Effective referral programs have two things: a defined goal and a way to track whether or not those goals are met.
When you’re clear on your goals, it’s easier to track how well a program is doing and make adjustments that encourage people to share and referrals to purchase.
And when you use an effective tracking tool, your referral program resonates with your audience and helps you meet your marketing and sales goals.
The easiest way to keep track of your referral data is by using a referral platform and we will show why. Most simple referral programs come with a simple setup that allows you to get started quickly. Let’s go into more detail!
Important components when tracking referrals.
You may have more components, but to start, the least you need to be aware of is:
Advocates: These are the people who are referring to your company. They bring in new leads and help your business grow. Primarily your happy customers, but also your family, friends, employees, business partners, prospects, etc. Everyone who has/had a positive experience with your company can share it with others and advocate for your business.
Referrals: These are the new people your Advocates are sending you. They will ultimately turn into new customers.
Rewards: Most referral programs provide some referral reward to the customer and/or referral. The reward may be one of the main reasons people engage with the program and you can set up different rewards for different stages of a referral, such as a verified or sold referral.
Dashboard: Your dashboard is the company’s information hub. It shows all the major statistics, including referring products, sales reps, referral status, and rewards. It is also where the company controls communication with new referrals through a text message, email, push notification, etc.
Why should you track your referrals?
The answer is “because you should.”
No matter what method you use to track referrals, you need to trace back who is referring your company. The simplest way to do it is manually or through a spreadsheet, but with an automated platform, you increase the chances of being more effective and assertive in your approach.
When you track your referrals, you can figure it out:
1. The number of Advocates signing up on your program.
At the end of the day, any business wants to have as much Advocates as possible (meaning 1 customer = 1 Advocate). You don’t need to limit your list of Advocates to current customers, as mentioned many times before, you can expand the list of your referral sources to friends, family, employees, influencers, etc.
2. Who are your best Advocates!
Your best Advocates would be the ones who send you more referrals and those referrals end up as closed deals for your business. The average of referrals per Advocates is around 2, but if your company takes the referral program seriously and track referrals in a daily or weekly basis, the number can be double or even triple.
Also, it’s important to know what you are doing to hold your sales reps accountable. A great idea is to build a plan with a quota for referrals (it can be a week or a month plan). That way you make sure they are on board and aiming to mention your referral program in all stages of the selling process and even reaching out past customers to have them sign up and refer too. You will then track the referrals per sales reps and reward them properly, based on their referrals’ performance.
How can you track your referrals?
We listed below the different ways to track your referrals and the reasons you should thrive for the best option in the market.
Poorly Tracked Referral Program: Pen and Paper.
If you track your referrals this way, great chances you can’t do pretty much anything to track them. Sales reps write them in pieces of paper or just mention them in conversations, with no real intention to follow up and track them.
What are you losing? If there is no process to promote and collect the referrals, they are frequently lost or forgotten. Sales teams don’t always get credit for that (since there is no way to track it) and customers don’t get a reward for their efforts.
Poorly Structured Referral Program: Excel Sheet.
What are you losing? We know sales reps have a lot on their plate so they may not follow up with the frequency that your business needs. Referrals are lost on this stage too! Prospects get frustrated if you do not contact within a few days and you lose business opportunities. Besides, you can’t guarantee that customers receive any reward and your efforts are fruitless.
Poorly Integrated Referral Program: CRM.
What are you losing? With a CRM in place, you may have some level of control, but the process is difficult so you can’t take the best advantage of it! You still have to push the sales reps to follow up on the system and it’s your responsibility to be sure the customer gets his/her reward, and this takes time and effort.
Completely Automated and Integrated Referral Program: Referral Platform.
You can use any tracking tool with your referral program, but here are some reasons an automated platform is the best option.
1. It’s easier for your Advocates to send you referrals.
For the Advocates, an automated and mobile friendly referral program makes their life much easier since they can submit referrals through a mobile app and also a webpage (according to comScore, people spend 50% of their digital time with smartphone apps versus 34% on a desktop), increasing their chances of referring friends and family.
2. You can track every single component.
When using a platform, you concentrate all data at the same place and make sure you don’t lose any contact. You also track how every single stage. Knowing when A moves to B can help you understand where you are the strongest or the weakest during the whole referral process.
3. You can set up standard stages and make sure everybody uses the same terminology.
When the Referral has to take action to earn a reward, you’ll update its status. The typical statuses are Pending >> Qualified >> Approved and Denied. Rewards can be tied to Qualified and Approved statuses, dependent on the program design. If you use other tracking tools such as spreadsheets, for example, you may have different sales reps using different terminologies, which makes it harder to track and compare performances.
4. You can set up a manual or an automatic referral reward.
Using a referral platform can help you expand and fine-tune your terms as in what defines a reward to creating a set conversion, to fraud detection.
Also, approving your referrals and rewards can be time-consuming if you are using a spreadsheet for your referral program. Identifying when the sales happen, and if you have a waiting period before providing any rewards to your promoter (perhaps based on your return policy). And keeping track of when the sales were initiated, on top of reminding yourself to follow up with the sales after 30-90 days.
Referral platforms can help you automate the process. With most platforms, you can even automatically approve or set it manually. You can set up automatic rewards and add bonus amounts for additional efforts.
And regarding the reward payment, you can provide the customer with plenty of options such as bank transfer, PayPal, virtual debit card and Gift Card.
5. The platform can work as a communication tool too.
A referral platform is more than only a referral tool, it’s a communication tool: your company can send the Advocates messages, emails, push notifications and keep them up to date with their referrals and the status of their project.
6. You can integrate the referral platform with your CRM system.
Besides, referral platforms usually offer an open API that allows you to integrate the referral program with your CRM, giving you complete connectivity with your business!