Referral marketing, or Word-of-mouth Marketing, is a marketing strategy that encourages existing customers to become brand advocates who recommend your products/ services to their friends and family. So, many merchants wonder about the benefits of referral marketing.Take full advantage of Referral Program Benefits

It works on the basis of offering incentives (rewards or discounts) to motivate the customers to participate in the referral program.

Read more about Referral Marketing – Everything You Need To Know To Master It.

As traditional advertising is losing its charm, more and more businesses turn to referral marketing.

So why do businesses, even big companies like Google or Tesla, choose to use referral marketing?

Because there are many benefits of referral marketing, and they are incredible.

11+ Top Benefits of Referral Marketing

Benefits of Referral Marketing

Here are all the primary benefits of referral programs.

People trust referrals

This is one of the most compelling benefits of referral marketing.

A lot of consumer reports indicate that recommendations and reviews are trusted more than traditional advertisements.

And people are four times more likely to buy when referred by their friends.

Hit the targeted audience

Typically, people often bring up conversations about their favorite products or stores with their friends who share the same interest.

This is another fascinating referral marketing benefit. Basically, this marketing strategy can hit right on your targeted audience. What can be better than this?

Gain loyal and valuable customers

The customers referred by their peers already have a favorable opinion of your brand. That is why they are more likely to become loyal customers.

Truth be told, a report of Wharton School of Business shows that referred customers are about 25% more loyal on average than other customers.

To add to that, a study of Wharton School of Business shows that referred customers have more lifetime value than other customers. How many more? 25% higher!

So another awesome benefit of referral marketing is that it can help you gain loyal and valuable customers.

Improve customer retention rate

A customer who participates in your referral programs is much more likely to stay with your company.

Studies show that people tend to have a stronger attachment to a company if their friends share the same bond. That is why both the referrer and referee are more likely to become loyal customers.

Long story short, referral marketing can earn you more loyal customers from both ends.

Because acquiring new customers is four times more expensive than retaining your existing customers, this is one of the top benefits of referral marketing.

Increase customer engagement

Customer engagement is the long-term relationship between you and your customer.

It is a crucial factor to your business. You should take any chance you have to connect with your customers.

Increasing engagement will strengthen your online presence and increase the chances of potential revenue.

As we mentioned, referral programs also reward your current customers. Those gifts and discounts will make your customers more happy and satisfied.

Not to mention, a customer who joins your referral program usually will visit your website more frequently to either claim rewards or discuss a product with others.

And more often a customer returns to your site, the more opportunities you have to remarket and promote.

Expand marketing reach

By using your existing customers as your advocates, referral marketing allows you to reach a pretty large pool of people that you might not be able to dive into otherwise.

There are almost no limits to your customer telling a friend about a good product or service. And then their friends will tell their friends, who will tell their friends, and so on. Here generates a purchase loop and boosts repeated sales. 

Customer referrals will allow you to expand your client base.

Great ROI value

ROI (Return on Investment) is a financial ratio used to calculate the profitability of a particular investment.

And of all marketing strategies, referral marketing is considered the most cost-effective one.

Usually, you need to offer your customers a small discount or gift to motivate them to share about you. But it still can reduce your budget, compared to other advertising such as online ads.

Why is that? Because it’s always a lot less expensive to push marketing efforts towards your existing customer base than to market to new customers.

You can save even more by merging your referral rewards into your loyalty rewards program, which allows you to award points rather than a gift or discount per referral.

Valuable data

Keep in mind that consumers always love personalized experiences. Personalization brings higher engagement, and it helps build stronger relations with your customers.

By tracking your customers’ referrals and engagement, you can give them the benefit of personalization.

On a bigger scale, these data give you a good idea of general market trends, which can help you become better at meeting customer needs.

And the progress tracking report of your referral program can give you more customer insight to perfect your referral strategy.

Those valuable data and insight is one of the most astonishing benefits of referral marketing.

Spread brand awareness

Modern consumers want to fix themselves with brands that have a positive reputation. That is why building your brand awareness and reputation is an essential task.

And letting your existing customers talk about you through referrals is the best way to improve your brand’s reputation.

In fact, 49% of USA buyers say that their friends and family are their top sources of brand awareness.

Social media boost

Social media has become a tremendously important advertising tool. For consumers today, it is a fundamental portal leading to all markets. 

Nowadays, most referral marketing platforms allow your customers to refer friends via social media channels. Therefore, your brand will get an additional social media boost.


Do you like the idea of your marketing running itself?

It might sound a little bit too good to be true. But with referral marketing, it can happen.

It might take some effort and investment in the beginning, but once you have built a good referral program, you can pretty much just sit back and enjoy its benefits.

How to take full advantage of Referral Program Benefits

Take full advantage of Referral Program Benefits

As you can see, those amazing benefits of referral marketing definitely help to grow your business. Even better, it can make growth hacking.

But how to build an attractive referral program to optimize the power of referral marketing and take full advantage of referral program benefits.

Here are some tips for you.

Get the timing right

Referral marketing will be more effective if you can show your customers referral CTAs at the right times.

Usually, the perfect time is right after purchase and again when your customer receives the product and appreciates its value.

Make it easy

The beauty of an appealing referral program is that it is easy to use.

Note that no one likes complicated things. So the best thing is to make your referral program as simple as possible. 

Give your customers a custom code or link so they can quickly share it on social media. Ask them to enter their friends’ emails so they can send out massive amounts of referral messages. Provide generic messages that can be customized, so they don’t have to write up their own.

Always remember that simple is the key.

Target your referrals

Your referral marketing materials should be clear about how and who will benefit from your products and services.

This way, it can also help you cross-sell to your existing customers.

Show your gratitude

Don’t just treat your customers like loyal clients. Treat them as brand ambassadors. Thank them and make them feel like they are part of something great.

Feeling like you are part of a community is a good feeling. And when your customers feel like they are part of your business, they will be more vocal and dedicated to helping you with those referrals.

Do as much as possible to motivate them to talk about you.


In conclusion, there are so many benefits of referral marketing. It can help you gain more loyal customers or spread your brand’s awareness. Not to mention boost your marketing ROI and hit right on your target market.

All you need to do is to make sure your referral program works flawlessly. And a great referral marketing tool can help you take full advantage of all the benefits of referral marketing without breaking a sweat.

I hope this article is helpful to you.

Best of luck to you!

BLoop – Best Referral Marketing Solution

BLoop – Best Referral Marketing Solution

After the huge success of their 5 previous Shopify apps, BSS Commerce has developed a brand new app named BLoop: Referrals & Affiliates.

BLoop brings out some out-of-the-box features that are completely focused on utilizing referral programs.

We promise to do our best to help you build the most robust and most effective referral program at the lowest cost.

With a mindset of never stop improving, BLoop Team appreciates every constructive criticism about our app to make it better and better.

If you have any problem or a new feature suggestion, please contact us via email at or Whatsapp at +84 793 366 094. Free support 24/7.

Currently, our amazing app is completely FREE, so every business, even the smallest one, can test it out and build your own sales-boosting referral programs. 

Loop in with us, Grow Together!

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