The famous maxim, “If you can’t measure it, you can’t improve it” applies to all aspects of business and marketing, including your referral program. Whether you want to calculate your return on investment (ROI) or determine which channels perform best, you can’t do it without data.
For marketers, the conversion funnel is where most measurement is concentrated, which is why understanding key metrics along the customer journey can help you hone your marketing strategies. Apply this concept to your referral program to ensure maximum ROI and meet your marketing goals. Use these three strategies together to measure and improve performance.
1. Evaluate Referral and Campaign Program Performance
You’re investing a lot of time and resources into your referral program, so just like with any other type of marketing initiative, you want to know how well it is working and what could be improved. Monitor the overall performance of your referral program with these key metrics along the conversion funnel:
When evaluating the top of the funnel for your referral program, look at how many impressions it has received. This metric tells you how many people have seen your referral widgets. If impression count is low, consider adjusting the position of your CTA or using a dedicated referral email to drive more traffic to a landing page.
Moving on to the middle of the funnel, look at how many times advocates have shared through the referral widget. A big gap between the number of impressions and the number of shares can indicate that your offer might not be compelling enough to prompt action.
Further down the middle of the funnel, the share rate tells you the percentage of advocates who share after viewing the widget. A low share rate might indicate that sharing requires too many clicks or that the incentives are not clear or enticing enough.
Closer to the bottom of the funnel, this metric indicates the total number of clicks from referred friends on the referral links—including clicks from email, social, and referral link shares. A low number of clicks might suggest that messaging isn’t engaging the referred friend or that the offer isn’t exciting enough to pique the referred friend’s interest.
At the bottom of the funnel, the number of conversions tells you how many referred friends have made a purchase or completed a sign-up. If conversions are low, consider increasing the incentive for friends. This is also a valuable metric to compare your cost per acquisition from your referral program against other channels.
The conversion rate gives you the percentage of referred friends who converted after clicking on a referral link. A low conversion rate could indicate a comparatively weak offer—your referral offer should be the best offer on your site to keep referred friends engaged and encourage repeat referrals.
Also at the bottom of the funnel and directly tied to conversions, revenue tells you how much money your referral program has generated. Use this in combination with revenue figures from your other marketing efforts to evaluate your overall strategy and assess ROI.
In addition to looking at your entire referral program, evaluate the same metrics for each campaign to identify areas for improvement and determine which campaigns are most effective. You can also see which campaigns get the most impressions, clicks, shares, and conversions, which can help you determine why underperforming campaigns are struggling.
How to Do It with Friendbuy
Use our built-in reports to get all the data you need to make informed decisions. The Dashboard and Performance Overview features allow you to use filters to compare performance across widgets. Look at all of them together or drill down into individual campaigns to see impressions, shares, share rate, clicks, conversions, conversion rate, and revenue.
You can also look at the Advocates Report to review the performance of your program’s best advocates by their email shares, friend clicks, referred purchase volume, and revenue.
2. Refine Referral Campaign Performance
If you run multiple campaigns within your referral program, Friendbuy allows you to track and measure each of them. Many brands run an evergreen campaign along with periodic time-bound campaigns to boost engagement. Regardless of the type of campaign you’re focusing on, you can use A/B testing to refine it.
A/B testing allows you to evaluate the following components of your referral program:
- Creative copy and graphics
- Referral offers for advocates and friends
- Calls to action
- Share email performance
How to Do It with Friendbuy
Whiskey club Flaviar used A/B testing to refine its referral offer by comparing the performance of two reward options for advocates: $50 in Flaviar credits or a free bottle of whiskey. Flaviar’s customers demonstrated why they signed up in the first place—they’re in it for the whiskey. Offering a free bottle of whiskey instead of store credit drove a 22 percent higher share rate and led to 22 percent more conversions.
3. Pay Attention to Channels
Understanding where the most engagement happens will inform where to focus your referral program promotion. Channels where your program might have a presence include:
- Personalized URLs
- Social media
Look at your conversion rate to see where your referral program is resonating most and amp up your efforts there.
How to Do It with Friendbuy
Our built-in reporting tools do all the work for you and provide data for each channel. On the Channels Dashboard, look at the channel details to see which ones generate the most engagement and revenue. DTC nail care brand Olive & June used this approach to learn that email was out-performing all other channels, prompting the company to design its widget to promote this share channel.
The Friendbuy Team Is Here to Help
We love sharing brand success stories, and one of the reasons we have so many is that our customers see the referral experts on our team as trusted partners. In addition to guiding you through the initial setup of your referral program, we help you identify areas for improvement even after your program has launched. When we look at these metrics together, we can help you come up with creative referral strategies that fit your brand.
For more pro tips on how to set up and measure your referral program, read Referral Marketing: The Essential Guide.