The Financial Return on Referrals

If you ask any business, they’ll tell you that their best advertising comes from word of mouth. But despite this age-old wisdom, way too often referral programs become haphazard and companies chase cold leads.


One of the main reasons that businesses forget about their referral strategy is that they don’t know the value of a referred customer. While it may seem difficult to quantify word-of-mouth, a recent study from the Wharton School of the University of Pennsylvania was able to measure the power of referrals and financial benefits of a referral program.


The study, entitled “Referral Programs and Customer Value”, set out to discover if there was a financial return on word of mouth. Researchers looked at the records of over 10,000 customers at a bank over a 3-year period. Half of the customers were acquired through the bank’s referral program and the other half through other marketing methods (direct mail, advertising, promotions, etc). The study asked:

  • If referred customers have higher profit margins
  • If referred customers are more loyal
  • If referred customers have a higher customer lifetime value.


The study found that the financial benefits of the referral program were quantifiable and significant. Referred customers generated 16% more profits than their non-referred counterparts. The researchers attributed this to better matching between the bank and the referred customer –  because the existing customer knew both the bank and the prospect, they could better assess if there was a good fit between the two. Essentially, current customers were better at finding qualified leads than the bank was.


The study also found that referred customers were 18% more likely to stay with the bank than non-referred customers. This was attributed to the fact that customers make referrals to friends and family that would truly benefit from the bank, and because people tend to have a stronger bond with organizations that their friends and family are also customers/members of.


Accounting for both the higher profits and greater loyalty of referred customers, the study found that the customer lifetime value of a referred customer can be up to 25% greater than the customer lifetime value of a non-referred customer.  Better yet, the ROI the bank earned on the investment in its referral program was 60%. Therefore, they weren’t guessing about advertising investments – they were running a highly profitable and quantifiable client acquisition strategy.


So, if your business wants to capitalize on social proof and leverage your best customers, there are clear financial benefits of a referral program. What creative ways do you use to increase referrals?




If you’re interested in starting a referral program for your business, Quicklinkt provides automated referral marketing and management tools. Visit for your 30-Day Free Trial.


Referrals for Mortgage Brokers

Here at QuickLinkt, we often get asked how businesses can successfully design and implement referral programs. So, we decided to start a series of blog posts that highlight how we’re seeing businesses be successful. First up – Mortgage Brokers.


Mortgage brokers and agents have been quick to adopt referral programs and implement an automated tracking solution. Looking at the industry, it’s no wonder that referrals are essential to any agent’s success: most new home buyers rely on friends and family to guide their home purchase process, trust is paramount when choosing a mortgage broker and since people work closely with their broker – they’re more likely to refer.  Better yet, there’s lots of people looking for the best mortgage rates since 88% of US home buyers finance  their purchase.


Here at QuickLinkt we’re seeing most brokerages let each lending agent run their own referral program. This allows agents to customize their terms, integrate with their social media profiles and personal websites, and communicate directly with clients. While brokers can choose whether or not to give rewards, we’re commonly seeing agents offer a Visa Gift Card to past clients for each successful referral. While the reward isn’t necessary,* it’s a nice way to say thank you and stay top-of-mind after the sale closes.


We’re also seeing agents use QuickLinkt to manage referrals from their professional network. For example, a real estate agent having an open house can send referrals to brokers using the QuickLinkt Smartphone App. This allows mortgage brokers to get a jump start on pre-approval, and real estate agents to quickly start searching for properties in the right price point. Each time the mortgage broker/agent updates the mortgage process (ie. conditional approval, pre-approved, etc.) the real estate agent is automatically notified, making it easy to keep contacts in the loop.


Mortgage brokers and agents are also realizing just how easy it is to drive referrals. We’ve heard from brokers that most of their clients are young, first-time buyers. These clients greatly appreciative a broker’s help – since getting a mortgage doesn’t come easily – and therefore are much more likely to refer. Better yet, because they’re digital natives they’re happy to send referrals through their Smartphone or a company’s Facebook page. They also have a large network of connections in the same demographic that will soon be looking to buy their first home, so they have plenty of potential referrals.


While each brokerage can use QuickLinkt to specify the referral program that’s right for them, these are just some of the ways we’re seeing mortgage brokers and agents be successful. And since it only takes 5 minutes to get started, mortgage brokers and agents can easily launch their program. What successful marketing tools have you seen for mortgage brokers?


To learn more about QuickLinkt, you can visit our website at or start your free 30-day trial at


*Remember to check if offering referral rewards is allowed in your jurisdiction