The Value of Customer Referrals in Marketing Your Online Business

The Value of Customer Referrals in Marketing Your Online Business Millions of dollars are collectively spent by thousands of businesses throughout the United States each year. Since the economy is still struggling through a recession, however, business owners are searching for effective ways to save as much money on marketing as possible in order to maintain a substantial profit margin.

Even though the overall costs associated with running an eCommerce business are much less than running a traditional brick-and-mortar company, finding an effective to market online businesses can be even more difficult to do.

This is one of the main reasons why online business owners depend so much on customer referrals to increase traffic and annual sales.

Using the Trust Factor in Marketing

People are more likely to trust their friends and relatives than most companies and pay much more attention to recommendations that come from these individuals than they do anyone else.Studies have confirmed that 92 percent of consumers trust these referrals more than traditional advertising overall, according to Business News Daily. As an eCommerce business owner, it is important for you to become highly skilled at using referrals and recommendations generated by your customers as an effective eCommerce marketing strategy.

The Long-Term Benefits of Referred Customers

Along with the short-term benefits of increasing the number of sales that are generated within your business, referrals can also provide even more substantial benefits on a long-term basis as well. This is primarily because of the fact that customers that are referred to your company by trusted individuals that are pleased by their experience with you are likely to return and provide you with repeat business in the future. A referred customer has a lifetime value that is 16 percent higher than other customers, according to a study by the Wharton School of Business. Therefore, satisfactory customer service plays a key role in the overall success of this specific type of marketing.

The Shifts of Positive and Negative Feedback

Keep in mind that customer referrals can also be very effective at driving traffic away from your business if the feedback that is being provided through these individuals is negative overall.As the old saying goes, negative information seems to spread faster and farther than positive information regardless of how many positive referrals your company may have already. Strive to make sure that you focus on providing superior customer service on a daily basis.

Provide Incentive for Referrals

In order to generate the most gain from this form of ecommerce marketing, provide customers with an incentive that will motivate them to actually want to refer as many people to your business as possible. One study confirmed that over 80 percent of satisfied customers are willing to refer companies to the people that they know, but less than 30 percent of those customers actually follow through with that desire, according to Using giveaway prize and contests as well as offer discounts and coupons on future sales can generate a substantial number of quality referrals and recommendations, because your customers will be more interested in what they are able to gain personally by doing so.

Editorial Team
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  1. Word of mouth marketing is powerful.

    You trust your friends more than anybody else, in most cases…yep, you trust them more than experts, even ;)

    Do your best job, attract raving fans/ aka customers, and keep these customers by over-delivering.

    These folks will spread the word quicker than you ever could because people seem to trust those closest to them more than anything else.

    The key resides in simply doing your best job and allowing your clients to shout you out on a persistent basis.

    Thanks for sharing!

  2. Great article!

    When it comes to referral, every one counts. Being said that, we must know how to gain the customer’s trust and come back for more. I think the biggest mistake is by doing the wrong move which immediately turn off the referral.

    Good planning and ‘respect’ is more than just important!

    Just my 2 cents.


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