This is Why Having a Referral Program is beneficial for a Restaurant.

This is Why Having a Referral Program is beneficial for a Restaurant.

Is it really beneficial to start a referral program in your restaurant? Is it really useful? The answer is YES…
Referral programs increase customer loyalty as well as provide a hike in customer engagement. Loyal customers recommend your business to their friends and families.

Referral marketing is a type of marketing which influences your loyal customers to refer your business to their friends, families and contacts. In exchange of this, they get rewards kind of cashback, coupons, discount code etc. Let’s understand how customer referral programs work…

What is referral marketing?

As per the study of Wharton School of Business referral marketing is the new form of old age’s word of mouth marketing. Referral marketing includes running referral programs to offer existing customers, loyalty rewards to recommend a company’s product or services.

Let’s take an example of google pay, their referral program says “Invite your friends and earn Rs.51 cashback on your friend’s first UPI Payment and when he or she makes payment using your referral code”

This is the most popular and easy way to earn quick bucks from the Google Pay (Tez) app. For This offer, we have to just promote Google Pay (Tez) among our family and friends.

Let’s Study the following statistics on referral marketing:

1. Referral marketing creates higher lifetime value customers, that are more loyal and contribute in higher margin than other customers – AMA

2. An average small business gets 60% of the business from running a referral marketing campaign – Kissmetrics

3. 82% of small business owners said referral marketing is the new source of business for them – Joel Hughes SVP, Constant Contact

Referral Marketing software minimise complexity

Many restaurant owners don’t pay attention to referral programs assuming they are expensive and complicated. But these are myths. Technology is growing nowadays, automation is a trend. Referral marketing automation removes much of the complexity, boredom, and hard work from planning & running campaigns. Using referral marketing software helps marketers run effective, assessable, and valuable marketing referral programs.

Benefits of Referral marketing for restaurant –

1. Gain Loyal Customers that act as brand ambassadors

Referred customers are your extremely worthy customers. 55% of loyal customers recommend their friends and family about your business. In addition, they perform as your brand ambassadors, convert more, bring more new customers and as discussed earlier they have a bigger customer lifetime worth than other buyers.

Look at the image below that showing how your one loyal customer can bring new customers for you

how loyal customer can act as your company's brand ambassadors

2. Increase Customer engagement

Generating referral marketing programs allows companies to generate a database of loyal customers and understand their buying behaviours. This provides an opportunity to run campaigns with promotions/offers, reward them for their activity, or simply say thank you for their contribution. This enables personalised marketing and boosts customer relationship.

3. Spread Brand Awareness

The more your customers talk about you the more new customers reach you gain. Whether you’re into B2B industry, a B2C or serves a variety of clients, referral marketing strengthen existing customer engagement and new customer acquisition while increasing brand awareness.

4. Gets new customers

As per the research by Nielsen, people are likely to buy four times more when suggested by a friend and 92% of consumers trust referrals from their friends and families. Additionally, word of mouth is a primary factor behind 20% to 50% purchases. When we heard “that place is awesome, must-visit there” This is the factor that directs us as a new customer toward a restaurant.

5. Increase Customer retention

Customers who participate in referral programs are more likely to stay loyal to a brand. Acquiring new consumers are usually 7 times more expensive than retaining your current customers, so the customer retention improvement is on the top benefits a restaurant can get by running a referral program in the restaurant.


Referral marketing is an easy and convenient marketing strategy for a restaurant to capture the target market and attract new customers. Any restaurant owner can start a this with help of a restaurant referral marketing software and automation software. Which makes managing referral campaigns with fewer complexities.

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