Customer Referral Programs: Top Methods and Rewards

Originally published on MarketingProfs.

The most effective method for a current customer to refer a potential customer to a business is a verbal recommendation, according to recent research from Amplifinity.

The State of Business Customer Referral Programs report was based on data businesses that use the Amplifinity platform. Respondents came from a mix of B2B and B2C firms.

The most common referral methods employed by the surveyed firms surveyed are lead forms (77% use them), email (73%), verbal (54%), social media (50%), shareable URLs (41%), and print cards (18%).

The highest volume of referrals come from social media (29%) and email (23%), respondents said. Below are additional findings from the research.

Verbal referrals have the best conversion rate of any referral method (32% of referrals lead to sales); lead forms rank second (19%), and email ranks third (17%).Referral programs most successful use, referral software, referral program software
Among current customers who make referrals, 61% make one referral per year, on average, and 34% make 2-10 referrals per year.

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The most popular incentive for referrals is gift cards (52% of businesses surveyed offer them); checks rank second (29%).

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About the research: The State of Business Customer Referral Programs report was based on data businesses that use the Amplifinity platform. Respondents came from a mix of B2B and B2C firms.

Which referral methods are generating new customers? [Infographic]

Referral software has significantly grown in adoption by businesses in an effort to amplify the good results companies already receive from more manual referral campaigns and programs. Because of this, more data than ever before is available to see not only how businesses automating referral programs are going about engaging customers to refer, but how customers are using these programs and the success different referral methods provide business customer referral programs. By analyzing this data, companies can better understand how customers interact with referral programs to turn referral marketing into a science.

The data used here comes from the new benchmarks report, The State of Business Customer Referral Programs. These benchmarks are a result of millions of referrals made in business customer referral programs run on the Amplifinity platform.

What type of referral methods are companies offering customers?

Out of the six referral methods, the inclusion of these methods are the following:

  • 77.2% include lead form
  • 72.7% include email
  • 44.4% include verbal referral
  • 50% include social media
  • 40.9% include shareable URL
  • 18.2% include print cards

Breaking down social media, it might be surprising to see that LinkedIn isn’t the most offered form of social media. Facebook, Twitter, and LinkedIn inclusion rate are as follows:

  • Facebook – 50.5%
  • Twitter – 27.3%
  • LinkedIn – 13.6%

You’ll also notice that not one method is included in all the customer referral programs in the study. To better understand what types of methods to offer try surveying customers to determine how they connect with their network.

Lastly, the best indicator of which referral methods to include is the effectiveness of those methods. Which methods are your customers using the most and which are the most successful? As you’ll see here, these two ways to judge effectiveness don’t always line up.

What referral methods are customers using the most?

It is plain to see that the methods customers use to refer is directly correlated with what referral methods a company offers. But looking at what method customers gravitate toward can still give you a great deal of insight. The following show what referral methods were most used by customers:

  • Social media – 29%
  • Email – 24%
  • Lead form – 23%
  • Verbal – 13%
  • Shareable URL – 12%
  • Print cards – <1%

It is impressive that social media is the most used even though it is only included in 50% of customer referral programs. Email and lead form follow shortly after, but their inclusion rate in the programs were more than 20% higher. This order of popularity could be based off the level of familiarity and comfort a customer has with the methods provided and also how easy the referral is to make. But one thing to remember is easy isn’t always better. The use of referral methods really isn’t a popularity contest . . . it’s a conversion contest.

What referral methods are converting referral leads?

When transitioning from looking at the most popular to the highest converting referral methods, only lead form, email and shareable URL come close to where they ranked in use. The following is the rate at which each referral method converted:

  • Verbal referral – 32%
  • Lead form – 19%
  • Email – 17%
  • Print Cards – 12%
  • Shareable URL – 4%
  • Social media – 1%

One point you’ll immediately notice is that while social media came in first in use, it came in last in generating new customers with only a 1% conversion rate.

The data points to top converting referral methods having a one-to-one relationship instead of a one to many. The discrepancy between the use of social media to refer and its conversion rate can be due to the fact that it is being used as a generalized blast in social networks as opposed to referring a specific peer that is in need of the product or service. While this is good to build awareness it won’t generate new customers.

To combat it, try training customers on how to refer one-to-one on social media or explain the best use of the referral program to them.

Start visualizing customers’ referral process and discover the science behind referrals: