Growing your small scale business or a start up is a tough work. The sales function requires a regular task of including fresh qualified prospects to your business quite frequently. Searching the best competent leads for your setup does not arrive from cold contacts but from well managed and well planned referral marketing. There are several benefits of this type of marketing which simply involves the positive words of mouth from your friends and existing customers. The result of such customer referral can bring about an exponential increase in your conversion rate without much ado. Let’s figure out few such benefits.
- Without the huge cost of advertising, referral marketing reduces your sales expenses. With less time spent on cold calling, you can easily concentrate on your customers and their further references.
- Referral also helps you to create a group of satisfied customers. The cycle of customer base, from here on, self-perpetuates with large number of satisfied customers referring your company to others.
- The ultimate result of all the points and benefits mentioned above is increase in your conversion rate. As per a world-renowned sales trainer, Tom Hopkins has mentioned in “Sales Prospecting for Dummies” that your closing ratio for non-qualified leads is 10 percent versus a 60 percent close ratio with referred leads.
The low cost of marketing on social media and the ever escalating revenue generated through customer referrals has granted the businesses a blessing that is almost impossible to ignore. Although still highly underrated by several businesses, the social media referral marketing has been successful in sowing the seed of success for many start ups and other setups.
“According to stats, Word of Mouth (WOM) has been able to improve marketing effectiveness by up to 54%.”
In fact it is also interesting to note that when the certain specific case studies were analyzed, researchers found out that
“For every 10% percent increase of WOM, a sales lift between 0.2% – 1.5% has been observed”.
As per the survey conducted by The Word of Mouth Association in January 2014,
- 64% of their survey answerers mostly or completely agree that Referral Marketing or Word of Mouth Marketing is more effective than traditional marketing.
- Partly indicated that they’ve incorporated WOMM into their traditional marketing campaigns.
- 70% of respondents are planning to increase their online Referral Marketing spending, and 29% will increase their offline WOMM spend.
- 82% use Word of Mouth Marketing to increase their brand awareness, but 43% expect it to improve their direct sales.
The influence of Referral Marketing is directly helping the business owners to increase the revenue and conversion rate is evident. However, the challenge dwells in the fact that how to effectively and efficiently identify, inspire and channel the efforts of the referrals made.