As members of a social society, many people typically ask for their peer's opinions when trying to make a decision. In the same way, consumers rely on their friends' reviews of businesses when trying new products. Word of mouth and referral marketing is an easy way for organizations to gain customers while retaining their most loyal clients in the process.
1. Establishes reputation
Prospective clients are more likely to be interested in the business if they hear of a positive experience from a trusted source to gauge their options. Giving incentives for referrals will encourage loyal customers to talk about the company and what it has to offer, according to Demand Media. Word of mouth marketing will create more interest in the organization and may even get through to consumers in ways other than traditional cold calling. The word of a friend that has been satisfied with the service will entice more clients due to reliable information they have of the business's good standing.
2. Higher retention rate
People that have been referred by a peer have typically stay with a company longer than those that found the organization by other means. A study done by Goethe University following the referral program of a German bank revealed that customers recommended to the business were 18 percent more likely to stay with the organization than other customers, according to Forbes. Over the three years that the research spanned, the group found no change in the retention statistic.
3. Promote the client's vision
Word of mouth marketing is an opportunity to gain client feedback and put it to use gathering more of an audience. Showing clients that you understand what they want will help gain more referrals and transform the business to meet their needs, according to marketing consultant Thomas Young. As the business continues to develop, clients need to know that their views and feedback are important in the organization's considerations. This will help foster long-lasting client relationships and gather more referrals in the process.
4. Cost benefits
Monetary gains can be seen in businesses that have utilized referral programs. While many provide incentives for their loyal customers, organizations will still typically see an overall increase in their revenue. Referrals take out some of the sales expenses, and referred customers are typically more apt to buy the services at full price because of the positive, trusted review, according to Darrell Zahorsky, a business expert and consultant. Although there will still be money coming out of the budget to reward references from loyal customers, the ultimate benefit from sales will be an overall improvement for the organization.
Gaining new customers for your business can be a challenge, but with a referral program it doesn't have to be. The Fonality Referral Program rewards enrolled referrers for submitting business references that become new customers. The process is easy and your business isrewarded for your referral of a new client. Visit Fonality's website to learn more about their new Referral Program.