• July 16, 2021

Everything you need to know about it!

We would like to start with some statistics.

  • Word of mouth is the main reason for 20% to 50% of purchase decisions. (Source)
  • Consumers trust word of mouth two to ten times more than payment methods. (Source)
  • Word of mouth improves marketing effectiveness by up to 54%. (Source)
  • The LV of a referred customer is 25% more than that of other customers. (Source)

Surprised? You shouldn’t be! After all, every time you want to buy a certain product or service, you first ask a friend or family member for a recommendation or go through reviews online, right?

This is why you need to capitalize on the power of word of mouth marketing, also known as getting started in referral marketing. It is the holy grail you are looking for.

Whether you own a clothing brand or a startup, referral marketing can bring you a steady stream of new customers. So, let’s learn everything one needs to know about referral marketing!

What is referral marketing?

Referral marketing is a marketing tactic in which you attract new customers and grow your customer base with the help of your company’s existing customers.

Basically, your current customers spread the word about your brand through referrals and word of mouth. The referrer and the referral generally receive some incentive on each referral!

Unlike other forms of marketing, in referral marketing, you can use your company’s existing customers to generate new leads. And, according to one study, people are 4 times You are more likely to buy when recommended by a friend!

But that’s not the only good reason you need to try referral marketing. There are literally MANY other benefits of this form of marketing, and we’ll talk about them in the next section!

3 amazing benefits of referral marketing

1. Build social proof

According to a survey, 92% of consumers trust references of people they know. This is how humans are connected. We trust our friends, family, or the people we know more than a billboard on the street.

Let’s develop this further with an example. You are looking for an affordable gaming laptop and you see an ad for one on Youtube. It is compelling. But then your friend recommends another laptop.

Now, the question is: which laptop are you going to buy? Obviously, you’ll trust your friends’ reviews more than a Youtube ad, right? That is exactly why referral marketing works so well.

With referral marketing, you can turn your biggest fans into brand advocates. Your friends and family will definitely trust your feedback on you, which will result in more customers!

Read more: 15 Smart Marketing Tactics You Need To Know!

2. A filtered target market

It is obvious that your current client will not go ahead and tell everyone about you. They would just recommend it to people who really want to buy the type of product you are offering.

This means that your leads will naturally filter through, and unlike other marketing tactics, you won’t have to waste time selecting the best leads from the lot. Your clients have done all the hard work for you!

Not forgetting, your connections and your existing customers will always keep you connected to your target market. They will always talk about you, keeping you at the top of your potential customers’ minds!

3. Great ROI value

Let’s face it: marketing is expensive. It puts a hole in your pocket and you don’t even know if you will get a good return on the money invested.

However, there are certain types of marketing where you can get an incredible return with minimal investment. One of them is, of course, referral marketing.

For the most part, you don’t even have to spend a single penny for your customers to recommend you to others. Believe it or not, there are approximately 2.4 billion brand-related conversations in the United States every day.

That means people talk about the products and services they enjoy all the time. So if you give them a good experience, they too will talk about you and promote your brand without breaking a sweat.

But, if you want to get the most out of your referral marketing strategy and get more customers to recommend you, you can start rewarding them for the same!

It would still cost you much less than traditional advertising methods and would provide you with many clients at the same time. So now, let’s break down a few more tips to help you build a solid referral marketing strategy!

3 tips for creating a good referral marketing strategy

1. Request referrals immediately

As soon as a customer buys your product, ask for a reference. It may seem a bit intimidating at first, but it is unavoidable if you want to grow your business.

Look, your customer is MORE excited about your product right after they have bought it. After all, they have decided to spend their hard-earned money on their product. That is why it is the perfect time to request a referral.

You can send them forms, ask them to share your thoughts, and let them know the benefits of recommending you to friends and family.

2. make it easy for people to recommend

Don’t put people through hoops and turns before they can get rewarded for recommending your business to their friends. Basically, don’t overcomplicate things.

If you want your referral marketing strategy to be a success, keep the process simple. For example, “Buy our product> Recommend us to two of your friends> Get a 10% discount on your next purchase. “

Do you see how simple it was? This would encourage more clients to recommend it to their friends and family because it is not a tedious and stressful task. 🙂

3. Provide exceptional service

It goes without saying: if your product is not up to the mark, no one will recommend it to others. (Even if you offer an 80% discount as a reward).

So, before proceeding with referral marketing, focus on delivering a great product and great service. That will make people refer you to others, even if you don’t offer ANY incentives.

No, we do not say it for the simple fact of doing it. According to statistics, excellent customer service will prompt 55% of consumers recommend a company!

Well, now that you know all the amazing things that referral marketing brings, let’s go ahead and take a look at some companies that are totally winning the referral marketing game.

Read More: Build Brand Awareness With These 9 Quick But Effective Ways

5 really cool referral marketing examples

1. Uber

Uber referral marketing example

Uber is the perfect example of how double-sided rewards make people more likely to refer. This ride-sharing app assigns each customer a referral code as soon as they sign up with Uber. Every time someone creates a new account with that referral code, both parties get their next Uber ride for FREE. Awesome, right?

2. Dropbox

Dropbox referral marketing example

Incentives don’t have to be limited to cash and gift cards, and Dropbox proved it. They offered an additional 500MB of free storage space to the referring customer and the newly referred prospect as well. As a result, the Dropbox membership skyrocketed by 60% in 2010 thanks to this referral marketing program.

3. Evernote

Evernote referral marketing example

Evernote, the note-taking app, awards customers points every time they make referrals. These points can then be redeemed for free access to the app’s premium features. Every time the referred customer upgrades to the premium version of Evernote, the customer who sent the recommendation also gets additional points.

4. PayPal


PayPal started its referral marketing campaign in the early 2000s when social media wasn’t that common. The company used instant messages, emails, and blogs to spread its referral marketing campaign and began paying people to refer their friends. This helped them grow between 7% and 10% every day.

5. Tesla

Tesla referral marketing example

Previously, Tesla used to offer customers a thousand dollars if they recommended a friend. However, they revamped their referral marketing strategy and now offer their customers items such as an exclusive battery, exclusive party invitations, and special edition products.


References are incredibly valuable and you already know that. If you want your business to be one step ahead in this competitive era, you must embed referral marketing into your business DNA.

With everything we’ve discussed above, the number of referrals you get is sure to increase. Just make sure your sales team asks for referrals every time they make a sale!

Once you figure out which referral marketing tactic works best for you, you’ll start to see great results and take your business to the next level. So, don’t wait any longer and get started with referral marketing today.

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Referral marketing - pinterest

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