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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.
Referrals have long been known to be effective due to the trust customers place in recommendations from friends and family. However, our new research suggests that customer referrals are even more valuable than marketers and researchers once believed.
