Knowing where your referrals are coming from is the key to ensuring that your referral marketing work as effectively as possible. Tracking sources like social media, email marketing and direct website traffic will show you which sources are generating the most qualified leads.
Key Metrics to Measure
Measurement is key to quantifying what’s working and what isn’t. At a minimum, you should be looking at UTM parameters for the tracking links and the referral conversion rate. The conversion rate of a referral program indicates to what degree referrals are being converted into customers who make a payment. From there, companies can determine whether their referral marketing platform is producing significant activity.
This can be measured by analyzing referred customers who have purchased, divided by referrals clicked, and running A/B tests among different referral strategies to see what works best.
Customer Lifetime Value: How Referrals Affect Long Term Revenues
Referred customers will have a higher Customer Lifetime Value (CLV) than non-referred customers. Businesses, by analyzing this metric, can invest in referral marketing software and B2B referral marketing. As a start, you should be:
- Tracking purchase frequency and average order value.
- Comparing the CLV of referred and non-referred customers.
- Applying predictive analytics to forecast long-term profit.
Monitor Referral Program Activity and Growth
Regularly track your referral marketing program to ensure your plan keeps working over the long term. This can be done by tracking metrics such as new referrals per month, program participation and re-engaged referrers.
From this point, you can improve your campaigns by testing alternate reward formats such as discounts, cashback or VIP status, using data to refine incentive structures, and ensuring rewards align with the motivations of your customers.
Referral Program Cost vs. Traditional Marketing
Comparing referral marketing costs with traditional marketing will help you make smart budgeting decisions. In this area, key points to consider include calculating cost per referral versus customers aquired through paid advertising, tracking the ROI of each channel, and calculating the quick wins often made through traditional ads against the longer-term customer retention that can come from referrals.
Optimize: Refine and Iterate Your Referral Strategy for Success
Lastly, we should recognize that a referral marketing platform needs to be audited and regularly tweaked to ensure growth and improvement. Conducting program audits, getting customer feedback and rebalancing incentives are extremely important here. In addition, test new referral tactics on a small scale to ensure that they can be employed on mass to increase engagement.
With these referral marketing metrics, you can track and optimize your program for growth and customer advocacy. So what are you waiting for? Get started today!
The post Track Referral Sources: Where Are Your Referrals Coming From? appeared first on Bar Magazine.
