Why You Should Track the Rate of Customer Referrals

Consider the referral as the true money question; it’s the final frontier of loyalty. If your customers are willing to stick their neck out vouching for you, they are truly powerful to your organization and the potency of its revenue stream down the line. Keeping and developing these customers, and developing other customers like them, is the key.

A customer referral means that you’re firing on two important cylinders.

First, you’ve done enough things right that they meld together into an experience that’s more than the sum of the parts of your organization. Your products, services, people, locations, and contacts present themselves beyond the ho-hum of our daily lives as consumers. You’ve gone beyond the execution of actions and tactics. You create memories customers want to have — again and again.

Second, the connection you’ve created with customers through the delivery of this experience compels them to tell others about it. Your customers become your marketing department, relating their experiences and convincing others to try you.

You need to know how far you are down this path of building a customer base that would refer you.

If you track the rate of referrals in general and by customer group, you’ll know the strength of your ongoing revenue stream before you even spend another dollar on marketing.

The examined company will also spend just as much time wringing its hands over why customers aren’t referring it and how the referral rates differ by customer group. You need to use this information to dig into the reasons behind the numbers and drive change as a result of what you learn.

When I get preachy about this, I’m usually met with the “we can’t do this” chant.

  • Of course, you can’t track referrals if you haven’t thought about referrals as an indicator of how well you’re differentiating yourself in the marketplace.
  • Of course, you can’t if you haven’t considered the power of having a customer refer you to someone else.
  • Of course, you can’t if you haven’t figured out how to encourage customers to forward referrals or
  • Of course, you can’t if you haven’t figured out how to track and measure them.

Find the way! It costs you only the time and commitment to get it done.  You may be tracking some of this information in pockets of your organization, but you probably don’t have a consistent system to manage this information as critical metrics to define business success.

Check how your company is doing by reviewing the components of guerrilla metrics and circling the barometer of difficulty to assess the current state of your tracking and management.

Take Action: Download Managing Customers as Assets

2 comments to " Why You Should Track the Rate of Customer Referrals "

  • Tracking referrals is so important that I am always amazed when I ask Sales & Marketing executives if they do it and they respond in the negative.

    First, as an absolute minimum it is only common courtesy to thank a customer when you find out they referred a prospect to your company. And if the referral turns into an order you may want to send a small gift (not anything imprinted with your brand) such as a bottle of wine, golf balls, whatever is appropriate. Remember, its not the amount spend that matters but the thought.

    Secondly, it is very interesting to see which of your promoters actually referred someone to you and also which of your passives or detractors referred – and they will. Trying to reconcile detractors actually referring will no doubt yield interesting insight into how your business is really viewed by your customers.

  • jeanne


    I couldn’t agree more. This is your customers “voting with their feet!” What’s really powerful is to understand the segmentation of your promoters as well, regarding their volume and value as customers. If your most valuable customers start moving from being Promoters there is a real opportunity for rescue and understanding.

    Thanks so much for jumping in!

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