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Referral program analytics you need to be tracking

Picture of Janko Vukotic
Janko Vukotic

Copywriter / Content Marketer

Why referral program?

Referral programs can be a great way to grow your customer base and drive sales, but only if they’re well-designed and properly executed. Once your referral program is up and running, it’s important to track the right analytics to ensure that it’s performing as intended.

Our referral program’s purpose is to improve your lead generation and sales. To drive growth, you need to keep track of Key Performance Indicators (KPIs) because only what can be measured can be improved.

So which referral campaign analytics should you track to ensure your program performs as intended? Here are the key program analytics that you should follow:

People reached

The first metric you should pay attention to is the number of people you’ve reached.

It’s simply the number of people who were made aware of your program. The referral rate directly influences the number of people you’ve reached.

The referral rate is a metric that tells you what percentage of your customers are referring new customers to your business. A high referral rate indicates that your customers are happy with your product or service and are willing to recommend it to others. A low referral rate could indicate that there’s room for improvement in your customer experience or that your customers aren’t aware of your referral program.

Either way, it’s important to keep an eye on this metric to ensure that your referral program drives growth.

So there are 3 key indicators here:

  • How many of your customers know about your referral program?
  • How many of your customers agreed to refer you to their friends and family?
  • How many of their friends and colleagues did they refer you to?

If the number of people you’ve reached through a referral program is low, you need to address these indicators to see where the bottleneck is.

Conversion Rate

This metric tells you what percentage of referred customers are converting into paying customers.

A high conversion rate indicates that your referral program is effectively driving new customers to your business. A low conversion rate could indicate that there’s room for improvement in the design of your referral program or that the people being referred are not a good fit for your product or service.

Either way, it’s important to track this metric so that you can optimize your referral program for maximum impact.

The conversion rate is the biggest indicator of your revenue growth.

The cost per acquisition (CPA) of referred customers

CPA is the cost of acquiring a new customer through your referral program. To calculate this, divide the total cost of running your referral program by the number of new customers acquired through referrals.

For example, if it costs $5,000 to run your refer-a-friend program and it generates 500 new referrals, then your CPA would be $10 per referral. A low CPA indicates that your referral program is an efficient way to acquire new customers.

Customer Lifetime Value

This metric tells you how much revenue each referred customer generates throughout their lifetime with your business.

A higher lifetime value indicates that your referral program is successfully driving high-value customers to your business. A lower lifetime value could indicate that there’s room for improvement in the quality of the leads being generated by your referral program or that the people being referred are not a good fit for your product or service.

The customer lifetime value (CLV) is closely tied to your average retention rate per customer, even though they’re not the same.

For example, someone can be your customer for a long time and not invest as much as other customers who were with you for a shorter time period.

However, CLV measures your customer’s connection with your brand and your product market fit.

It’s also an important metric because you’ll earn more from a smaller batch of recurring customers than from a larger group of one-timers.

How to boost conversions if your referral programs are underperforming

The first thing that you need to do is find out where the bottleneck is.

Are your existing customers not satisfied with your offer, are they not incentivized to participatet in the referral program, or are the new leads reluctant to “come into the store”?

Once you establish what’s slowing down your referral growth, you can improve your program and make it more appealing by giving out better rewards.

Make sure to also engage and nurture your leads with entertaining and educational content that provides value to them and that they can use to improve the quality of their existence somehow.

Show that your business goes beyond sales and marketing and personalize your outreach. Get familiar with your clientele.

Pay attention to your copy. Is it appealing enough? Is it attention-grabbing, reader-friendly, and upbeat? Does it trigger an emotional responseor leave the reader apathetic?

You can improve your email marketing open rate by improving your copy, using a few hooks, storytelling, attention grabbers, and power words.

Test different subject lines and see what your audience reacts to the most.

Instead of being formal and bland, personalize your content and experiment with different tones and styles (warm and friendly goes a long way).

But keep it genuine, don’t just try to persuade them to click the button.

If your click-through rates are low, you probably need to make your CTAs more visible and appealing.

Experiment with different kinds of CTAs, colors, fonts, the number of CTAs per email, and the positioning.

And don’t be desperate to close the sale.

Conclusion

When determining which analytics to focus on for your refer-a-friend program, it’s important to consider how many conversions are coming from referrals and how much revenue those referrals generate.

Additionally, looking at the lifetime value and cost per acquisition of referred customers can reveal insights into whether your referral program is an effective marketing tool.

By focusing on these key metrics, you’ll be able to ensure the success of your referral program and significantly boost your ROI.

Janko Vukotic

Copywriter / Content Marketer

Janko writes stuff that sells stuff. He's a direct response copywriter with a strong background in digital marketing, conversion rate optimization, and content marketing strategy. In his free time, he enjoys reading everything he gets his hands on. Has a knack for explaining complex stuff in a simple manner... and vice versa. Writes mean copy. Exists.

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Janko Vukotic

Copywriter / Content Marketer

Janko writes stuff that sells stuff. He's a direct response copywriter with a strong background in digital marketing, conversion rate optimization, and content marketing strategy. In his free time, he enjoys reading everything he gets his hands on. Has a knack for explaining complex stuff in a simple manner... and vice versa. Writes mean copy. Exists.

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