Referral marketing
What is referral marketing?
Referral marketing encourages customers to recommend a product, usually through a referral programme that rewards the referrer, the new customer or both, with credits, discounts or other benefits. Each customer gets a personal link or code.
It formalises word-of-mouth marketing and can feed a viral loop.
Why referral marketing matters
Referred customers come with trust built in, and the cost per customer is often lower than paid channels. It works best when the product is already worth recommending.
Related marketing terms
Word-of-mouth marketing is when customers recommend you to others, and the work a company does to make that more likely and easier.
A viral loop is a cycle where using a product brings in new users, who use it and bring in more, such as invites or shared content.
The viral coefficient, or K-factor, is how many new users each user brings in on average. Above 1, a product grows on its own.
Affiliate marketing pays partners a commission for each sale or sign-up they send through a tracked link or code, so you only pay for results.