Referral Marketing Statistics

Referral Marketing Statistics 2024: 20+ Powerful Facts

Published on: October 24, 2023
Last Updated: October 24, 2023

Referral Marketing Statistics 2024: 20+ Powerful Facts

Published on: October 24, 2023
Last Updated: October 24, 2023

Referral marketing is often seen as the most powerful way to build brand awareness and attract new customers. 

The premise is simple, this type of marketing relies on existing customers telling others about the business and its products.

In essence, it’s word-of-mouth and personal recommendations.

As the following referral marketing statistics will show, this type of marketing is becoming extremely popular and effective. 

It should be noted that referral marketing is usually controlled by professional marketers within a business.

They will use customer reviews, individual referrals, and a variety of other incentives.

This encourages existing customers to share their stories and attract new customers. 

This approach has become so popular because we live in a digital world.

It’s too easy for businesses to create digital marketing campaigns and potentially fudge figures. 

Referral marketing introduces the personal element, giving potential customers more confidence in your products. 

Let’s look at some statistics and find out just how good referral marketing is. 

Key Statistics

  • 92% of consumers trust personal referrals
  • 82% of americans will check before buying a product
  • 91% of millennials would buy something recommended by a friend
  • 83% of consumers say they will refer products
  • 50% of referral programs offer dollar credit
  • 91.2% of referral programs are double-sided
  • 86% of business buyers state word-of-mouth is the biggest factor when making purchase decisions
  • Only 30% of american companies have a formal referral program
  • Customer referrals are the top marketing tactic
  • 69% of employers have an employee referral program
  • 40% of company hires are a result of employee referrals
  • Hiring via referral is faster 
  • 49% of american shoppers discover brands via referrals
  • One happy customer can create nine referrals!
  • Referrals have a higher conversion rate
  • Brands are talked about 90 times a week
  • 98% of consumers read online reviews
  • 21% of businesses lose customer trust after bad word-of-mouth
  • 78% of marketers believe referrals create the best leads
  • Consumer reviews on websites increase conversion rates

Top Referral Marketing Statistics in 2024

1. 92% Of Consumers Trust Personal Referrals

A recent survey by Nielson found that 92% of consumers have more confidence in a product which has been referred to them by a friend as opposed to any other sort of marketing campaign.

The survey spoke to 28,000 people and found that nearly all of them trusted word-of-mouth recommendations. 

Amazingly, 70% of those asked also said they would trust online reviews.

However, only 36% of those asked trusted online video ads. 

It shows the power of referrals if you’re trying to increase sales. 

(Nielson)

2. 82% of Americans Will Check Before Buying A Product

The more expensive the product you’re considering buying the more likely it is that you’ll want some reassurance before you spend your money. 

That’s natural, you don’t want to waste your money, but you do want to know you’re getting a good product. 

If you fit into this category then you’re not alone.

According to the latest survey by Ambassador, an impressive 82% of Americans will ask family and friends about a product before buying it. 

This is the simplest way to have confidence that the product you’ve chosen will do the job you want it for.

The survey also noted that approximately two-thirds of US residents say they are more likely to buy something if a friend or member of their family has put positive posts about it online.

(Ambassador)

3. 91% Of Millennials Would Buy Something Recommended By A Friend

Following on from the above statistic, the power of referral marketing is perfectly summed up by the latest survey from Annex Cloud.

The survey specifically targeted Millennials.

It discovered that 91% of Millennials would look at buying a product if a friend recommended it.

The only question would be whether they wanted/needed the product or not. 

The same survey found that 48% of Millennials admitted that word-of-mouth is much more likely to influence their buying decision than other adverts, such as TV ads.

It’s also worth noting that 23% of Millennials would avoid purchasing a product if their friends didn’t approve of it. 

(Annex Cloud)

4. 83% Of Consumers Say They Will Refer Products

Retailers need to convince customers to refer their products.

It’s the fastest way to attract more customers and persuade them to buy. 

Fortunately, a recent survey by Referral Candy found that 83% of consumers are happy to refer products to family and friends.

They simply need to be happy with the product.

  Unfortunately, while most consumers have good intentions, only 29% of consumers will refer a product without being prompted. 

That means marketing teams have to provide incentives and find other ways to get consumers to refer their products. 

(Referral Candy)

5. 50% Of Referral Programs Offer Dollar Credit

Referral 1249

Businesses have found one of the most effective ways to get consumers to refer their service to others, is to reward them for doing so. 

There are several ways in which this can be done.

However, the most recent research suggests that dollar credit is the most effective. 

Companies that do offer dollar credit average $10 per referral.

However, if the product is much more expensive, the dollar credit amount will be higher.

It tends to rise with the value of the purchase.  

The company simply offers a credit on the consumer’s account if they refer a friend.

Getting cash to spend with the company is a pretty good incentive to recommend products to family and friends. 

Companies that choose not to offer dollar credit are likely to offer gift cards.

This happens in 17.6% of cases.

Percentage discounts are offered to 9.8% of consumers and, 5.9% of the time, cash, points, or subscription time is given. 

(Referral Candy)

6. 91.2% Of Referral Programs Are Double-Sided

Double-sided referral programs benefit everyone involved and, therefore, are more likely to attract new customers.

The double-sided program gives a reward to the consumer for referring the product of the business.

It also gives a reward to the new customers who have decided to purchase the new product.

In most cases, both parties will get exactly the same reward.

In fact, statistics show that 72% of companies give the same reward to new and existing customers. 

It’s worth noting that this is in keeping with current consumer demands.

According to a recent Ambassador survey, 88% of people would like an incentive if they share products on social media.

If you’re a Millennial the demand for a referral program is even higher.

95% of Millennials would be interested in an incentive to share their product experiences. 

(SaaSquatch)

7. 86% Of Business Buyers State Word-Of-Mouth Is The Biggest Factor When Making Purchase Decisions

As far as business-to-business recommendations go, word-of-mouth is considered to be the most important part, and the most influential. 

In a recent survey 86% of B2B buyers felt that they would only purchase after a product was recommended by a friend. 

That’s not the only interesting fact in the world of B2B and referral marketing.

The same study found that 68% of professionals would reference word-of-mouth several times a week.

It’s been shown to be a reliable source of news and provides hints regarding which direction the industry is moving in. 

(Blan & Otus)

8. Only 30% Of American Companies Have A Formal Referral Program

Despite the majority of marketing professionals understanding and embracing referral marketing, a disappointing 30% of businesses have a formal referral program.

Some other businesses have an unofficial program.

However, the best programs are those that lay out clearly what the rewards are and when they will be allocated. 

It’s worth noting that 71% of companies with referral programs have higher conversion rates.

In addition, 69% of the businesses state they can close a deal faster, and 59% have recorded a higher lifetime value. 

That means they make more per customer in a referral program than they do for those not in a referral program.

(Statista)

9. Customer Referrals Are The Top Marketing Tactic

It’s hard to beat a referral program as new customers will instantly feel they are purchasing a good quality product from a reliable company. 

Businesses understand this.

According to the latest research, 87% of marketing professionals working within B2B and using referral programs felt their efforts were providing dividends.

The same respondents felt that referrals were the most effective marketing approach.

The survey found that nearly 50% of those asked put referrals as the best marketing tactic. 

The second place was taken by personalized messages, with 35% stating these were an effective approach. 

Online events saw a similar success percentage and SEO was felt to be positive in 30% of cases.

Lead gen with intent data was well received by 29% of B2B marketing professionals.

(Trust Radius)

10. 69% Of Employers Have An Employee Referral Program

Referral 1250

Referral programs aren’t just for attracting new customers.

They can also be used to attract new employees.

In general, existing employees will be cautious about recommending someone for a job, in case it comes back on them. 

However, that doesn’t stop 69% of employers from introducing employee referral programs. 

Surprisingly, this is an effective approach.

Although employees will think hard before recommending anyone, when they do recommend it’s because they are confident they will be a good addition to the workforce. 

This is borne out by the facts which show that 88% of employers feel employee referrals generate the best hires and 82% of them say they offer an excellent return on investment.

An impressive 71% of businesses will offer cash to employees in order to persuade them to refer someone.

Cash remains the best incentive, although paid time off is generally well received, as are gifts, social praise, and a donation to charity on their behalf.  

(Career Builder)

11. 40% of Company Hires Are a Result Of Employee Referrals

Finding the right employee isn’t always easy.

That’s why employers have referral programs, hoping that existing employees will recommend someone. 

In many cases, this works. According to the latest figures, an impressive 40% of all hires are a direct result of employee referrals. 

Interestingly, on average the company will get more applications via a job board or a career site.

As many as 75% of all applications come from job boards and career sites.

Just 36% of hires come from these sources.

In contrast, only 7% of applications are a result of referrals.

However, referrals make up 40% of all new hires!

(Jobvite)

12. Hiring Via Referral Is Faster

The biggest problem for many employers is finding good-quality help and finding it quickly.

In many cases, an employer will want to fill a vacancy as fast as possible.

That’s why some employees are taken on and later dismissed, they simply aren’t compatible with the firm.

Hiring via a referral is appealing to an employer because the person is being vouched for.

The process is generally much faster. 

According to the latest survey, it takes just 29 days for someone to start working when they’ve been referred to the company. 

In contrast, an employee discovered via the traditional job application process is likely to take between 39 and 55 days. 

You should also note that 47% of employees hired via a referral scheme will stay at the company for three years or more. 

(Jobvite)

13. 49% Of American Shoppers Discover Brands Via Referrals

One of the biggest challenges facing many businesses is increasing brand awareness.

While the internet has made it easy to reach millions of potential customers, it has also made it easy for businesses to be lost.

There is often too much competition. 

In order to find customers the business needs to increase brand awareness.

This is best done via referrals.

The latest figures show 49% of brands are discovered after they have been referred by family and friends to someone else. 

Put simply, the personal touch still matters and brands need to tap into this to generate the highest number of customers possible. 

As mentioned, customers acquired via referrals are more likely to be loyal, giving the business a better chance of success. 

(Miller n.d.)

14. One Happy Customer Can Create Nine Referrals!

One disappointed customer can post a negative review and potentially cause a business to lose customers. 

However, the business can negate this issue by responding quickly and fairly to the issue.

Potential buyers reading reviews will see that the business has reacted and take this into consideration. 

However, what you may not appreciate is the power of a happy customer.

According to a recent survey by Oberlo, one happy customer can generate as many as nine referrals.  

That’s nine potential customers all of which are likely to be loyal. All you have to do to secure this is to keep your customers happy!

(Oberlo)

15. Referrals Have A Higher Conversion Rate

Conversion rates 1248

The key to a successful business isn’t in referrals or brand awareness, these are tools to help you get to the end result. 

The aim is to communicate with these potential new customers and convert them into customers. 

According to a recent survey by Finances Online, leads generated by referrals are 30% more likely to convert into sales.

The reason is simple, anyone approaching the company after being referred already believes the business is respectable.

They also know what the business is offering and will be interested in their products. 

That makes it more likely that they will purchase something.

It’s worth noting that marketing professionals don’t need to reach a huge number of people to find extra customers and convert them. 

Instead of focusing on quantity, choose quality, such as that provided by referrals. 

(Finances Online)

16. Brands Are talked About 90 Times A Week

You may not realize it but the average person will hear about brands 90 times every week, just in conversation. 

It could be a discussion about where to buy a new dress, issues regarding a recent purchase, or any number of other possibilities. 

The point is that brands are often talked about, even when someone isn’t thinking about a specific brand.

It’s just part of the average week. 

Of course, such a high level of brands being talked about weekly does mean that many people will be more aware of specific brands, and may even start shopping with them. 

(HubSpot)

17. 98% Of Consumers Read Online Reviews

Deciding on a product means understanding its specifications, and whether it’s good value for money. 

In many cases, people need to research a product to ensure they are spending their money wisely. 

That’s why, today, 98% of consumers will read an online review before deciding whether to purchase or not.

It provides consumers with reassurance that the product and supplier are genuine. 

Of course, this does mean reviews have a large amount of power over a business.

Just one negative review can make a big difference to customer numbers and the bottom line of any business. 

(Bright Local)

18. 21% Of Businesses Lose Customer Trust After Bad Word-Of-Mouth

As just mentioned, negative reviews and referrals are likely to stop a customer from purchasing your product.

That’s why it’s essential that all negative reviews are responded to and dealt with as fairly as possible.

According to the latest research, just one piece of negative publicity, via word-of-mouth or a review, can damage the trust in a business by 21%.

That means five negative reviews could torpedo your business completely.

Of course, it would probably take more than that and you should be dealing promptly with any negative reviews to reduce any impact on your business. 

It should be noted that 37% of people will only leave a positive review and just 6% will leave a review after a negative experience. 

(SEMRush)

19. 78% Of Marketers Believe Referrals Create The Best Leads

Anyone referring customers to your brand is likely to be happy with the service that you’ve offered. 

When they refer customers they will be thinking of people that may have a genuine interest in the products they are talking about.

This belief in the quality of a product is noticeable when they talk to people.

The result is those being referred are more likely to be interested in what you have to offer and this will make it easier to convert them into customers. 

That’s the reason why 78% of marketers believe referrals create the best leads.

In most cases, minimal work is required to make the conversion.   

As a business, it’s a good idea to prioritize a referral program.

It’s likely to be more lucrative than many other forms of marketing. 

(Software Advice)

20. Consumer Reviews On Websites Increase Conversion Rates

Consumers can be wary of reviews posted on a business website as they can be manipulated by the business.

That’s why it’s important to post a mixture of reviews, and not simply ones that say how great you are.

This will help visitors feel that the reviews are genuine. 

When this happens, visitors are more likely to purchase your products.

In fact, the latest studies show that your conversion rate could increase by as much as 19.8% if you show consumer reviews on your site.   

It’s worth noting this does better in some industries than others.

For example, retailers selling musical instruments do particularly well.

These retailers have seen a jump in conversion rates of 47.3% after adding customer reviews to their websites. 

(Power Reviews)

Summing Up

Referral marketing isn’t a new thing. It’s always been an option for businesses.

However, as the above referral marketing statistics show, it’s become an increasingly popular tool for businesses trying to compete in a digital world. 

If you’re not already offering customer and employee referral programs, it’s time you did.

They require minimal effort and could make a fundamental difference in the success of your business. 

Of course, referral marketing requires trust between you and the consumer.

It’s important to build trust gradually and monitor for any incidents that could damage that trust.

When you get it right, referral marketing can reap great rewards for minimum cost. 

Sources

Exploding TopicsSaasquatchAnnex Cloud

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Written by Jason Wise

Hello! I’m the editor at EarthWeb, with a particular interest in business and technology topics, including social media, privacy, and cryptocurrency. As an experienced editor and researcher, I have a passion for exploring the latest trends and innovations in these fields and sharing my insights with our readers. I also enjoy testing and reviewing products, and you’ll often find my reviews and recommendations on EarthWeb. With a focus on providing informative and engaging content, I am committed to ensuring that EarthWeb remains a leading source of news and analysis in the tech industry.