There are few things more persuasive than the referrals of people you trust. It is also free, so you can get a much higher ROI with referral marketing. In the U.S., friends’ social media posts influence 81% of customers’ buying decisions, compared with 78% who are influenced by posts by the brands they follow.
Customer referral programs work best though when you are clear on your sales and marketing goals, make changes to encourage sharing and referrals, and implement a tracking platform that helps you achieve marketing and sales objectives.
What is referral tracking?
Since many people rely on the opinions of friends and family, they often ask them for recommendations regarding films, restaurants or books. People like to share products related to their favorite companies, such as gyms or workouts.
Think about the scenario where your gym or fitness boutique gets referred by not one referrer, but a lot of people. Now, you’ll have to track which referrals came from each person. Referral tracking is a method of monitoring and collecting data on all activities related to your referral program.
Your existing customer base can receive their personalized referral code or referral link, and when their referred friends and family use one to check out your business, you will be able to track all your customer referrals.
What are the benefits of tracking referrals?
Referrals need to be tracked for several reasons, including identifying who to reward and when. While tracking referrals can provide you with deep insight into how to increase referrals, it can also help you make smarter decisions about your marketing strategy. Several other reasons exist that can help you with your referral program.
Measure the level of customer satisfaction
You can gauge the satisfaction of your customers by tracking a few key metrics in your referral program. Referrals are more likely to come when your customers are happy with your service. NPS (Net Promoter Score) is one metric you can use for measuring customer satisfaction. The likelihood of a satisfied customer referring your product and services is greater than that of a dissatisfied customer, regardless of if there is a reward.
See how many people have signed up for your referral program
Review your referral marketing program’s participation rate to help you evaluate its success. Looking at participation rates or numbers of sign-ups can help you determine if the program is working. Your referral marketing strategy may need to be altered if your participation rate is low.
Check how often your referrers share their referral codes
Take a look at how many advocates are sending referrals, and which channels they prefer, such as email, text messages, social media, a referral code, and so on. Your advocates can then produce more content and improve the experience of using the program.
You will be more likely to get recommendations from happy customers. When you offer an incentive, you can measure satisfaction right there. Clients who receive a relevant reward will refer others.
Track the number of referrals from your customers
You can see how much an advocate gets referrals by tracking their referral rate. From that, you can create a level-based reward system and the number of referrals generated by your best advocates can go a long way.
You may have an advocate who shares their referral code and referral links with their 10,000 followers on social media. However, not everyone will click on the referral link. This equates to only .1% of followers clicking on the link. Ensure that what you offer will satisfy a new customer.
See how many referrals actually follow through
Your referrer might share many times, but only get a handful of referrals. Now you need to see if that referred friend will show up to your business.
You’ll be able to track how many referrals visit your gym after being referred. By using this number, you can determine whether changes are needed for your referral program. The number is often used by marketers to gauge a program’s success.
To measure the effectiveness of your redirect page, landing page, and confirmation page, you can also look at how long it takes a consumer to buy a product after clicking on their referral code. A low number of referrals may indicate you need to restructure your referral marketing program or reconsider your referral rewards.
Ensure referrals are valid
If you do not track references accurately and effectively, you might be charged for referrals that aren’t genuine. It could also decrease the overall return on your program if you pay for referrals that aren’t authentic.
The right tracking can enable you to determine which references are rewarded, which is important to ensure only legitimate referrals get paid and that self-referrals and fake referrals do not get anything.
Analyze how the referral marketing program affects revenue
Incentives provided to members will likely have a significant impact on your profit based on how high your conversion rate is. You can offer your existing customers an incentive to convert friends and family into members through a 10% discount. But a free trial for conversion could result in a loss of profit.
How can you track your referrals?
For the business owner trying to keep up with referral marketing, keeping track of your referral information is one of the more challenging and perplexing aspects of referral marketing. There are several methods for tracking, including flyers, cards, and referral program software.
You may need a simple solution rather than something more complex depending on your business needs.
1. Real-life Referral Process
For a spa or wellness boutique that offers printed materials like gift cards to customers, you can provide referring customers with copies of business cards and flyers to hand out to their friends. You can also add a referral code to printed referral cards, which will link the referrer to anyone who uses it.
2. Online Customer Referral Process
When you work with a good referral platform, the simplest referral program would be:
- A referrer participating in the referral program invites their friends and family via their referral tracker, which could be a referral link or code.
- The referred friend is then tracked using the unique identifier that can be found in a referral link or code.
- A referrer receives a reward when a friend purchases referrers, products, or services through the link provided.
3. Referral Platform Process
It becomes easier when using referral program software and the software does all of the work.
- A postback URL is a link back to the referral program software with the conversion data and URL parameters you provide.
- An API call returns the URL parameters provided by the referral program with the referrer’s referral.
Looking for a referral program platform?
Referrizer is an automated referral marketing tool that helps you to increase referrals and easily keep track of rewards, advocates and new customers that you generated through word of mouth marketing.
Always Review Your Referral Tracking Process
When running a referral program, keeping track of referrals is a critical part of your overall marketing strategy. The more visible a referral program is, the more likely it is to succeed. Your referrers should be able to utilize their referral codes or referral links on social media, fliers, and even traditional cards.
Don’t forget that a successful referral program is all about providing an excellent customer experience so your customers are more than willing to refer you to others. You can still use referral tracking, in either case, to keep track of your customer referral program, increasing the chances of your business growing.