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8 reasons to use referral marketing for your car dealership

What is Referral Marketing?

Ever heard the marketing strategy called “Referral Marketing?”

Referral marketing strategy is a form of mouth marketing strategy that makes use of recommendations and word-of-mouth to grow a business’s customer base through the networks of its existing customers. A referral marketing program can take many forms, but at its root, it’s a way to get your loyal customers to help you spread the word about your business. It allows your customers to become your company’s brand ambassador by recommending your business to their friends and family. Keep in mind that referral programs are one of the least marketing strategies that a business can utilize to grow its customer base. 

Referral campaigns are an effective form of marketing for a car dealership. Most dealerships rely on positive feedbacks, word-of-mouth, and repeat purchases instead of hard-selling tactics to make a sale. Additionally, referral marketing for a car dealership provides a lot of benefits. A referral program can help you optimize your sales cycle, generate high-quality leads, increase conversion rates and take your marketing efforts up a game. Many car dealerships turn to referral marketing programs because they want to expand their reach, and they know their customers can market to potential leads far more successful than they can, which is just one of the benefits of referral marketing. 

How does the referral program work?

To give you a general idea, a good example is a dealership can credit a monetary amount or discounts on car maintenance service for every successful referral. The referred customer can also receive incentives base on your dealerships’ budget. Technically, it is a win-win situation for everyone – you get free marketing and a successful sale, and your existing customer is rewarded for the successful conversion.

We listed below 8 reasons to use referral marketing for your car dealership!

A cheaper marketing strategy.

Because referral marketing relies more on the usage of word of mouth and your current customers, your marketing costs are practically cut down tremendously! Is that even possible? Yes, it is!

Well, technically, you’re still expending some budget for the gift, discounts, or other forms of incentives, but when compared to your traditional marketing strategies, it is very cheap! It is also a lot less expensive pushing marketing efforts towards your existing customer base than it is to market to new customers. Not to mention, a customers’ recommendation of you is much more persuasive than any ad you set in motion. Marketing to a completely new customer can be rather expensive, but if you’re using your current customer to market for you, your expenses get cut down.

People trust recommendations

Perhaps, the most captivating benefit of referral marketing programs is that customers trust referrals. Recommended brands mean a happy customer is satisfied with your product or service. In fact, according to, 92% of consumers around the world now say they trust recommendations from friends and family, above all other forms of advertising. If a brand is recommended by a lot of consumers, it means that a brand is already proven and tested in delivering excellent results. Simple, right?

Increase your reach 

Referrals from people allow you to increase your outreach by using your customers as your company’s brand ambassador. While some venues and occasions are simply off-limits to traditional marketing, word-of-mouth is virtually no limit to your customer telling their friend, co-workers, or family about a good product or brand. Because many people have a diverse circle of friends, customer referrals will also allow you to expand your customer base. 

Higher ROI

Well, there’s no argument that discounts, gifts, or incentives will cost your dealership extra expense – referral marketing is way cost-effective to advertise when compared to other modes of marketing strategies. You can even save up even more money by streamlining your referral marketing system rewards into your general loyalty rewards program, which will allow you to award points rather than monetary value, gift, or discounts per successful referral. 

Multiply your loyal customers. 

It’s much easier to generate leads through your loyal customers’ circle of friends than it is to acquire a completely new customer. A referral program creates a sense of trust, and that can generate more loyal customers for your dealership. Compared to other forms of marketing, a referral is a cost-efficient way to gain new and loyal customers. They now have an incentive to purchase from you soon and possibly even refer you more in the long run. 

Better engagement

If an opportunity to connect with your customers shows up, you should always take it upon yourself to do so. Why? Because building up your customer relationships is important in becoming a referable business. 

Referral marketing will allow your dealership to utilize relationship marketing. Referral marketing enables you to build up a group of loyal customers who will speak on behalf of your car dealership. As well as allow you to measure and see certain behavior metrics.All of which enables your dealership to build the perfect opportunities to remarket and promote your business. 

Promotes brand awareness and a better reputation.

Referral campaigns can help your customers get to know your dealerships’ story and improve your overall reputation. Many modern consumers want to align themselves with businesses that have a strong voice and positive influence. Allowing your own customers to tell and share your story through referrals resonate more strongly in the general consumer market. 

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