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So the time has come – your business needs a performance measurement system, which would allow it to grow. In order to implement growth strategies, you need reliable statistical information with which to set targets.
Introducing key performance indicators (KPIs) is how you can do that and, consequently, make your referral program flourish.
Coming up with the right indicators can be challenging, especially if you've had no previous experience with KPIs. So if you're looking for down-to-earth strategies to help you define effective indicators, this article is for you. I'll be using my referral program as an example.
1. Measure Your ROI
The return on investment (ROI) may easily be the most crucial indicator of your referral program. This will allow you to keep track of how much money you're losing or winning.
To find out this indicator, the return (benefit) of an investment is divided by its cost. The result is expressed as a ratio or a percentage.
2. Assess the Average Referral Count
This indicator will enable you to view the number of raw lead referrals that are brought by participants of the program. Apart from everything else, you'll be able to see how successful your referring audience is (the people who refer your program to others).
If this figure is low, you may consider improving your referring guidelines and / or the materials with which you provide your referrals).
3. Discover the Rate of Participation
This KPI reflects the number of people (in %) that decided to try out the program after they had been pitched with the offer.
This figure may indicate how interested a person is after he or she has read your copy.
4. Assess the Level of Reward Attainability
Determining this KPI is essential if you'd like to enhance the rewards system for your program.
If you set your goal too high (for example, bring 97 referrals and win...), it's unlikely that anyone will try at all.
5. Count the Conversion Rate of Referrals
To get this percentage, find out how many referrals have converted to customers. If you see that the demand for your product is there among participants as well(and only among your referrals), you can quickly capitalize on it.
6. Time It.
Calculate the total amount of time that it takes you to manage the program. The referral program itself can be broken down into several parts, so you can see how much time each part takes. This will keep you focused on your task and help you be more organized. You can even use time tracking software (available online for free) to get started with this software development KPI.
Implementing these KPIs into your referral program:
Having KPIs is just the first step. You also need to implement it into your strategy to benefit from it. Here's how I was able to profit from introducing the KPIs above in my referral program:
- ROI. This indicator provided me with a quick overview of how successful my strategy was and whether I was going in the right direction. In this case, figures spoke louder than words.
- Average Referral Count. Thanks to this KPI, I was able to correct my referring materials.
- Rate of Participation. With this indicator, I could see at a glance if copies for my program needed improvement.
- Reward Attainability. Rewards were meant to encourage participation, but I've noticed that none of the participants actually aimed for that. When I had lowered my numbers after I analyzed the figures, the result didn't keep themselves waiting.
- Referral Conversion Rate. Participants of my program can also buy the product themselves. Thanks to this figure, I could see that participants also needed the product and implement the necessary strategies.
- Timing may actually seem like a waste of time, but it allowed me to see what parts of referral program marketing took most and least of the time. Consequently, I no longer had to make rough guesses and had a better control of the whole process – and of my time.
I hope you'll find this approach useful. Feel welcome to leave your questions and comments in the field below.