Research: Customer Referrals Are Contagious

Abstract

New research reveals the surprising power of “referral contagion,” where referred customers not only buy more but also refer 30-57% more new customers than others. This phenomenon, observed across industries, is driven by social factors like the perception of referring as appropriate and the tendency to befriend similar people. A simple experiment, reminding referred customers of their referral origin, increased successful referrals by 21%, highlighting the potential for leveraging referral psychology to boost program effectiveness. These findings call for businesses to re-evaluate their investment in referral programs, considering the amplified potential of referred customers. While some risks exist, such as the spread of negative perceptions, they can be mitigated with a balanced marketing approach.