Referral Marketing’s Take On the E-commerce Brands

The Meta man, Mark Zuckerberg, is an ardent believer of referrals and its power. The recent statistics prove that Zuckerberg is right! Referral leads have a 16% higher lifetime value and a 30% higher conversion rate than leads generated from other marketing channels. Also, referral marketing accounts for 13% of consumer sales and drives $6 trillion of annual consumer spending.

These facts show that referral marketing is one of the most influential forms of marketing and advertising. This article explores how your e-commerce brand can benefit from referrals and testimonials and how a referral marketing program can help you garner these referrals and testimonials. 

To complement these words above, here’s a real life scenario of Uber.

Uber sensed the power of referral marketing before it became an essential tactic for brands. This rider app provided a referral code to all the existing customers. If any new customer signs up using that referral code, both the parties would get their next ride completely free. Uber was determined to keep their referral program dual-sided, ensuring that both parties would benefit. After this, Uber’s signups and ride numbers skyrocketed!

When brands like Uber successfully pulled off the referral marketing game, many other brands understood that consumers trust the referrals or recommendations of people they know personally over influencers or sponsored ads. This trust can convert into more conversions and sales for your e-commerce business. This single fact is a compelling reason to invest in a referral marketing program. 

Reach Your Target Audience and Attract their Attention

The average person receives 100-120 emails per day. Further, most users give only 10-15 seconds per email, and the open rate for emails is just 20–40%. These facts show that you should not rely only on email marketing to reach your audience and attract their attention.

Moreover, emails are just one type of content that users are inundated with on a daily basis. They also see hundreds of social media posts, website banner ads, landing pages, and more in their daily digital timelines. How can your brand cut through all this noise? One of the easiest and most effective ways is through referrals and recommendations.

Consumers who get referrals from someone they know personally are more likely to pay attention to your brand’s messaging. Many potential buyers deliberately search for recommendations for their product research and purchases. These buyers are more likely to listen to a friend’s recommendation to check out, consider, and even buy from your brand.

Increase Customer Acquisition and Retention

New customers referred by existing customers have a 37% higher retention rate, and one happy customer can bring in 9 referrals. These new customers come on board because they trust the word of someone they know personally. This trust is also more likely to keep them on board and stop them from switching to the competitors in the market.

By giving existing customers an attractive incentive, you can get them to reach out to their friends and family and recommend your brand in their own words. The trust they have built up within their own social networks can pull in more people who will also trust your brand, helping you to dramatically increase your reach in a very short time.

This is what happened with AirBnB in 2019. The company’s referral program led to a 900% year-on-year growth for first-time bookings and also increased daily bookings and signups by 300%. These stats show the power of trust-based referrals and recommendations in boosting customer acquisition and retention.

Increase Brand Awareness and Customer Engagement

Referrals and recommendations are a great way to spread your brand’s message. Instead of bombarding your audience with salesy emails or in-your-face social media ads, you can get your customers to promote your brand. By making them your brand advocates, you can increase your brand’s outreach. Your message will sound more honest and authentic when it comes from real people, increasing the chances that their connections will want to hear your brand’s story. This will build a positive reputation for your e-commerce brand.

An authentic and incentive-based referral marketing program also creates an opportunity to communicate with your customers in personalized ways. Use the program in conjunction with your social media and email marketing programs to build your digital presence, increase engagement, and build meaningful customer relationships. These are all great ways to keep the circle of trust going in order to bring in more recommendations and encourage even more referrals.

Referred Customers Spend More

According to the Retail TouchPoints, customers acquired through word-of-mouth spend 200% more. Referred customers also have a 25% higher lifetime value compared to customers acquired through traditional marketing methods. Here again, trust plays a role – not only the trust they have in the person who recommended your brand but also the trust they have in your brand right from the start of their engagement.

Consequently, they are more likely to be more loyal to your e-commerce brand. Over time, their loyalty can bring in even more customers, creating a virtuous cycle of acquisition – loyalty – retention – referral – acquisition.


A well-planned and well-optimized referral marketing program can bring in all the benefits discussed above. All in all, referring marketing is a cost-effective and proven way to boost your e-commerce brand’s presence in a crowded market.

Want to amplify your brand’s presence and reach through referral marketing? Connect with the experts at Ergode, and we’ll show you how you can set up your own referral program. Click here to get started.

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