TABLE OF CONTENTS
The State of Referral Marketing
Acquiring New Customers
Methods of Acquiring New Customers
Rewarding New Customers
Analyst Bottom Line
About Demand Metric
Referral Marketing Challenges
Barriers to Program Implementation
Referral Program Performance
Appendix – Survey Background
Any sales representative, demand generation manager or marketer will acknowledge that the very best source of highly qualified leads come from referrals. Having customers that become advocates by referring prospects is perhaps the highest form of praise for a vendor. Customers who refer prospects do so because they have confidence in the vendor and its solution. That customer also trusts that the vendor will take good care of the referred prospect and therefore not cause any reputational damage to the referrer. The act of referring represents that the big pieces of the value equation are in place and working for the customer who refers, and as such, a referral provides extraordinary validation for the vendor, and tremendous credibility with the prospect. Given the fact that referrals occupy the top of the qualified lead pyramid, it is a bit surprising that so many companies simply allow referrals to evolve and occur organically. This is probably the result of a perspective about referrals that they can only occur this way, that they’re already occurring at the greatest possible frequency, or that they are simply a force of nature that defies management. So while every sales representative, demand generation manager or marketer longs for referrals – the most effective method of acquiring new customers – slightly over half of organizations in this study have a referral program in place. In a study sponsored by RewardStream, Demand Metric conducted a survey to find about the current state of referral marketing. The study’s goal was to understand the interest in and success with referral marketing, gaining insights from which to derive best practices.
This study’s participants were primarily marketers in both B2B and B2C organizations. Participants represented a wide range of industry affiliations and are with companies whose total employment ranges from less than 25 to more than 15,000 employees. Responses were collected from those who reported having a referral marketing program and those that did not. For those that did report having a program, the study investigated its parameters and effectiveness. For those that reported not having a referral marketing program, the reasons why were investigated, along with future plans for implementing one. The analysis of this study’s data provides these key findings about the current state of referral marketing:
88% of study participants agree or strongly agree that referral marketing is effective.
57% of participants have a program for referral marketing in place. Most of these programs were designed and are managed internally. Just 7% of companies doing referral marketing are using an automated referral platform from a vendor.
Study participants rank referral marketing as the most effective means of acquiring new customers, followed by events, email, digital advertising and social media, respectively.
Over one-fourth of organizations with referral marketing programs in this study report acquiring 30% or more of their new customers through referral marketing.
Over three-fourths of companies doing referral marketing are using multiple types of incentives with their programs.
71% of study participants rate referral marketing as one of the lowest in terms of cost per new customer acquisition. This report details the results and insights from the analysis of the study data. For more detail on the survey participants, please refer to the Appendix.
RewardStream is the foremost authority on referral marketing, combining an innovative blend of marketing insight and proprietary technology to design and manage referral programs for some of the world’s most prestigious brands. The company was founded in 1999, operates in 39 counties globally and processes more than 20 million referrals. For more information, please visit www.rewardstream.com.
ABOUT DEMAND METRIC
Demand Metric is a marketing research and advisory firm serving a membership community of over 45,000 marketing professionals and consultants in 75 countries. Offering consulting methodologies, advisory services, and 500+ premium marketing tools and templates, Demand Metric resources and expertise help the marketing community plan more efficiently and effectively, answer the difficult questions about their work with authority and conviction and complete marketing projects more quickly and with greater confidence, boosting the respect of the marketing team and making it easier to justify resources the team needs to succeed. To learn more about Demand Metric, please visit: www.demandmetric.com. To read the rest of this report, become a Demand Metric member today!