Word of mouth is the primary factor behind 20-50% of purchasing decisions, which is why rewarding your customers should be a no brainer for most businesses. Rewarding customers for sending new customers to your business is a necessary tactic for the majority of business growth; 84% of people trust recommendations from people they know, making them the most influential form of advertising. Plus, digital platforms have made it easier than ever for businesses to reward their clients. So, not only are rewards a proven strategy, but they now require little effort on the part of both businesses and consumers to send and receive.
Let’s dig into some of the core reasons why rewarding your customers is the best way to grow:
Reward Size Doesn’t Matter
One of the biggest benefits of rewarding your customers is how cost-effective it is. As it turns out, people just like being acknowledged, even in a small way. According to the American Marketing Association, offering a reward increases referral likelihood, but the size of the reward does not matter. Therefore, a $5 gift card has the same impact as a $50 gift card. The point is that rewarding your customers is all about showing your appreciation, and in turn they feel like you are a business that cares, and that they can trust. In turn, they will tell others about your stellar service.
You can also implement this incentive program with your employees, and sales teams. You are more likely to see better performance from sales teams that have an incentive program based on their performance. Again, these incentives do not have to break your company’s bank, they can be small rewards over a period of time. The goal is driving business growth, and incentivized employees are the fuel behind that.
It’s Faster than Traditional Growth Tactics
Companies that reward their customers for referring new clients experience 86% more revenue growth over the years when compared to the rest. This is probably because referring customers make an average of 2.68 invites, which provides this multi-level referral program the opportunity for exponential growth, and at a much faster rate. Additionally, according to research by Influitive, companies with a referral program in place experience:
- 69% faster time to close.
- 59% higher lifetime value
- 71% higher conversion rates
Therefore, not only do referral programs speed up sales, more people are likely to purchase from a referral, and remain loyalists, and potential referrers themselves.
It’s Non-Generation Specific
Another reason why rewarding consumers for referrals can be so successful is because every generation looks to, and trusts their peers for recommendations. There isn’t any specific age group that doesn’t value the insights and advice of others when making purchasing decisions. Therefore, implementing a rewards process is attractive to everyone. Plus, given that Gen X, Millennials, and Gen Zers actually trust referral advertising the most, it’s valuable to understand that the future of consumer spending is highly dependant on referral marketing efforts. In fact, since digital channels and review sites are only becoming more influential referral marketing and eGift card solutions are only growing in popularity. For more about this, check out 8 Reasons Why Digital Gift Cards Are the Future of Consumer Rewards.
Despite the fact that rewarding customers for their referrals is a beneficial strategy; it is still largely untapped. Only 30% of B2B organizations are investing in the channel. This gap means most companies are leaving a ton of potential customers and money on the table. See how your business can leverage Perkalead with referral rewards here. Or, if you’re ready to get started, you can sign up for a free account now.