How do new customers come to your shop to buy a brand? What is the percentage of customers who purchase products based on media advertisements? What is the ratio of customers who come shopping based on word-of-mouth referrals? This post explains referral marketing as a powerful tool for B2C marketing.

What is Referral Marketing?

Studies reports there are approximately 2.5 billion brand-related conversations in the US alone. At this ground, we can assume the rate of global discussions related to products/services. Referral Marketing is one of the ancient strategies used in marketing. It encourages services/products to potential customers through word of mouth, also known as referrals. These referrals can happen naturally or can be influenced by the marketing department of a company. There are diverse approaches to referral marketing. Today, offline and online platforms are doing well to promote products/services by giving offers. However, people are always looking for comments and ratings as a referral. In addition, your family or friends are often asking “how is it” when they come to know you have bought a new product. These types of conversations about a product have an immense influence on the further development of a business.

Referral Marketing can aid you in nurturing your business. Maintaining the quality of your greatest assets, the clients interested in your product or service, and having them recommend it to friends and family can lead to big rewards for your company. When you decide to apply referral to your marketing plan, it will be essential to consider a few steps.

Understanding customer needs and wants is the first step in referral marketing. This requires extensive marketing research and its application in referral marketing. You can do this research in different ways.

The first one is by exploring customers’ buying habits to find out their preferred products/services. Then, depending on the business, a company could offer reductions, add-on services or free products. The second research method is to find out what consumers prefer by making use of customer assessments. The assessment can ask a shopper what it takes for them to take part in a referral program. It is generally in the form of a reward or incentive. Marketers would then include possible gratuities with the investigation or ask the customers to add options.

The next step is to decide what strategies have to take on referrals. Here, marketers can determine the procedures and plans, such as how many referrals are required to get the incentive and how they can prove genuine referrals. For example, you could trace referrals through a unique signup link for every existing shopper. This way, the company can track the referrals back to the customer and their exclusive link. But, this process should be actual and reliable; otherwise, there is a chance of losing customer loyalty.

The following step in a referral marketing strategy is to market the program publically. Some businesses place signs in physical stores, usually near the cash registers, that offer customers to join the program. A collective strategy is to create brochures that customers can take with them, comprising information about the referral program, offering consumers a physical notice of the program.

After the referral marketing strategy has started, it is necessary to focus on ongoing marketing activities to follow the program’s effectiveness. To understand success, the company will have to decide on how it will measure success. For example, you could know the success rate by assessing how many customers share their thoughts about your product with their friends, family, and colleagues. If you follow online referral marketing strategies, it is easy to find out “shares” and “likes” you have got. Whereas, in offline marketing strategy, you can directly take the feedbacks using your customer care programs.

Any company that offers services/products can make referral campaigns part of the marketing strategy. Referral marketing is common among retail stores, travel agencies, restaurants, gyms, and health professionals. All the areas of business are opened with excellent opportunities for referral marketing. Even an insurance agent or a doctor can use referral marketing techniques to boost their revenues. Referral marketing is also used by online companies, often in combination with social media and sharing websites.

Offline Referral Marketing

Offline Referral Marketing is a traditional mode of marketing that was focusing “word of mouth” publicity. When people get recommendations from those they believe, they will be more likely to try that product/service. When a person has high social status or is admirable to all, people may try to imitate that person by using the product. That is why advertisers using celebrities to introduce a product before the masses. Here, the celebrity will turn as a referral.

Online Referral Marketing 

Online referral marketing is a part of digital or internet marketing and focuses on online interaction between customers. Online, especially through social media, is where views on product favorites and experiences are being shared. It also includes a company’s website and social media accounts linked to these companies. Companies encourage this way of referral marketing by providing campaigners of their products with unique referral codes and information on special proposals.

An important cluster for referral marketing is the company’s clients. This strategy focuses on keeping existing customers pleased and working with them by giving them incentives for their recommendations. For example, an incentive could be cash or offering customers who contribute an extra and exclusive product or service for free every time the company gains a new customer through referral.


Whether small or large, any business can make benefits using referral marketing strategies. As it is a simple model of marketing, referral marketing strategies will work well for startup businesses. The employees and business family have an interactive role in boosting sales by providing benefits of the product/services to friends and relatives. When a person wants to try something different, friends and family are often the first to hear and recommend a product or service. It can also help a small business to get a head start on its competition.

About the Author:

Pramod Kumar is a teacher, trainer, and a writer passionate about academic writing. His favorite subjects include psychology and economics. He is always exploring innovative theories and how it can be implemented in everyday lives. He is also a regular content contributor for, a website dedicated for PowerPoint Templates.


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