Referrals from happy customers are better than any public relations that you could ever pay for.
In both the B2B and B2C markets, customer referrals are as good as gold. Customer referrals are almost 2.5 times more likely to turn into customers according to the American Marketing Association.
Customers that do not require a full marketing engagement to acquire cost around 10 percent of what a normal customer costs to get that first sale from.
The secret to more referrals is to, first and foremost, provide a great product or service. Once you do that, you should work to generate that all-important word-of-mouth marketing, and reward them for doing so.
Incentives for Referrals are a Great Way to Start, But Not Sustain, a Program
Direct incentives are definitely strong motivators. A current customer is 40 percent more likely to give a referral if offered a good incentive. This number holds for the amount of customers who would more likely write a review, topping out at 42 percent.
However, this is not a great way to sustain a program. If you need a few reviews to get ahead of your competition, go ahead with a direct incentive.
Keep some of the other strategies in mind for the long haul.
Younger People are Motivated Through Social Recognition
Although traditional business knowledge may tell you the opposite, the younger the customer, the less money you spend on them.
However, you need to understand the youthful consumer in order to take advantage of this dynamic. Younger people get more out of being recognized as popular or as a leader from peers than any other kind of incentive. As Generation Y takes over the workplace, this trend will only increase.
Around 44 percent of people from ages 18 to 34 stated that they would refer a company online if they got social media recognition in return.
Keep this strategy in mind; social media recognition is among the cheapest incentives that you can give.
In general, the older the customer, the less he or she is motivated by receiving social media perks.
Combine Your Incentives to Maximize Engagement
Customer engagement programs work best when paired with direct incentives and social recognition. Although the trends mentioned above work for most people, there are always outliers. Also, your customer base may just be different. Try different methods if you do not see the results above from your customer referral efforts.