TY  - JOUR
A1  - Schmitt, Philipp
A1  - Skiera, Bernd
A1  - Bulte, Christophe Van den
T1  - Do referral programs increase profits?
T2  - GfK Marketing Intelligence Review
N2  - Marketers increasingly use word of mouth to promote products or acquire new customers. But is such companystimulated WOM effective? Are customers who are referred by other customers really worth the effort? A recent study clearly says “yes”. In a study of almost 10,000 accounts at a German bank, the referred customers turned out to be 25 % more profi table than customers acquired by other means. Over a 33-month period, they generated higher profi t margins, were more loyal and showed a higher customer lifetime value. The difference in lifetime value between referred and non-referred customers was most pronounced among younger people and among retail (as opposed to private banking) customers. The reward of € 25 per acquired customer clearly paid off. Given the average difference in customer lifetime value of € 40, this amount implied a return on investment (ROI) of roughly 60 % over a six-year period. The encouraging results of this study, however, do not imply that “viral-for-hire” works in each and every case. Referral programs would be most beneficial for products and services that customers might not appreciate immediately. Products and services that imply some kind of risk would also benefit to a more than average degree from referrals because prospects are likely to feel more confi dent when a trusted person has positive experiences. Companies should consider carefully which prospects to target with referral programs and how large a referral fee to provide.
KW  - Customer Referral Programs
KW  - Customer Acquisition
KW  - WOM (Word-of-Mouth)
KW  - Customer Management
KW  - Loyalty
KW  - Customer Value
Y1  - 2013
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/31086
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-310860
SN  - 1865-5866
N1  - © 2014. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License. (CC BY-NC-ND 3.0)
VL  - 5
SP  - 8
EP  - 11
PB  - GfK Nürnberg, Gesellschaft für Konsum-, Markt- und Absatzforschung
CY  - Nürnberg
ER  -