It’s no secret that people tend to follow the opinions of those around them, especially when choosing where to dine out. As a result, referral programs have become an increasingly popular method of marketing in the food industry.
Using an easy-to-implement rewards system, restaurants are able to harness the power of word-of-mouth marketing and generate new business by turning brand lovers into ambassadors. But what does the science say about the effectiveness of referral programs and what can the data tell us about the power of brand ambassadors when it comes to marketing strategy?
The underlying principle behind referral programs is rooted in the psychology of human behavior. Studies have shown that 90% of people are more likely to trust a recommended brand, even if that recommendation is from someone they do not know. This is because humans perceive other humans to be more honest and credible than businesses. Moreover, a study conducted in 2019 confirmed that public trust in brands averaged just 37% across the US. In essence, people trust people and value hearing their opinions.
Taking those figures into consideration, it should come as no surprise that consumers are even more likely to take action based on recommendations from people they do know. By incentivizing customers to spread the word, restaurants are tapping into the power of social proof. This is because word-of-mouth inadvertently helps potential consumers acquire knowledge while reducing perceived risk. In addition to driving new business, referrals help build loyalty. Rewarding customers for referrals is an organic way to let them know they are valued and appreciated. Thereby, creating a sense of goodwill and encouraging repeat customers.
But what about the power of brand ambassadors specifically? Brand ambassadors can be defined as those who are particularly loyal to a business and are willing to promote that loyalty. In fact, research shows that they are 50% more likely to influence a purchase than traditional customers. Furthermore, ambassadors significantly impact revenue. The Wharton School of Business found that customers who are referred by a brand ambassador have a 16% higher lifetime value, this is because ambassadors tend to be more loyal than others and have a higher rate of repeat purchases.
While the proof behind the power of brand ambassadors and referral programs is irrefutable, only 31% of brands utilize brand ambassador programs. So, what can restaurant owners do to harness the power of their best customers in 2023? One key strategy is to create a referral program that incentivizes them. By offering compelling rewards, such as free menu items, discounts, or gift cards, restaurants can transform their most loyal visitors into brand advocates and capitalize on moments of delight.
We know how crucial it is to build a foundation that attracts new customers while keeping loyal regulars coming back for more. And in today's competitive food industry, it's not enough to simply rely on word-of-mouth marketing. Restaurant owners need a sustainable, effective system to grow their business organically while leveraging word of mouth. With that in mind, we’re excited to introduce Appfront Referrals, our latest customizable program that offers an array of benefits. Here’s how it works:
By building loyalty, attracting new restaurant goers, and providing comprehensive data, referral programs help business owners reach their objectives and stand out from the competition (over 1 million restaurants across the US, and counting).
If you're interested in learning more about Appfront Referrals, schedule a demo with one of our experts. We'll walk you through the process and answer any questions you may have. Contact us today to learn more and get started.
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