Referrals are a proven way to generate high-quality and low-cost sales leads for your business. If done right, they can become a powerful sales engine and help you improve your close rate. A sales referral is simply getting your brand or product referred to another company or individual.
Not sold on the importance of referrals? Here are a few numbers that might change your mind.
- Customers are 4x more likely to buy when they have a recommendation from a friend (Nielsen)
- You can expect 16% more profits from customers who have been referred to a business. (Harvard Business Review)
- 64% of marketing executives said that word-of-mouth recommendations were the most effective form of marketing. However, only 6% of executives say that they’ve mastered it. (Forbes)
Meanwhile, trust in traditional forms of marketing is low.
- According to a study, only 3% of people trust marketers. (HubSpot)
- Only 4% of customers trust ads. (American Association of Advertising Agencies)
These stats tell the story: customers trust their friends and people they trust to help guide their purchase decisions significantly more than they trust typical marketing.
3 reasons why referrals work
Here are 3 reasons why referrals work so well in helping businesses attract new customers.
1. Our referrals are low with a fixed cost monthly.
Unlike Google ads or Facebook ads, customer referrals, when done correctly, are inexpensive.
2. B2B referrals lend more trust
When potential customers come to your business, they’ll be more likely to trust you. After all, they know their friend or family member had a positive experience.
3. Referrals create a virtuous cycle
Once your business’s referral engine is working smoothly, it can lead to more and more growth. Customers who come in through referrals can, in turn, give you more referrals.