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The Importance Of Referrals For Your Business Explained

The Importance Of Referrals For Your Business Explained

When you have a problem that requires a solution, where do you search? Most people, turn to their network. Whether you are searching for new healthcare practice, a new car, or a realtor, you usually reach out to the people you trust. These could be your friends, relatives, or people you know who will guide you without bias. These people, whose opinion you believe, act as promoters of the business they suggest. The influence and importance of referrals for your business are undeniable. It is a powerful tool to attain new customers without actually creating a big dent in your marketing budget.

With referrals, businesses are enabling the most powerful marketing engine that they have, that is, their customers.

Also read: Customer Satisfaction: A complete guide

Importance of referrals for your business

Not buying on the importance of referrals? Following are a few numbers that might change your mind.

  • Customers are four times more likely to purchase when they have a recommendation from a friend
  • You can project 16% more profits from customers who have been referred to a business
  • 64% of marketing executives agreed that word-of-mouth recommendations were the most efficient form of marketing. Nonetheless, only 6% of executives believe that they’ve mastered it.

Meanwhile, trust in conventional forms of marketing is low.

  • As per a study, only 3% of people believe marketers.
  • Moreover, only 4% of customers trust ads.

These stats explain the story: customers believe their friends and people they trust to help guide their buying decisions significantly more than they trust traditional marketing.

Before we talk about how you can devise a successful customer referral marketing program, let’s talk about what makes referrals work.

Why referrals work 

Here are 3 reasons for the importance of referrals for your business to work so well in helping organizations attract new customers.

  • Customer referrals are low-cost– Unlike Facebook ads or Google ads, customer referrals, when done correctly, are low-priced.
  • Customer referrals lead to more trust – When potential buyer comes to your business, they’ll be tending to trust you more. After all, they understand the fact that their friend or family member had a positive experience.
  • Customer referrals are creating a virtuous cycle– Once your business’s referral engine is operating smoothly, it can drive more and more growth. Customers who come in through referrals can, ultimately, provide you with more referrals.

Creating an effective referral marketing process

Now that you know more about the importance of referrals for your business, here’s how you can get started with referral marketing. Here are a few steps that you can take to ensure that your referral marketing process is running effectively and appealing to new customers.

  • Delivering fantastic customer experiences – Customers don’t want to provide recommendations to businesses that they just feel fine about. To ensure that your customers want to talk about your business, take time to enhance your overall operations, and make sure that you’re offering a world-class customer experience.
  • Reaching out to your customers at the right time– Hit when the ‘iron is hot. If you are confident that you have given an excellent experience to your customers (such as feedback in the form of survey responses and reviews) the time is right to ask them to refer your business.

Also read: Use of RFID in Cold Chain Logistics to Boost Market Growth

Offering an incentive to your customers for referring your business 

Probabilities are that you have tons of happy customers. The concern is that not all of them will go out of the way to refer your business within their connection proactively. To help offer your customers an extra push, offer an incentive in the form of a gift card or a discount (or any other item of value to the customer) for every recommendation.


If the process of providing a recommendation is too complicated and lengthy, even your most motivated customers aren’t going to go through with it. Therefore, ensuring that you’re making it easy for customers to share a referral. Hence, offer them something that they can easily share through text or email. The importance of referrals for your business could improve the numbers, and drive customers to your organization. Hence getting your customers to do your marketing. Since customer referrals are a great way to get more customers at a reasonable cost. So, what are you waiting for? Start asking your customers for referrals.

For more interesting information, kindly connect with our industry experts at  Aeologic Technologies.  


What is the advantage of taking referrals from your clients?

A study surveyed that referral marketing is trusted by 86% of customers. Thus, it is the most trusted form of marketing. A customer is also 50 times more likely to purchase a product when it is suggested by their close friends and family. Not surprisingly, customers are more likely to believe their network than sponsored ads.

Why are referrals a powerful tool?

Your new clients and prospects are more likely to follow your recommendations. Prospects and clients you meet through referrals will follow your recommendations because they know their friend or colleague has had a positive experience.