Referral Premium

Posted in Marketing and Strategy Terms, Total Reads: 857

Definition: Referral Premium

When existing customers bring new customers, they are rewarded by referral premiums. It can also be considered as a premium that is provided by the company to its existing customers to sell to new acquaintance or friends. According to social media experts research 78% of consumers trust on their friend’s recommendations and only 14% trust advertisements. Thus businesses needs to generate referrals in order to get good business.

In order to engage people online community needs to be developed, and thus inspiration can create brand catalysts by the help of premiums. Good referrals shows that what you’re doing is actually correct and customers think highly about the company as they go through the experience shared by other customers. Relationship building problems can also be skipped as it provides an implied trust factor. As similar products and services are penetrating the market thus businesses rely on positive referrals to gain new customers. In order to boost the customers to bring in referral some incentive plans is required.

For example : Many websites like Box and Drop Box use referral plans, where whenever a new customer gets added the both of us receives bonus space. For selling a product or service to a friend premium is offered to the customer.

Details of Drop Box:

• Double-sided incentive program

• Provide both the referrer and the referred friend extra storage space


• sign-ups increased by 60%

• 2.8 mn direct referral by April 2010

• 100,000 registered users by Sept 2008

• 35% of regular sign ups by referral

• Traditional Ad spend Nil


Hence, this concludes the definition of Referral Premium along with its overview.


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