
and
Rewards
Unlike traditional marketing, referral programs are performance-based. The only expenses are the rewards for your customer advocates and prospects, and only when you obtain a new customer. Careful consideration of the reward against your profit margins should ensure the programme's scalability as well as ensuring a lower cost of acquisition than other marketing targets.
Your new prospect will likely have similar interests, tastes and values to their referee meaning they're more likely to become a long term customer of yours and also to spend more with you. Indeed, research of a German Bank showed that the lifetime value of a referred customer is 16-25% higher than a non-referred customer.
By showing your customers that you value their opinion, you help to build mutual trust and credibility with your customers. Rewarding your existing happy customers for acting as brand advocates helps to build a community of customers who are engaged with your brand.