Running referral marketing campaigns and implementing referral marketing helps businesses acquire consumers and grow rapidly. This is because most consumers trust referrals and recommendations from their close ones.
Brands like PayPal and Dropbox have used referral marketing, and they efficiently managed to grow by 3900% in the span of 15 months.
I have compiled the latest referral marketing statistics that cover topics like word-of-mouth referral, the effectiveness of referral marketing, the power of referral marketing, and other key statistics in this article.
Referral Marketing Statistics 2024: Top Picks
- Referral marketing helps companies and businesses generate 3 to 5 times higher conversion rates.
- 65% of the new business opportunities come from referrals and recommendations.
- Word of mouth affects 20% to 50% of the purchasing decisions.
- More than 90% of consumers trust word-of-mouth referrals more than other forms of marketing.
- Companies that invested in referral marketing campaigns witnessed an 86% increase in revenue compared to the previous year.
- 92% of the consumers trust referrals from their family and friends.
- 84% of the B2B decision makers state that their B2B buying process starts with a referral.
- 71% of consumers said that they easily get influenced by social media referrals.
- 27% of the sales representatives state that they get over half of new clients through referrals.
How Effective Is Referral Marketing?
The effectiveness of referral marketing depends on the effort, time, and money you invest in it.
Let us take a look at the effects of investing in referral marketing.
1.) Referral Marketing Helps To Generate Three To Five Times Higher Conversion Rates Than Other Channels
A referred consumer can bring you a 25% or higher profit margin and is 18% more loyal than a customer acquired through other means.
Additionally, referred customers have a 16% higher lifetime value than those who became your consumers through other means.
Source: Harvard Business Review, Annex Cloud.
2.) 77% Of Marketers Consider Lead Forms As The Top Referral Methods For B2B And B2C Business Owners
At the same time, 73% of marketers consider emails to be the most popular referral method. Some of the other popular referral methods are social media referrals (50%), verbal referrals(54%), shareable URLs (41%), and print cards (18%).
The following infographics display the most popular referral methods.
Source: Truelist.
What Percentage Of Business Comes From Referrals?
Referrals help businesses to increase sales rates. At the same time, companies that invest in referrals observe higher rates of ROI.
Let’s take a look at the profit made by the businesses with the help of referrals.
3.) 65% Of The Business Opportunities Come From Referrals And Recommendations
Besides, 82% of small businesses claim that referrals are their main business source.
Additionally, almost all software companies get 20% to 50% of their new consumers through their existing customers.
Source: Signpost.
Word Of Mouth Referral Statistics
Word-of-mouth referral is among the most common referral techniques. It helps businesses to create trust among their users.
Let’s take a look at how word-of-mouth referrals help firms.
4.) Word Of Mouth Affects 20% To 50% Of All Purchasing Decisions
According to McKinsey & Co., word of mouth is the primary factor that affects consumers’ purchase decisions.
64% of marketing executives believe that word of mouth is the most effective form of marketing.
5.) Word Of Mouth Is Two To Ten Times More Effective Than Paid Ads
Almost 23% of the customers talk about their favorite products with their family and friends daily.
As a result, Word-of-mouth marketing helps businesses generate an average of five times more sales than paid media impressions.
21% of brands also admit that they lost customer trust due to negative word-of-mouth.
Source: Invespcro, Semrush, BCG.
Referral Program Statistics
Businesses that run referral programs or campaigns are more likely to witness an increase in their conversion rates. Referral programs also help in increasing reach and brand awareness.
This section highlights the effects of referral programs run by the businesses.
6.) Companies Or Businesses With A Referral Campaign Witnessed 86% More Revenue Growth Over The Past Years
A study conducted by Wharton Business School concluded that referred consumers were $0.45 more profitable per day than any other customers.
Additionally, the customer acquisition cost (CAC) for the referred consumers was $23.12 less than that for non-referred customers.
Over the initial six-year span, the referred consumers have a 60% higher return on investment than the non-referrals.
Above all, the overall ROI generated from a referral program is ten times higher for large businesses, while that generated by a medium-sized company is 9.4 times higher.
The infographic displays the overall ROI generated by referral marketing for large enterprises, medium-sized businesses, and small businesses.
| Business Size | ROI Generated Through Referral Marketing |
|---|---|
| Enterprises | 10.2 times |
| Medium-sized businesses | 9.4 times |
| Small businesses | 3.6 times |
Source: Finance Online, Wharton Business School.
7.) 92% Of Customers Trust Referrals From Their Close Ones Over Other Forms Of Advertisements
The buyers referred by a friend are 18% more likely to stay with the brand. These buyers also help companies generate more revenue over the years.
Further, more than 9 in 10 consumers trust referrals from their friends and family over anything else.
On the other side, only 36% trust online video advertisements.
Source: Harvard Business Review, Nielsen.
8.) Customers Acquired By Referrals Spend 200% More Than The Average Consumers
They are four times more likely to refer your brand to other consumers and have a 37% higher retention rate.
PayPal statistics also show that it experienced daily growth of 7-10% through referral marketing.
Source: Annex Cloud. Deliotte.
B2B Referral Marketing Statistics
How effective is referral marketing for B2B businesses, and how much profit does it generate? In this section, let us explore the answer to this question and related stats.
9.) 84% Of The B2B Decision Makers State That The B2B Buying Process Starts With A Referral
Peer recommendations or referrals influence more than 90% of B2B purchases.
At the same time, 87% of the sales marketing efforts are effective when using B2B referral marketing.
As a result, 86% of B2B companies with a referral program experience growth.
Source: Think Impact, Viral Loops, ReferReach.
10.) 78% Of B2B Marketers Believe Referral Programs Generate Good Or Excellent Leads
At the same time, 82% of B2B sales leaders believe that referrals generate the best leads.
These referrals help B2B businesses gather 30% more leads, which generates revenue for their businesses.
Hence, 70% of sales leaders, 69% of B2B frontline sales personnel, and 67% of marketers believe that referred leads close faster than others.
Source: Influitive, Forbes, Finance Online.
11.) 49% Of B2B Marketers Believe Customer Relations Are The Most Effective Marketing Tactic
While 37% and 31% of marketers believe personalized messages and online events to be more effective, respectively.
At the same time, some of the other top B2B marketing tactics are:
- Customer referrals (49%)
- Online events (35%)
- Personalized messages (37%)
- Investing in SEO (31%)
- Lead generation with data (27%)
Source: TrustRadius.
Social Media Referral Marketing
Social media users are growing rapidly, and 4.8 billion people use these platforms worldwide. Hence, most businesses prefer to run campaigns on social media and invest in social media referral marketing.
I have covered the results of social media referral marketing in this section to help you understand its importance.
12.) Based On Social Media Referrals, 71% Of Consumers Are Likelier To Purchase A Product
According to Shareaholic, social media accounts for marketing and advertising for nearly 31% of new business.
Further, HubSpot states that 78% of consumers admit that they are influenced by the posts and other media shared by their favorite brands on social media.
However, only 39% of consumers prefer to give feedback to a business on social media.
Source: Annex Cloud, Shareaholic, HubSpot.
13.) 59% Of Pinterest Users Have Purchased An Item After Viewing It On The Site
Similarly, 33% of Facebook users have purchased an item they saw on their friend’s walls or news feeds.
Besides, 55% of the consumers reported sharing their purchases on Facebook, Twitter, Pinterest, Instagram, and other social media platforms.
They usually share their positive experiences about a brand or a company and ask for opinions from family and friends.
14.) 82% Of Americans Said They Ask For Recommendations From Their Family Or Friends Before Purchasing
Besides, 66% of Americans said they are likelier to purchase a product suggested by family or a friend on social media.
Therefore, 88% of Americans reported that they would like to get some incentives for sharing products on social media.
This number jumps to 95% when talking about millennials. Besides, over 3 in 4 Americans said they would like to receive an incentive in cash.
Source: Ambassador, Exploding Topics.
The Power Of Referral Marketing
This section will help you understand how referrals affect businesses and increase customer loyalty and brand awareness.
15.) 85% Of The Millennials Trust The Recommendations And Referrals Given By Their Friends And Family
28% of the millennials further said that they would not give a chance to the product if their friends and family didn’t like it.
83% of Gen Z and Gen X shoppers said they would purchase a product referred by their close ones.
Gen Alpha is among the most impactful referrers, and 81% of Gen Alpha kids influence their family’s purchasing decisions.
Also, a happy customer can yield at least nine referrals.
The following infographic displays the percentage of trust different generations have in referral marketing by age.
| Generation | Percentage Of Trust In Referral Marketing |
|---|---|
| GenZ | 83% |
| Millennials | 85% |
| GenX | 83% |
| Baby Boomers | 80% |
| Silent Generation | 79% |
Source: LinkedIn, Extole, Truelist.
16.) 83% Of The Consumers Said They Were Ready To Refer A Business After Encountering A Positive Experience
So, if customers are satisfied with their experience, they are ready to go the extra mile and write a positive review.
Plus, 91% of the people in the United States said they usually share exclusive offers and good deals with their family and friends.
Source: Jobs in Marketing.
17.) 27% Of The Sales Representatives State That They Get 50% Of New Clients Through Referrals
Customers who witness your business is recommended and approved by other clients are likelier to do business with you.
These referred clients are more likely to become permanent and loyal consumers.
Source: Jobs in Marketing
Employee Referral Statistics 2023
Employee referral boosts your chances of getting the job. It makes your profile stand out, making you more likely to get hired.
Let us take a look at the facts and figures related to employee referrals.
18.) 84% Of The Company Runs Employee Referral Programs
These programs account for 30 to 50% of all hires. The cost per hire recorded during the employee referral program is lower than other recruiting methods.
Companies using employee referral programs can save an average of $3,000 or more per hire.
At the same time, the candidates that are referred are 2.6% to 6.6% more likely to take the offer.
These Employee referrals have the highest applicant-to-hire conversion rates. Only 7% of the employees apply, but 40% are hired.
The best part is the referred employees join their positions within 29 days compared to the 39 days needed by other applicants.
19.) 42% Of The Referral Hires Come From Employee-Submitted Referrals
Referred candidates are usually 15 times more likely to be hired than other candidates.
Besides, the referrals of high-performing candidates are given more importance as they are 10% more likely to refer to a high-quality candidate.
Source: Zipdo.
20.) Hiring Candidates Through Referral Programs Is 55% Faster And More Efficient Than Through A Career Website
New candidate hires via referral programs generate around 25% more profit for their companies than those sourced via other channels.
Hence, 71% of employees with successful referrals feel satisfied with their role compared to 56% of employees from other hiring sources.
Source: Zipdo.
Incentives And Rewards
Incentives and rewards are the best way to encourage consumers to refer a business or product to their family and friends.
In this section, we will examine how incentives and rewarded referrals help the company market its products.
21.) Referred Consumers Are Expected To Have A 34% Higher Average Order Value Than Other Consumers
Rewarding existing consumers for referrals helps drive additional revenue. Customers who make referrals are more likely to purchase, repeat purchases, and have higher order values.
Further, the referred consumers and the ones who make referrals are
- Four times more likely to buy a new product.
- 54% more likely to make another purchase.
- Have a 34% higher order value.
- Spend 25% more on the business compared to other consumers.
The latest case study by Talkable shows us the effect of referral marketing campaigns on RhinoShield’s revenue and traffic. The company successfully converted 17.3% of referred traffic using referral marketing software.
Source: Social Media Today, Knowledge at Wharton.
22.) Offering A Reward Increases The Likelihood Of Getting A Referral
Here, the size of the reward does not matter.
In fact, 84% of Americans stated that an exclusive offer would make them buy from a specific brand, and they would also refer it to a friend.
Besides, 91% of the Americans said they would share an exclusive offer with their family and friends.
Source: American Marketing Association, Kelton & SheerID.
Conclusion: More Than 52.5% Of Businesses Use Referral Marketing
Referral marketing is a highly effective strategy for businesses, with statistics showing its significant impact on growth and customer acquisition. Referred customers are more loyal, have higher lifetime value, and generate greater profits. Word-of-mouth referrals outperform paid advertising by 2-10 times, influencing 20-50% of purchasing decisions.
Companies implementing referral programs see substantial revenue increases, with 86% experiencing growth. Social media plays a crucial role, as 71% of consumers are likelier to purchase based on social referrals.
Overall, referral marketing offers higher conversion rates, lower acquisition costs, and increased customer loyalty across various industries and generations.
