Fire Up Those Referral Programs!

a new report from the wharton school of business titled “referral programs and customer value (pdf download)” vets the effectiveness of customer referral programs — even where incentivized. it also reveals that customers acquired through this channel are 16%-25% more valuable than those gained otherwise. the referral program featured in the study was provided by a bank who followed the activity of 10,000 customers over a three year period.  a cash incentive was offered for every new customer referred. the results? referred customers have higher margins than other customers. they were 18% more likely to stay with the company. lastly — they have a higher customer lifetime value (clv), which is the net present value of all the profits a customer generates over his or her entire association with the firm. thought you would find this highly interesting!