40+ Referral Marketing Statistics Your Competitors Don't Know Yet

People trust recommendations from friends up to 10x more than anything your brand says directly. In fact, 92% of consumers trust recommendations from people they know above all other forms of advertising. And, based on our research, referred customers will typically spend more and stay longer with your company. 

If you're not yet convinced, these referral marketing statistics will show you exactly why your customers can be your best marketers.

General referral marketing statistics

Consumers rank personal recommendations as their most trusted source of information when making purchase decisions. A BCG survey of 32,000 consumers found two-thirds ask friends and family before buying anything. 

This is 2-10 times more often than they rely on company websites or traditional media.

In another study, Nielsen found that 92% of people trust recommendations from friends and family above all other advertising forms.

Online reviews come in #2nd, with 70% of consumers trusting them.

And if you remind customers they originally came through a referral, it makes them 21% more likely to refer others themselves.

How far does this trust in recommendations reach? 

From our research, we discovered that 84% of shoppers learn about new products through conversations. And for 86% of consumers, recommendations are a critical factor influencing their purchase decisions.

Why do shoppers love referrals so much?

The main reason why customers love referrals is because they provide real-world details that only actual users would know. This ranks highest for Gen X (54%) and remains important across all generations (50-53%).

Benefits of referral marketing

Believe us when we say that referral marketing should not just be an afterthought. Here are a few reasons why referral programs deserve a central place in your marketing strategy. 

• Referred customers stick around longer and spend more money. Research shows their average value is at least 16% higher than non-referred customers
• A referred customer brings at least 25% more profit and shows 18% higher loyalty than customers acquired through other channels
• Referred customers don't just buy more. They actively bring in 30-57% more new customers than your average buyer
• 25% of shoppers report they're more likely to purchase items recommended by someone they know compared to last year
• Finally, 39% of your customers will feel more connected to your brand after making referrals, regardless of whether they receive incentives

Word of mouth statistics

Word-of-mouth influences 20% to 50% of all purchasing decisions, making it one of the most influential factors driving consumer behavior.

What’s more, customers gained through word-of-mouth (WOM) are twice as valuable as those from traditional marketing. They also refer twice as many new customers.

When forced to choose just one information source, half of US shoppers pick word of mouth over any other option.

For business owners concerned about retention, word-of-mouth delivers here, too. Studies show that referred customers stay with your business 37% longer than those acquired through other channels.

Brand discovery is increasingly happening through personal recommendations. In the US, 36% of internet users report finding new brands through word-of-mouth.

Online reviews stats

Nearly everyone reads reviews now. 98% of consumers check them occasionally, while 77% read them frequently or always. 

Those who never read reviews dropped from 13% in 2020 to just 2% in 2021. 

Not only that, but 93% of shoppers admit that online reviews influence their buying decisions.

For many customers, reviews are their go-to research tool, second only to search engines. 

What do customers value most in reviews? 

Product performance details and satisfaction levels are the main things customers look for in online reviews. 

Does the number of reviews matter? 

Yes, it does. One analysis found that US shoppers expect to see an average of 112 reviews per product. Younger buyers typically want even more reviews before they commit to a purchase.

Consumers are not just checking your website, either. Half of online shoppers trust 3rd party review sites like Google, Yelp, Facebook, and TripAdvisor more than reviews on your company site.

Most people leave reviews simply to share their experiences with other shoppers. 

Cost of getting negative reviews

A single negative review can and will cost your business up to 30 potential sales. 

After all, when someone hears about a negative experience from a friend or family member, 52% immediately cross that brand off their consideration list.

For those who don’t write you off completely, 86% will be hesitant to buy from you regardless of how compelling your other marketing efforts might be. 

Furthermore, 92% of shoppers only exclusively visit businesses maintaining *4 stars or higher. 

Customer referral program data

Nearly half (44%) of consumers join referral programs primarily for the rewards. However, 31% of consumers avoid referral programs because they worry about annoying friends with referral links. 

And 20% feel uncomfortable recommending products solely for rewards. 

Most customers (65%) would prefer ‘dual-sided’ rewards where both the referrer and new customer benefit.

How popular are these referral programs?

Three-quarters of shoppers use referral codes at least sometimes, and 29% use them frequently. Younger shoppers (18-35) are especially active since 80% use referral codes. 

Additionally, 28% of consumers often or always share their friends’ referral links.

Consumer participation in referral programs by age group

That said, these referral programs are not as smooth as customers always want them to be.

Nearly a third of customers say the biggest issue is rewards being too low. 

Another 25% of shoppers are frustrated by limited sharing options, while 20% find the process takes too much time or is difficult to track.

Which industries can benefit most from referral programs?

Electronics and professional services see the highest reliance on referrals. Over half of electronics purchases are influenced by recommendations.

B2B referral marketing statistics

82% of B2B sales leaders identify referrals as their highest-quality lead source. This isn't surprising, as 91% of B2B buyers trust word-of-mouth recommendations above other marketing channels.

B2B referrals can also increase revenue. Studies show that 86% of B2B companies with formal referral programs experienced revenue growth in the past two years, compared to just 75% of those without structured programs.

Across organizational roles, referrals received overwhelming support.

• 87% of frontline sales staff consider them essential
• 82% of sales leaders rely on them
• 78% of marketers prioritize them in their strategy

However, while 91% of customers are willing to provide referrals, only 11% of salespeople request them. 

What motivates customers to refer a brand?

Cash is king in referral marketing. More than half( 58% of customers) say money is their biggest motivator when recommending brands to others. 

Free products or services come in #2, while gift cards from Visa or Mastercard appeal to 41% of potential referrers.

Subscription extensions and internal currency rewards both sit at the bottom. They have only 10% effectiveness in motivating customers to refer others.

However, customers don’t always get the incentive they want from a referral program.

Businesses typically offer around $10 per referral, but customers actually expect double or quadruple that amount ($21-40).

When it comes to reward structure, most customers (54%) want a flat reward for each person they bring in. However, 35% would rather see their rewards grow as they refer more people.

FAQs

Final thoughts

The referral marketing statistics we've covered show that 92% of people trust recommendations above any ad you'll ever make. We also know that referred customers spend more, stick around longer, and bring their friends.

Companies that take this to heart and build actual referral programs will see their revenue grow. Those that don't are missing out on significant opportunities.

What's your next move? 

Will you leave referrals to chance or start turning happy customers into your most influential marketers?

Sources

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2. Nielsen. Consumer trust in online, social, and mobile advertising grows
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20. FinancesOnline. Referral marketing statistics
21. WiserNotify. Word-of-mouth marketing stats
22. ReferralRock. B2B referral marketing statistics