It’s a month or so after you’ve launched your referral program, but you aren’t getting new customers from referrals. Or, maybe you’re getting a few new customers, but not as many as you’ve expected. Does that mean your referral program is dead on arrival? Not necessarily.
If people are sharing with their friends, and those friends are finding out about you, those are great initial signs that your referral program’s building momentum shortly after launch.
So, how to check your referral program’s performance before you’ve got enough referrals to measure its success?
The first three leading indicators of referral program success are awareness, shares and reach – how many people join and engage with your program, how often people share your brand, and how often people click on referral links. These are the best predictors of successful referrals (which are the fourth, and final, leading indicator).
Today, we’ll dive into how each metric feeds into the next, and how you can measure and improve these metrics.
The Referral Funnel: How it connects to the leading indicators
Here at Referral Rock, we use the Referral Funnel to analyze referral programs. The Referral Funnel is a framework that helps you visualize and understand how referral programs work. It’s divided into four stages: aware, share, reach, and referral.
Each stage of the Referral Funnel has a goal:
- Aware: Make people aware your program exists through dedicated campaigns, as well as during other experiences they have with your brand (like check-out and your newsletter)
- Share: Get people to send share messages and refer their friends
- Reach: Get people to click the referral link
- Referrals: Get referred friends to convert
The funnel shows how each step in the referral process feeds into the next.
People need to be aware of your program before they will share, and they need to share to create reach.
Then, reach must happen (friends must click on the referral link) before the friends can convert as referrals.
We’ve divided the Referral Funnel into two parts: the member journey and the referral journey.
The member journey involves the actions the member, or potential sharer, takes. The goal is to get the member to share a message with friends.
- The member becomes “Aware” of the referral program through dedicated campaigns, existing brand experiences (check-out, website footers, in-app) and program notifications
- The member then “Shares” prewritten messages with their friends via sharing links, emails, SMS, social media, or other ways.
The referral journey involves the actions the referred friend takes after they receive a shared message from the member. The goal is to get the referral to convert.
- The friend receives the shared message from the member and decides if they want to click.
- Once they click, the friend is “Reached” and directed to a webpage to learn about your brand for the first time
- The friend decides if they want to convert (become a “Referral”)
Understanding the leading indicators’ role
The goals of each stage of the Referral Funnel are tied to leading indicators, the metrics or data points in Referral Rock that let you easily measure your program’s success.
Even if you aren’t getting many successful referrals yet, the leading indicators let you reliably gauge how successful your program will be, and pinpoint any sections of the Referral Funnel that need optimization.
The indicators make it easier to monitor changes and trends in your program metrics over time. They also simplify analytics and remove guesswork.
These leading indicators let you monitor each section of the Referral Funnel:
- Aware: Members Added, Members Activated, Member Visits
- Share: Shares
- Reach: Reach (Number of clicks on referral links)
- Referrals: Referrals (who convert)
Optimizing your leading indicators
When you’re checking on your leading indicators, work backwards. Start by looking at referrals, then reach, then shares, and then awareness to gauge how successful your program is and see if there are any problems.
- Are you getting enough referrals to meet your program goals?
- Are you reaching enough people so they have the opportunity to convert?
- Are members sharing your program?
- Are members visiting their Member Portal (estimate of engagement)?
- Are you consistently adding new members AND are they activating?
Remember: If you’ve just launched your program (say, around a month ago or less) and aren’t getting many referrals yet, checking your shares and reach will help you predict how successful your program will be.
Shares and Reach are the best predictor of future performance, so monitor them closely and track how they change over time. Are shares and reach lower than you’d like, or have they dropped? When in doubt, add more promotion, improve your messaging, and make it easier for people to share.
Also, take context into account. Valleys in your referral program metrics might be caused by factors like holidays and naturally slow periods.
When you make a data-informed change, record when and what you change, and make sure enough people see your changes to know if they are successful. That way, it’s easier to monitor results over time.
And don’t overcorrect just because a metric has dropped. If you can, first compare your program data over time to see if a fluctuation is normal or if there’s a cause for concern. It takes time before you see the real results of a program change.
Let’s break down how you can improve each leading indicator and optimize your referral program.
Awareness: Members Added, Members Activated, and Member Visits
Do people know you have a referral program?
Before people will start sharing your brand through your referral program, they need to know that your program exists!
Checking in on the behavior leading up to the share tells you if people are aware of, and engaging with, your referral program.
We’ve identified three leading indicators that, together, measure awareness.
- Members Added: number of new members added to the program
- Members Activated: number of members that engaged with the program for the first time
- Member Visits: number of visits to the Member Portal (often, this means people clicked on a link to your program – whether they actually shared or not)
So, be on the lookout for how many people join and engage with your program, and how many times people visit their portal.
How to improve awareness?
Remember that the more people who join and participate in your program, the more shares you stand to receive.
If your Members Added and Members Activated are low, this means not enough of your audience knows about your program.
And if Member Visits are low, people aren’t engaged and have likely forgotten about your program, even if they knew about it before.
To create more awareness, optimize these four different factors:
- Campaigns – regularly promote your program on several channels
- Access – give lots of different options for accessing the program
- Notifications – Engage existing members with automated reminders
- Invites – invite people at key times, when they’re happy and primed to refer
Here’s more on how to optimize your program promotion.
Run regular promotional campaigns
Promoting your program regularly is key to improving all three awareness indicators, as it ensures your program stays top of mind.
Start with your launch campaign, or your initial campaign introducing your referral program, but don’t stop there.
After that, we recommend sending monthly emails dedicated to the program, plus promoting your program with a sentence or two in transactional emails and newsletters.
- Include a direct link to your program page in all of these emails.
- With Referral Rock, you can activate One Click Access links so anyone can access the program instantly, without a tedious sign-up process.
And don’t forget to send invite emails to new customers if you’ve already launched, as they might have missed the initial campaign.
Expand your access points
In addition, give people as many entry points to your program as you can – places where they can learn about and join your program.
Where and how do you usually communicate with customers? Where do people interact with your brand? Your answers will reveal places where you should integrate referral program promotions, such as:
- Email newsletters
- Social media accounts
- Website (banners, footers, site navigation, CTA buttons, etc.)
- Customer portal or behind a login (in-app)
- Checkout pages
- Mobile app
- Account notifications
- Transactional emails
- Business cards, postcards, or other printed material
- In-store signage
- Email signatures
Re-engage joined members
Another key piece is engaging the members who have already joined, to increase member visits. Referral Rock lets you send automated Monthly Summary emails with a personalized overview of their activity during the month. That way, people won’t forget about your program.
We also recommend personal outreach to your most active sharers, and targeted campaigns for specific customer segments. Also, you might send reminder campaigns to the people who haven’t shared in the last month or quarter.
Send event-based invites
Event-based invites let you reach new and existing members at their happiest times – the times they’re most primed to share with friends (say, after they make a purchase or complete onboarding). Referral Rock lets you automate this outreach.
Seasonal campaigns are another spin on this – try campaigns based on a holiday, brand milestone, peak sales time, or historically slow sales time.
Regular program promotion will improve the number of members who join, and the number of members who stay engaged – boosting the number of shares you stand to receive!
See our promotion best practices for other recommendations on increasing awareness.
Shares
Are people telling others about your business?
People know about your referral program, but are they sharing with friends?
As you might expect, “shares” measures how often people tell others about your business via your program – how often they send their referral link to others.
The more shares your members make, the more new customers you stand to gain. The shares indicator lets you check in on how many times members used any share method to refer their peers.
But how and where are people sharing? What channels do they view and click before sending their referral link? This can help inform your program promotion strategy.
Our aggregated referral program data from the first half of 2024 gives insights on how people typically share – the methods and mediums.
(Keep in mind that this data comes from referral, affiliate, and ambassador programs across many industries.)
People overwhelmingly prefer to copy and paste their referral link directly, with this accounting for around 31% of shares.
Posting on social media is still common, and one reach there can potentially translate to lots of referrals. But people prefer to share personally, via more direct channels (copying to the clipboard, email and SMS).
They also appreciate the flexibility of referral links – once they have their referral link, they can instantly copy and share it anywhere, and they don’t need to log back into the referral program to start sharing.
How to improve shares?
If Member Visits are high but Shares are low, then members aren’t sharing despite being aware of the program. Improving your share rate is all about making that share as easy, frictionless, and enticing as possible.
Create a more compelling offer for the member
Rewards are meant to excite your members and encourage them to share.
If you aren’t seeing as many shares as you’ve hoped and you’re promoting your program regularly, then it’s likely the reward that needs improving.
Rewards need to cut through the noise to grab the member’s attention. Everyone is busy, so getting members excited to share with their friends is critical.
Increase the reward value, or find out what types of rewards your customers would like to earn and change your incentives accordingly.
You might also try giving customers a choice of gift card rewards from a gift card menu, increasing the value of the reward as customers make more shares, or offering a higher reward for the first successful referral if money is tight.
Be careful when changing member rewards, as this can set expectations for future rewards. We recommend running a seasonal (limited time) campaign first before updating the main program reward. That way, if the reward change doesn’t meet expectations, you’re not locked in and can easily switch back to the original reward.
Add or change a friend reward
We recommend adding in a reward for the referral if you haven’t already. People are equally motivated by what they can give their referred friends and what they get in return. They appreciate the opportunity to help their friends get a good deal. And they won’t feel like they’re “selling out” their friends just to get a reward of their own.
If you’ve already added a reward for the referred friend, it might need changing. Either increase it, or change the reward type. The referral reward is easy to change because the referred friend only sees that reward once.
Consider running a seasonal campaign to test any reward changes.
Refine reward messaging
Before they share, people need to know exactly what you want them to do (share) and what’s in it for them (the reward).
Evaluate the messaging in your member emails, on your program landing page, and in your Member Portal. Are the instructions, and the rewards on offer, clear? If not, think about breaking down the instructions into three or four bulleted steps.
Make sharing convenient
Giving program participants instant access to their click-to-copy referral link is the way to go.
Once customers join the program, send them their referral link via email right away. This way, they can access that link instantly, without the need to log in.
You should also include the customer’s personal referral link in any dedicated program promotional emails.
What about if they want to use your program page to share – say, via email or SMS? Referral Rock lets customers access the program with their email or social credentials, so they don’t need to remember another login.
Engage, engage, engage
Be sure to engage existing sharers and remind them to continue sharing. Targeted emails are a great way to do this – try sending emails a week or so after they share, or right after they earn any of your rewards on offer.
Monthly summaries of a sharer’s activity are another great way to keep your program participants engaged. As we highlighted in the awareness section, these automatic emails give a personalized overview of the shares someone’s made and the rewards they’ve earned.
Reach
The ball is in the referred friend’s court now – we’ve moved to the referral’s journey. They’ve received a message from their peer, but are they interested enough to open that message and click the referral link inside?
Reach measures the number of page visits your referral program creates – how many unique people click on a referral link and land on your website or friend landing page. So, it also tracks whether the shared message is resonating.
Since reach includes both the referred friends who convert and those who haven’t converted yet, it lets you gauge the brand awareness your program creates (how many new people now know about your brand).
Unlike most referral platforms, Referral Rock monitors and shows the Reach metric, or number of page visits from both unique unconverted and converted referrals.
We’ve found that every share reaches a total of 13 people on average! 13 people reached for every share is significant, and shows the impact of online share methods. This is likely the result of power sharers, who share with many people in one fell swoop.
How to improve reach?
If shares are high but reach is low, that means members are sharing but the share message isn’t resonating with referred friends. In other words, potential referrals are seeing the message their peers share, but aren’t compelled enough to click and engage with it.
So, we recommend improving the message people share with their friends, and the reward offered inside.
Revise your share message
The share message is what members send their friends on social media, email, SMS, or when copying and pasting a link. It’s the first time a friend learns about your business, so it needs to be compelling enough for them to take action.
Give the referred friends a reason to click and learn more about you – what value do you offer that can help solve their problems or make their life better?
Consider these points as you evaluate your share message:
- Does the message connect with new referrals?
- Is it written from the member’s point of view, without any marketing language (would the member say that to a peer?)
- Does it highlight what’s in it for the referral (the referral reward)?
- Does it highlight the benefits of your business (why the referred friend should care)?
You might also ask your top customers or sharers for ideas on how you might personalize the message.
Change the referral reward
The reward can also be a deciding factor in whether someone clicks. So, if you aren’t yet offering a reward to the referred friends, we recommend you do so. And if you are, consider increasing its value, or changing it up so it better ties back to your business (say, so it offers a discount, store credit, free product or service, or upgrade).
Referrals
Converted referrals are the ultimate goal of any referral program, and the clearest predictor of a program’s success.
After your referral program has been active for a month or so, start to check on the numbers of referrals you receive.
“Referrals” are the referred friends who convert – who purchase, fill out a lead form, or sign up for an email list or subscription. So, are referrals purchasing, signing up, or filling out that key lead form? The referrals indicator tracks how many conversions your program brings in.
How many referrals should you expect? Every business is different. The length of sales cycles can affect how quickly a referred friend converts.
But using our data across hundreds of referral programs in many industries, we’ve found that every individual share produces about one referral. (This also validates that shares are a good early indicator of referral program success!)
How to improve referrals?
If reach is high but referrals are low, we recommend improving your friend landing page. Give referred friends a compelling reason to become a lead or customer.
Improving the friend landing page is key here. Referrals need to be interested in your business beyond any rewards they get as part of your referral program. The shared message got them interested. Now this page needs to convert them – get them to take immediate action..
Improve the friend landing page messaging
The friend landing page is your best chance to convince new referrals to take action and engage with your business. It’s also the first introduction to your company for most referred friends, so make sure they understand what your company does and why it’s relevant to them.
- Does the page speak to the relevant audience?
- Does it clearly explain the company and offer?
- Is the call to action clear and relevant?
- Is the call to action easy and simple to complete (focus on removing friction in the first step)?
- Are you providing a smooth and compelling journey (from referral message to friend landing page to action)?
Remember that, from the share messaging to this page, the text, images, offer, and call-to-actions need to convey a single experience.
The share message got them interested – and now, the referral page needs to convert them. They need to work together, not feel disjointed.
Make the “ask” easy to say yes to
Overall, the “ask” (what someone must do to convert) must be as easy as possible to complete, and provide clear benefits to the referral.
Make it easy for referrals to say “yes.” Your call to action should be simple with minimal friction.
Don’t ask them to purchase unless it’s an impulse buy, and minimize the number of form fields you ask them to fill in. You can always follow up with more information once you’ve captured the referral’s contact details.
The reward also comes into play here. Again, offer a reward to referred friends if you aren’t already. And if you are, consider increasing its value, or changing it up so it better ties back to your business.
Improve your program with the leading indicators
Monitoring shares and reach provides early insights into engagement and potential improvements. After you’ve generated shares and reach, you can also start tracking your numbers of referrals.
- Awareness: Promote your program regularly, on multiple channels, to create as many access points as possible. Don’t forget to engage existing participants.
- Shares: Enhance the ease and appeal of sharing by creating a compelling reward, giving participants easy access to referral links, and engaging them with targeted reminders.
- Reach: Improve the quality of your referral message to resonate with new potential customers. Ensure that the message feels personal, and highlights clear benefits.
- Referrals: Optimize the friend landing page to clearly communicate your value proposition. Ensure the reward system is attractive to both the referrer and the referred friend.
By focusing on these areas, you can enhance the overall performance of your referral program, increasing both engagement and conversion rates. Regularly promoting your program and adjusting strategies based on data will help maintain momentum and drive continuous improvement.
