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Ways to decide A Good Referral Rate to set amazing Referral Program Benchmarks

  • Posted on January 31, 2023 by Robert
  • Reading time about 5 minutes
best referral rewards marketing software

Referral incentives encourage clients to tell their friends about your company. A reward is given to the consumer who made the referral when the person they recommended made their first purchase from your company. These initiatives attract a consistent supply of new clients while converting existing clients into brand ambassadors.

With a carefully thought-out referral programme in place, high-growth brands can bring in 5 to 15% of their new clients. Your customer experience programme is a fantastic method to find your most satisfied customers and then motivate them to recommend your business to their friends at every stage of the after-sale process.

How can you tell if your rewards system for customers is working as it should and if your referral rate is also good? the answer is by comparing it to other programmes in your speciality. You can get a clear image using a variety of measures. However, the recommendation rate is the surest indicator of how well your referral programme is working.

What Is a good referral rate?

Industry-specific referral rates vary, therefore it’s important to look at the figures that apply to your particular business. Examining other referral marketing indicators, such as your sharing rate, referral visits, and conversion rate, will help you better understand the referral rate.

How to measure the referral rate?

The most crucial indicator to consider when assessing the general performance of your referral programme and campaigns is possibly your referral rate. It is calculated by dividing the total number of clicks on referral links by the sum of those clicks’ purchases.

The number of referred purchases divided by the total number of purchases is the formula for determining the referral rate. The equation reads as follows:

According to statistics on referral marketing, the ideal referral rate is 2.3% or roughly 2 out of every 100 purchases. Even while it might not seem like much, it is difficult to accomplish.

In another sense, if you want to calculate the referral rate for your program, get a calculator and start working. A score of around 2% would be preferable.

Types of referral programs or rewards systems for customers you must go with

Direct referrals

Direct referrals are suggestions made in person, right away. A direct recommendation occurs when you pick up your phone, send the person your referral link, and they make a transaction.

Customers must be aware that you provide a referral programme, and it must be quick and simple to use.  When you have this, clients can recommend friends to you on the spur of the moment.

Reputational references

Referrals based only on reputation are exactly what they sound like: people recommending your goods. The referrer in this instance may or may not have used your product themselves, but they have enough faith in your company’s reputation to endorse it to others.

Run referral campaigns that offer allies tempting incentives to refer friends. If someone is preparing to buy a mattress from you, for instance, but wants a discount, they can recommend a friend or family member to buy it so that you both get a discount when buying.

Encouraged referrals

Referrals that are compensated for by a reward like a discount code or a free gift are known as compensated referrals. The effectiveness of your referral programme depends on how you choose to reward your customers for making referrals and how you encourage friends to make purchases.

How to build a successful customer referral program in 2023?

Know the needs of your customers

By conducting surveys, looking at recent support requests, or even just reading online product reviews, you can examine your customers’ demands. One of the most popular methods to gauge customer satisfaction is an NPS survey. You may enhance your products and onboarding procedures for new clients by getting more user feedback from these questionnaires.

Customers are asked to score your product on a scale of 1 to 10 and to state if they would suggest it to a friend. With the correct incentives, a high NPS can be a sign that your customer loyalty management software has the potential to be very successful.

Publicize your referral programme

You must get the word out about it before you can expect anyone to participate. Email campaigns that are time-based or automatically generated are one way to advertise your referral programme. With this, you can email clients who have made a purchase asking them to refer friends or family in exchange for discounts on their subsequent purchases. You can use social media channels to advertise your referral programme.

Offer the appropriate value

A good referral programme requires striking a balance between what appeals to potential referrers and what is profitable for your company. There are many different kinds of referral programmes. Discounts, points, credits, extra products, or even cash incentives may be offered to both the referrer and the referred party.

Customer service is crucial

Customer service is a major consideration for 84% of buyers when purchasing a product. If the consumers you want to convert into brand evangelists have enjoyed working with your company, they are much more inclined to tell their friends about it. Sending information about your referral programme to someone who has just received excellent customer service is a terrific approach to increase participation in it.

You may use this information to send them an email campaign that advertises your referral programme since common customer support solutions allow customers to provide good comments following an interaction.


Understanding your consumers’ needs and what would best motivate them to share is crucial when launching a referral program. Using shareable referral codes and URLs generated by customer loyalty management software, you should also make the referral process as simple as feasible.

Look no further than Novus Loyalty if you’re searching for a quick and effective approach to setting up the best referral rewards marketing software. It includes everything you need to turn your clients become your brand ambassadors, including a global rewards catalogue with more than 100 countries covered.

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