What Is Referral Marketing & How Can It Grow Your Startup?

By Guest Author | marketing | September 17, 2020

Asking for advice not only in personal problems but also in practical life has become a trend. For instance, if you want to shop an antique for your house decor and you are blank, you will turn to your friend for their advice. If you are going to have a baby soon and have no idea what baby products to buy, you will ask someone who already has a baby. They will probably refer you to a store or a particular brand product, which is how the word spreads. 


Promoting a startup is a challenging task, and as an entrepreneur of new business, it can be a real challenge to make contacts and build a clientele. But where do you usually start? You start by acknowledging your close ones about your business, like family, friends, acquaintances, etc. You spread a word about your business through the “WORD OF MOUTH” technique used for years. 

This marketing technique involves setting up a robust referral plan that stimulates customers to share their positive experience using your product or service with their contacts via word of mouth. This strategy is used by many businesses for a long time now. 

This strategy is considered one of the most reliable marketing approaches implemented by large and small businesses, both globally. Customers coming through referrals are more likely to stay for a longer duration. 

But to get the best out of the referral marketing program, you require a well-planned referral program. A referral strategy not only motivates customers to shop from you, but also builds a sense of customer loyalty as they feel unique, rewarded, and valued. 

Before further reading this article, the following are the statistics you must look at:

  1. 74% of the audience consider a friend’s advice as a key to influence their buying decisions.
  2. 92% of customers count on referrals from people they know.
  3. The audience is four times more likely to buy when recommended by a friend.
  4. 81% of U.S. online customer’s buying decisions get influenced by their friends’ social media posts.
  5. 28% of millennials say they prefer not to purchase a product if not approved by a friend.

Now you can imagine the amount of influence a referral program can have on your product or services’ buying decisions.

Why do young enterprises choose REFERRAL MARKETING?

New businesses are easier to form but difficult to sustain. Because of intense pressure from competitors, the startups can find it challenging to allure customers regularly. Moreover, startups do have financial issues, and they want to market their brands with affordable methods. Hence, referral marketing has made it simpler to increase their brand awareness with less cost. 

Benefits of Referral Marketing

Strengthens Your Relationships:

It builds a powerful bond between your customer and your business. Providing them the referral benefits, they are marketing your brand for you. Once they receive the reward, the customers will naturally be encouraged to share more. This will create your brand’s reputation in the market, and you will also get marketers for life. 

Instantly Creates A Buzz: 

The way referrals are, it gets viral instantly. Social media has augmented the referrals, and one can refer to their friends with just a tap. For instance, one of your customers has referred your brand to their friends on a social networking platform; then, it will make your brand visible to all their friends. Now you know how fast it spreads. 

Affordable For Your Brand

Referral marketing is for you if you want to promote your business at a minimal cost. The best thing to do is to create a campaign for your brand and wait for the outcomes. Apart from getting your business, this method also established your brand in the market. Referral marketing can reduce the burden of your shoulders since you can leverage the existing customer base. Your current users will help you establish your brand.

Acts Like An Advertisement:

Advertisement is essential for any brand. Businesses spend tons of money on advertising and marketing. However, it is difficult for startups to spend this sort of money after advertising their brand in the initial stage. Hence, referral marketing has emerged as a blessing for such small companies. Small enterprises can build their brand base by utilizing these efficient marketing techniques. 

Word Of Mouth Is Always Reliable:

As mentioned earlier, before making any purchase decision, we ask plenty of people for their opinions and ask their suggestions as well. This is because we believe their judgment more than we consider ours. Word of mouth has become the fastest spreading tool, most successful for marketing brands since it directly leads to conversions.

The Referral Campaign Workflow

Referral Campaigning is a workflow that starts with making a campaign for your business on your webpage and ends with rewarding your client for successful conversions. This campaign runs through a workflow. Workflow refers to the order of the process that rules strategic parts of your campaign.

There are 2 types of workflows:

Mobile App Flow-

Step 1: Current clients invite their friends via the referral program.

Step 2: The friend approved the invite and installed the app.

Step 3: Referral campaign program later tracks that conversion has been made.

Step 4: Referral campaign later sends a coupon to his referrer via mail for effective conversion.

Website Flow-

Step 1: Launch a referral program on various platforms, such as Facebook, Google, etc.

Step 2: Send invites to perspectives clients to participate in your campaign.

Step 3: Clients will refer the same to their friends and relatives via various sources.

Step 4: Reward your clients for referrals sales.

Step 5: Referrers can check their invitation growth through statistics whenever needed in the referrer panel.


Hopefully, this article has enlightened you all you need to know about Referral marketing. It has the potential to help startups in establishing their business in the market and sustain in the fierce competition. Referral companies such as InviteReferrals have come up with exceptional features to support young enterprises flourish. This is a fantastic opportunity for you as an entrepreneur to grow your business and become one of the leading brands in the coming years.

Harnil Oza is CEO of Hyperlink InfoSystem, one of the leading app development companies in New York and India, having a team of the best app developers who deliver the best mobile solutions mainly on Android and iOS platforms. He regularly contributes his knowledge on leading blogging sites.