Referral or “word-of-mouth” marketing consistently ranks as the most effective customer acquisition strategy for marketers. Upwards of 75% of consumers rely on friends and family to make purchase decisions. A prospect who has a relationship with an existing customer is worth 35% more to a business. Overall, one third of businesses have active referral programs. Those that do (including large brands like Dropbox, Airbnb, and SoFi), experience an 86% growth in revenue within 2 years.
Schmitt, Bernd Skiera and Christophe Van den Bulte, “Referral Programs and Customer Value” July, 2010.
2. Razorfish Social Influence Marketing Report
3. Rewardstream, “What Factors Influence Referral Marketing?” June, 2016.
A number of industries, including telcos, credit unions, academic institutions, non-profits and retailers, are heavily reliant on affinity marketing in order to acquire customers. Currently, these marketers struggle to find information on the external network of their current customer base or the relationships between existing customers. They do not know who has a high-value network or is a potentially strong influencer. If a marketer knew, for example, that a recently converted customer has been responsible for bringing in a number of new clients, they can focus efforts on strengthening that relationship.
This type of data becomes particularly important when there is limited available information on an individual. Meaningful marketing data on young people, immigrants, and the underbanked/underserved is often hard to come by. However, knowledge of their friends, family, and associates can provide a powerful view into their needs, preferences, and behaviors. As the old saying goes…”birds of a feather flock together.”
Facebook, Twitter, and others have emerged to enable social network or influencer marketing. However, these channels do not provide a true picture of a consumer network and lack the association to the robust offline data available on individuals. LexisNexis® Risk Solutions has leveraged the knowledge of social relationships for years to help mitigate fraud risk and drive collection strategies. We have recently evaluated the power of this data from a marketing perspective. In one engagement, with a wealth management firm, we were able to identify seven relatives and associates on average for each of their current clients. We were able to find at least three relatives and associates for half of their customer base. These new prospects represented parents, siblings, friends, and former roommates who were potential targets for advisory services. We were further able to segment each of these individuals by income and identify those with the highest net worth.
Download our latest infographic to learn more about our relatives and associates solutions.