This report presents findings from a 2014 Extole survey. The figures are shown as published at that time.
Loyalty + referrals: a positive connection
More than three quarters of retailers have customer loyalty programs. Retailers with loyalty programs are twice as likely to use referral marketing as those without. Referral marketing also drives positive, measurable ROI at almost twice the rate for retailers with loyalty programs as for those without. In short, retailers who care about loyalty use referral marketing.
Extole learned this and more in a survey of more than 300 decision-makers in marketing and technology functions for retailers across the United States. It shows that retailers, armed with increasing digital marketing budgets, are spending more on referral marketing, email marketing, and social media marketing because they very effectively help acquire and retain customers. (Find out more in the survey report, Perfect for You: How Referrals and Other Top Channels Drive Retail Revenue.)
When we look specifically at retailers with loyalty programs versus those without, striking differences emerge in how they use and benefit from referral marketing.
Loyalty programs are the retail norm
More than three quarters of retailers have a customer loyalty program: 77% have one, and 23% do not. That makes loyalty the baseline for retail, and it is a natural place to add a refer-a-friend program.
Retailers with loyalty programs use referrals
Asked to name the digital marketing programs they use regularly, 57% of marketers at retailers with loyalty programs say they use referral marketing. That is very similar to the 55% of all retail marketers who do so.
Across all retail respondents, the share using each program regularly was:
- Email marketing: 87%
- Social media marketing: 86%
- Display advertising: 75%
- Search engine optimization: 75%
- Mobile advertising: 71%
- Digital video advertising: 65%
- Paid search: 59%
- Referral marketing: 57%
- Content marketing: 56%
- Affiliate marketing: 45%
Asked specifically whether they regularly use referral marketing, retailers with loyalty programs say yes about twice as often as retailers without them.
The return on referral investment
It is not just in the use of referral marketing that companies with loyalty programs differ from those without. They are also more likely to view it as an investment, and one that generates positive returns.
Investment or discount
76% of retailers with loyalty programs see referral marketing costs as an investment, compared with 62% of those without. Only 19% of retailers with loyalty programs and 18% of those without see them as a discount.
Positive or negative ROI
62% of retailers with loyalty programs report positive ROI from referral marketing, against 37% of those without. Another 24% of retailers with loyalty programs call it cost neutral (31% without), and 9% call it a net expense (15% without).
How retailers feel about referrals
Retailers with loyalty programs describe referral marketing more positively than those without. The share who agree that referral marketing:
- Is a way to reward my existing customers: 57% with a loyalty program, 44% without
- Is a way for my existing customers to share rewards with their friends: 54% with, 38% without
- Generates valuable new customers: 57% with, 49% without
- Helps me capitalize on my social follower base: 48% with, 39% without
- Helps me capitalize on my email subscriber base: 41% with, 33% without
Methodology
In August 2014, Extole surveyed 302 respondents in primarily U.S. retail companies, varying widely by geography, revenue, and type. Over half of respondents held jobs in marketing or advertising. Others held job functions including information technology, general management, and executive.
Retailer type
- Clothing, Shoes, Jewelry and Accessories: 22%
- Miscellaneous Retail: 16%
- Computers, Electronics and Home Entertainment: 15%
- Building Materials, Hardware and Home: 13%
- Supermarkets, Groceries and Specialty Foods: 10%
- Home Furniture, Furnishings and Equipment: 5%
- Cosmetics, Beauty Supplies, and Fragrances: 4%
- Office Supplies and Stationery: 4%
- Books, Music and Movies: 3%
- Automotive Parts and/or Accessories: 3%
- Cars, Trucks and Motorcycles: 2%
- Beer, Wine and Alcohol: 2%
- Pets and Pet Supplies: 1%
- Garden Supplies, Flowers, Plants and Nurseries: 1%
- Toys, Games and Hobbies: 0%
Annual revenue
- $5mm to under $10mm: 7%
- $10mm to under $50mm: 14%
- $50mm to under $100mm: 10%
- $100mm to under $500mm: 13%
- $500mm to under $1bn: 18%
- $1bn to under $2bn: 19%
- $2bn to under $5bn: 9%
- $5bn and above: 10%
Physical footprint
- Throughout U.S.: 34%
- Single U.S. city: 19%
- U.S. and international: 19%
- U.S. regional: 16%
- Single U.S. location: 10%
- Online only: 2%
- International only: 0%
About Extole
Extole helps brands acquire new customers at scale by rewarding existing customers. We exist to help marketers drive measurable, reliable customer acquisition at scale. Our referral platform helps brands take advantage of a resource they already have in front of them: their current customers. At the time of this report, more than 300 retail, financial services, consumer subscription, and B2B companies used Extole to acquire new customers.
See referral in action
Ready to connect your loyalty program to referral marketing for retail? Request a demo to see what Extole can do for your program.