Today, the push to engage customers through social media outlets is greater than ever. This year alone, eMarketer predicts that 80% of businesses with 100+ employees will adopt social media for marketing. The opportunity remains however, to demonstrate “Social ROI”. Understanding the need to address these hesitations, researchers Schmitt, Skiera and Van den Bulte spent almost three years tracking approximately 10,000 customers of a German Bank, both referred and non-referred. The research proved that referred customers are unquestionably more valuable for companies over the short and long term, and “referred customers exhibit a higher contribution margin, retention, and customer value.”
All in all, the study found that “the average value of a customer acquired through a referral program is higher than that of a customer acquired through other methods”. Putting the skeptics to rest, referral marketing holds its ground as a ROI positive investment. But a word to the wise when exploring the options; referral solutions should be convenient, compelling and comfortable for the referrer, while tracking the entire process from referrer to referee purchase.