What is referral rate?<\/h2>\r\n\r\n\r\n\r\n
Referral rate measures the percentage of total purchases made that come from referrals \u2013 from customers who were referred to your business or product through someone else. This rate is usually calculated per month or year.<\/p>\r\n\r\n\r\n\r\n
For example, if two out of every 100 purchases came from customer referrals last month, then your referral rate for that month would be 2%. ![\"referral](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2023\/05\/referral-rate-formula.png\" "\\"\\"")
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How to calculate a referral rate?<\/h3>\r\n\r\n\r\n\r\n
To calculate the referral rate, you will need to know how many purchases have come from referrals over a set time period (e.g. a month, quarter, or year). Once you have that number, divide it by the total number of purchases within that same time period. This will give you the overall referral rate over that period.<\/p>\r\n
You can then calculate other referral rates across different equivalent time periods, and compare the referral rates to measure progress. You can also compare referral rates to purchase rates across other marketing channels.\u00a0<\/p>\r\n\r\n\r\n\r\n
This is one place where referral software really shines. Referral software tracks all the referrals your customers make \u2013 it records who made the referral and when the referral resulted in a purchase. So, it\u2019s convenient and simple to instantly see how many purchases have come from referrals, and find your referral rate.<\/p>\r\n\r\n\r\n\r\n
What is a good referral rate?<\/h3>\r\n\r\n\r\n\r\n
A referral rate of 2% is generally considered to be healthy. The global average referral rate across all industries is 2.35%. If your referral rate is close to or higher than this, then you can feel confident in knowing that your referral program is on track.<\/p>\r\n
A few industries have exceptionally high referral rates on average (between 3% and 5%). This includes the SaaS industry.<\/p>\r\n
![\"referral](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2023\/05\/referral-rate-stats-a.png\" "\\"\\"")
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How to improve referral rates?<\/h2>\r\n\r\n\r\n\r\n
Improving referral rates involves three fundamental steps:<\/p>\r\n
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- Shares:<\/strong> Encouraging customers to refer more often<\/li>\r\n
- Reach:<\/strong> Getting referred leads to visit your website or page<\/li>\r\n
- Successful referrals:<\/strong> Enticing the maximum number of referred leads to complete their purchases<\/li>\r\n<\/ul>\r\n
The more shares you get, the more leads you’ll reach, and the higher your chances are of getting new referred customers. And of course, the more referred customers you have, the higher your referral rates will be!<\/p>\r\n
Based on Referral Rock data, every share brings in 13 link clicks on average, and one successful referral on average. So, measuring your shares is a great initial indicator of whether your referral program will be successful, even before referrals roll in.<\/em><\/div><\/div>\r\nHere are some of the most effective ways to increase your referral rate, and boost customer acquisition:<\/p>\r\n
Make sure you\u2019re promoting your program well<\/h3>\r\n
\r\n\r\n<\/p>\r\n
The number one reason why referral programs fail is a lack of consistent promotion. If people don’t know about your program, they won’t share. That’ll cut down your reach and reduce the number of referrals you stand to bring in.<\/p>\r\n
Promoting your program is vital to keep referral rates healthy!<\/p>\r\n
Divide your promotion strategy into two types of referral promotions: direct and indirect.<\/p>\r\n
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- Direct promotions are completely focused on promoting your referral program, with a clear ask for a referral. Emails and social media posts dedicated to asking for referrals are some examples.<\/li>\r\n
- Meanwhile, indirect promotions take place within communications not fully dedicated to your program \u2013 through methods like email signatures, transactional emails, and newsletters.<\/li>\r\n<\/ul>\r\n
You should be promoting your referral program<\/a> through a mix of the following ways:<\/p>\r\n
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- On your website, including a banner on your homepage, a dedicated landing page, and numerous links<\/li>\r\n\r\n\r\n\r\n
- In mass emails focused on your program<\/li>\r\n\r\n\r\n\r\n
- In personal referral emails sent to your most loyal and satisfied customers<\/li>\r\n\r\n\r\n\r\n
- In newsletters, update emails, confirmation emails, and other emails unrelated to your referral program<\/li>\r\n\r\n\r\n\r\n
- Through social media posts (consider shouting out top referrers for added social proof!)<\/li>\r\n\r\n\r\n\r\n
- In email signatures and social media bios<\/li>\r\n
- On your thank-you page (right after a purchase)<\/li>\r\n\r\n\r\n\r\n
- In your customer portal (if you have one)<\/li>\r\n\r\n\r\n\r\n
- On social media platforms like X (Twitter), Instagram, and Facebook<\/li>\r\n\r\n\r\n\r\n
- In-store (if applicable)<\/li>\r\n<\/ul>\r\n
![\"gold's](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2023\/01\/golds-gym-twitter-referral-promo.png\" "\\"\\"")
<\/p>\r\n\r\n\r\n\r\nOffer attractive rewards<\/h3>\r\n\r\n\r\n\r\n
It is absolutely essential to offer referral rewards<\/a> that are attractive enough to entice your customers to refer leads, but that are still friendly to your budget. Think beyond the cash referral fee<\/a> \u2013 you can also offer other rewards that are tailored to your brand. Rewards that tie back to your brand include store credits (gift cards), free products, service upgrades, swag, and exclusive bundles.<\/p>\r\n\r\n\r\n\r\n
\u00a0It’s also a good idea to simply poll or ask customers what they would like to receive as a reward and tailor your rewards program to both their needs and yours. You might even consider a tiered structure, where rewards increase in value the more referrals someone makes.<\/p>\r\n
![\"Postable](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2019\/06\/refer-your-friends-and-get-e1586295620809.gif\" "\\"\\"")
<\/p>\r\n\r\n\r\n\r\nMake incentives double-sided<\/h3>\r\n\r\n\r\n\r\n
Both the referring customer and referred lead should be highly motivated to participate in your referral program. It’s not enough for just existing customers to be incentivized to make referrals; you must also offer something of value to your referred leads to encourage them to complete their purchases. This could involve offering discounts, free trials, or other enticing promotional offers that apply to the first purchase.<\/p>\r\n
![\"omsom](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2016\/09\/omsom2023-1.png\" "\\"\\"")
<\/p>\r\n\r\n\r\n\r\n\r\n\r\nCraft referral emails that get to the point<\/h3>\r\n\r\n\r\n\r\n
To motivate maximum sharing, referral emails need to get to the point quickly. The first thing customers will see when they receive a referral email<\/a> is the subject line. It should be concise, and should include the reward to motivate email opens.\u00a0<\/p>\r\n\r\n\r\n\r\n
The next component of the email they’ll see is the headline. This should tell customers what to do (refer) and why (receive the reward).<\/p>\r\n\r\n\r\n\r\n
Keep the body of the email short and sweet, and address the customer by name to add a personal touch. The body of the email should simply explain how the referral program works in no more than three or four bullet points. And be sure to include the unique referral link<\/a>. Placing the customer\u2019s referral link right in the email can make the referral process easier for customers while drastically increasing click through rates.<\/p>\r\n\r\n\r\n\r\n
Including an eye-catching hero image that shows the reward being offered, and that fits with your brand, can help drive home the point. The hero image could also show friends having fun and connecting with your products.<\/p>\r\n\r\n\r\n\r\n
Finally, add a CTA above the fold that\u2019s easy to pick out, and that directly states what you want the customer to do in a few words (e.g. \u201cshare now\u201d or \u201cget $10\u201d). Make the CTA button a color that stands out from the rest of the email.<\/p>\r\n
![\"Little](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2019\/06\/2019-11-05_13-10-29-e1586305165656.png\" "\\"\\"")
<\/p>\r\nReferral Rock\u2019s One Click Access links<\/a> make it as easy as possible for customers to join your program via an email promotion. When customers click these direct links, they\u2019re instantly signed up for your program (no password needed).\u00a0<\/p>\r\n
We recommend including One Click Access links in all emails you use to promote your program, both direct and indirect. Use our Program Link Builder to instantly embed One Click Access links in emails, sent with your platform(s) of choice.<\/p>\r\n
Use timed email reminders strategically<\/h3>\r\n
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Reminding customers to refer friends or family on a consistent basis, but not too often, is another effective way to increase referral rates. We recommend sending dedicated monthly emails to all customers within the first year of the program, and quarterly emails (every three months) after the first year. Of course, that’s in addition to indirect promotion in emails like newsletters.\u00a0<\/p>\r\n
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Referral Rock data shows that 30% of shares come directly from emails.<\/p>\r\n<\/li>\r\n
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This highlights the importance of ongoing referrer engagement, as most of the emails are sent after the program is first launched.\u00a0<\/p>\r\n<\/li>\r\n<\/ul>\r\n
We recommend including referral program promotions in\u00a0all\u00a0<\/em>the emails you send customers, even if it’s just a few words at a time. Adding in passive email promotions helps keep your program top of mind without overflooding your customer\u2019s inbox.<\/div><\/div>\r\nThe right referral software will automate email sending for timely customer reminders, to help keep the program top of mind without being overwhelming.<\/p>\r\n
Referral Rock makes it easy to set up event-based triggers, which send promotions to customers who purchase, renew a subscription, or take another action that shows they\u2019re satisfied.\u00a0<\/p>\r\n
![\"brain](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2021\/04\/brain-fm-reminder-email.png\" "\\"\\"")
<\/p>\r\n\r\n\r\n\r\nPersonally ask customers to refer<\/h3>\r\n\r\n\r\n\r\n
There are several effective ways for personally asking customers to refer your products or services. One method is to send repeat customers a personalized letter that invites them to join your program and offers a heartfelt thank you for their consistent support. You could even provide insights into how they have helped your organization grow since they first became a customer.<\/p>\r\n
When sending a personal message:<\/p>\r\n
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Have a reason to reach out (time it for a key moment when they’re likely to share, like right after a purchase)<\/p>\r\n<\/div>\r\n<\/li>\r\n
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\r\nBe specific about who’s a good referral fit (i.e., the characteristics of an ideal referral)<\/p>\r\n<\/div>\r\n<\/li>\r\n
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\r\nExplain your program concisely<\/p>\r\n<\/div>\r\n<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n
Another way to ask customers for referrals is to reach out post-purchase, whether that\u2019s via a thank you page or in a confirmation email. Here you can thank them for their purchase, remind them of the reward they will receive if they refer someone else, and provide an easy link to share your company with others.<\/p>\r\n
![\"australian](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2022\/10\/australian-ethical-thank-you-two.png\" "\\"\\"")
<\/p>\r\nWith Referral Rock, you can send a Monthly Summary email that gives each active program participant a personal overview of referrals they’ve made and rewards they’ve earned within the month. This keeps them motivated to share, and keeps your program right at the forefront.<\/p>\r\n\r\n\r\n\r\n
You might even invite customers to make more referrals right after they earn a referral reward, especially if you have a tiered program.\u00a0 Check out an example of this type of email from Morning Brew:<\/p>\r\n
![\"morning](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2023\/07\/morning-brew-consider-us-impressed.png\" "\\"\\"")
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Try making referring a game<\/h3>\r\n\r\n\r\n\r\n
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- Reach:<\/strong> Getting referred leads to visit your website or page<\/li>\r\n
![\"tabbed](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2023\/05\/tabbed-out-progress-bar.jpg\" "\\"\\"")
<\/p>\r\n\r\n\r\n\r\n![\"vinyl-me-referral-email-template\"](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2017\/02\/vinyl-me-referral-email-template.jpg\" "\\"\\"")
<\/p>\r\n\r\n\r\n\r\n![\"a](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2023\/05\/a-b-test.png\" "\\"\\"")
<\/p>\r\n![\"why](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2021\/04\/why-referral-rock.png\" "\\"\\"")
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