As a marketer, your number one priority is to help grow the business. Whether that means attracting subscribers or driving sales, new customer acquisition is imperative to every brand’s livelihood. With all the tracking, tools, and analytics available today, marketers can for the most part predict how many new customers they will be able to drive by how much money they are spending. What they can’t predict, however, is what kind of customers.
Let’s take a look at the the most common acquisition channels, SEO and SEM. Recent data shows that search marketing spend continues to grow, but its overall budget share is declining. What this means is that marketers are looking for more cost effective ways to acquire better customers. And not just any customers, but customers with high lifetime values (LTV), high brand loyalty, low attrition rates, and a willingness to tell their friends about your brand, products, or services.
Enter the third acquisition channel, referral marketing. No longer the stepchild, referral marketing has stepped into the spotlight as marketing’s Cinderella. It helps brands acquire new customers at scale by rewarding their existing customers. Because these customers are marketing on a brand’s behalf, the messages are trusted and result in acquisitions. The data backs it up. The AMA claims referral marketing generates customers who have higher LTVs, are more loyal, and contribute higher margins per year than other customers.
In other words, for brands looking to grow their businesses, referrals are an instrumental part of their marketing mixes. Let’s take a look at this third acquisition channel by the numbers: