Marketing Dictionary
Referral Marketing
Definition
A method of promoting products or services to new customers through referrals, usually word of mouth.
Deep Dive
Referral Marketing is a strategic method of promoting products or services to new customers through existing customers, typically leveraging word-of-mouth recommendations. This approach capitalizes on the power of trust and social proof, as people are often more inclined to try a new product or service when it comes recommended by someone they know and trust, such as a friend, family member, or colleague. Businesses often formalize this process by establishing structured referral programs that incentivize both the referrer and the referred.
Examples & Use Cases
- 1A software company offers existing users a free month of service for every friend they refer who signs up for a paid plan
- 2An e-commerce store provides both the referrer and the referred friend with a 15% discount code on their next purchase
- 3A local salon rewards loyal clients with a free haircut when they refer three new customers.
Related Terms
Word-of-Mouth MarketingInfluencer MarketingCustomer Advocacy