16 times greater lifetime value when referred

QUESTION – how do I maximise repeat business and referral rates?

THOUGHT – make it easy to repeat and refer

Research completed in 2018 reported that a referred customer is worth up to 16 times more – in terms of lifetime value – than a customer generated by way of promotion. It is a staggering statistic!  

Another study in the same year found that a referred customer is four times more likely to purchase than a customer generated by way of promotion.

These are two rather compelling reasons to divert resources away from promotion and into actively driving referral. It begs the question – why are there advertising agencies all over – but few, if any, referral agencies? A business opportunity? Maybe!

With this in mind, it seems important to make it as easy as possible for satisfied customers to refer. You might think they should make an effort to refer, but they are unlikely to. It has to be easy, and there has to be a rationale.

In this regard, there is considerable merit in:

  • Give customers the information to refer
  • Provide an accessible referral avenue
  • Highlight incentive programmes
  • Introduce them to your community
  • Ask and provide a medium

Many purchases are more emotional than cognitive. After the purchase, it is often helpful to provide the facts that will allow rationalisation of the investment and provide information that can be passed on to potential referees.

If you have a referral system online, or indeed if the sale occurs online, direct the customer and ask for a referral, or at the very least a positive review. Reviews, while not as potent as face-to-face referrals, are a significant driver of referral business.

Remember – CLICK HERE TO TELL YOUR FRIENDS … and you could win …

If you have a referral or loyalty programme, don’t wait for your customers to find out about it – tell them all about it and encourage them to refer and access the rewards. Talk to your customers.

There is real merit in establishing a brand community. There are few new tools in terms of effectiveness in driving referral and repeat business than a brand community. That is why some 61% of US corporates now report having a brand community or developing one.

Don’t leave it to the customer to find your online community – tell them all about it, how to find it, and reasons why they should get involved in the community.

There is also every reason to ask the satisfied customer if they have friends who might be interested and give them a card or brochure to hand on to friends along with details of incentives available to the referrer or referee.


Make it easy to refer. For that matter, make it easy for customers to buy, refer, repeat purchase.  Indeed, do anything else that might facilitate a sale. The easier it is, the more likely it is to occur.

Talk to your customers before the sale and after the sale. Provide them with the information, incentives, and resources needed to refer. Remember – the is no better business than a referral.


Super Office, Shaun Buck, Saasquatch, Hubspot, ShareSomeFriends, Journal of Marketing, Nielsen, Texas Technical University, INC and Customer Experience Insight


MORE THOUGHTS – www.djohncarlsonesq.com 

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