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Top Reasons to Use Referral Marketing Programs

Jobsdive August 31, 2021

What is Referral Marketing?

Referral marketing is a marketing strategy where a product or service is marketed through businesses existing customers rather than traditional forms of marketing. Referral marketing is one of the least expensive forms of marketing available for a company to grow its customer base. Referral incentive programs aim to grow their market share by enticing their customers to promote the product through incentives. Referral incentive programs offer incentives like cash rewards, store credit, gifts, free samples, discounts on products and so on which will catch the attention of the customer to refer to the product. 

Why are referral programs so popular as a marketing strategy?

Referral programs target customers to refer the product to their family, friends, colleagues, and acquaintances. This is why it is also known as refer- a- friend marketing. Referral marketing is used by companies big and small as they understand the core behavior of its customers who depend on the approval and seal of satisfaction from people they know who have tried the product. Around eighty percent of consumers depend on the referral of their peers before they make a purchasing decision in the US. 

Let us look at some of the top reasons a company should use referral marketing programs:

The reasons concerning the cost-effectiveness of referral marketing and how it provides a great return on investment for the company.

  1. The most important reason for a company to use referral marketing incentives is because people influence people. Referral from someone who is trusted to a person is the best version of marketing. Nearly ninety percent of consumers believe in people who are in their trusted circle. Research has shown that consumers are more likely to follow word-of-mouth recommendations than the company’s social media marketing team. 
  2. It is a relatively easy way to promote their product or service on social media. Referral marketing programs can be promoted through social media where the customer can learn the benefits of promoting a product and what incentive they will receive.  This makes referral marketing extremely cost-effective to market the products. Potential customers are more likely to buy a product that has been promoted by their friends on social media. 

These reasons for referral marketing elaborate and show how they value and retain loyal customers that refer their products:

  1. The more the customer feels like that they are part of the company the more likely they are to try and add to the success of the company. This is a part of the job referral as the customers are more likely to thank the company for the incentives and share the enthusiasm for the success of the company. Since they receive incentives for their referrals and hard work, they are more likely to buy from the company and continue supporting the company. 
  2. Companies and businesses are constantly trying to gauge how successful they are in promoting their products or services. Referral programs however can show businesses how well a product is doing. This information is incredibly valuable for companies as they can change strategies, prices, and approaches based on this information. Simply put, a customer who is satisfied enough to recommend their products to another person is a good indicator that the product is doing well. 
  3. Through referral incentive programs there is an increased retention rate of customers. When customers refer products to customers the company’s social profile and brand value increase. Through greater recognition, existing customers are more likely to further trust the company and the product. It should also be noted that engaging with new customers is way more expensive as a cost for the company than customers who are already loyal customers. 
  4. The referral program is a great way for businesses to find and identify their loyal customers. This is important information for every business to have. These customers will have a high amount of referrals, which will be evident from shared content about the product. Studies have also shown that American customers prefer exclusive offers over a loyalty program available to everyone. The customers who will be chosen for the exclusive offers can be chosen through the customers who refer the product to other potential customers. 

These reasons show how referral marketing is used to create higher customer engagement and increase the number of new customers

  1. There is a further increase in the market share through referral marketing programs. No amount of social media marketing or any other type of marketing will have the reach or impact that a customer who uses the product referring the product to the people they know would do. 
  2. Referral programs are very valuable to a company as they result in new customers. These customers have shown to be more valuable to the return on investment of the company. This is due to the referred customers already knowing of the benefits of the product or service as they have already been informed by the person who referred the product to them.
  3. Referral incentive programs result in higher customer engagement. The customers referring to the product provide the product with a stronger online presence. The customers who got referred to the product from someone they know will try to find out more about the company or product. This will result in them checking social  media and websites. This garners more general engagement from the customer which is highly valuable to the company. 


Referral programs are really successful for many companies as potential customers are more likely to consider product recommendations if the recommendation is provided by friends or family. Traditional advertising can seem like they are manufactured by companies to simply sell products whereas referral programs are based on recommendations from people they know and trust. is one of the best job referral program where you can earn money by sharing jobs to others. Apply jobs in newnan ga

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