Small businesses are always looking for ways to increase their cash flow, and a referral program is a great way to do so. Forgetting to implement a referral program can be dangerous since referrals are one of the strongest ways to attract new customers and grow business.
Here are some of the ways referral programs can increase your cash flow:
1. Increase revenue
The most obvious way in which a referral program can increase cash flow is by boosting your overall revenue. Studies show that companies with a referral program experience 86% more sales than those that don’t.
2. Increase your net profit
In addition to increasing overall revenue, a referral program can also increase your net profit, as it incentivizes customers to refer their friends, family and colleagues to your business. As a result, they’re more likely to make a purchase.
3. Decrease your customer acquisition costs
Aside from boosting your overall revenue, a referral program can also help decrease your customer acquisition costs. This is primarily because you’re not paying to advertise to new customers. Instead, you’re giving clients an incentive to promote your brand through word of mouth, which 28% of people say increases brand affinity.
4. Increase your brand awareness
A referral program can boost your brand awareness, which in turn can have a significant impact on your cash flow. This is because referral programs enable customers to share your brand with their friends and family, and also with strangers online.
5. Increased customer retention rate
Referral programs can go a long way in attracting new customers, but they are also an excellent way to retain your current customers. Research shows that customers who are referred to your brand by another customer have a 37% higher retention rate, which means that even if they don’t buy from you today, they are much more likely to come back to you in the future.
