with the best customer profiling tool you could ever use: your own customers!

It creates loyal shoppers

Many marketers don’t realise how high the level of loyalty gained from referred customers can be.

According to an AMA study, referred customers are 18% less likely to churn than non-referred customers, and have 25% higher customer lifetime values.

Referred customers are not only more profitable, but more valuable too. When referring friends or family in exchange for a reward, customers are more likely to refer people who will be valuable to your business, and who could become loyal customers themselves.

Marketing built on connections not only generates trust and credibility, but also drives high value customer acquisition and improves customer loyalty in the long run.

Offering incentives to your own customers in exchange for a referral is far from wasting money. This brings your business more worthy and loyal customers who already believe in your brand and are ready to invest in your product, based on their friend’s opinion of you.

In other words, referral marketing helps you build loyalty and trust with new customers thanks to your existing loyal and satisfied ones.


Referral marketing is one of the most powerful and essential tools for online retail businesses today.

Whether you’re choosing to implement it yourself or use time-saving software, asking your customers to take part in your referral marketing campaigns can really make a difference.

Referral marketing helps build trust, credibility, recognition and loyalty; and in an era where social proof is one of the biggest keys to success, customer referrals can  be a game-changer for online retailers.


By Alan Duncan, Marketing Director, Europe at Trustpilot

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