Don’t let vanity referral metrics lead you astray.
Marketers put a substantial amount of time into referral initiatives and programs in an effort to grow revenue and achieve fantastic ROI. But it can be difficult to determine what referral metrics actually represent how our programs and strategies are performing. The problem is there are growing amounts of metrics that all are promoted as providing amazing insight into your initiatives, but without context the metrics you’re relying on and any wonderful insight you’re seeing can easily turn into a vanity metric.
But what is a vanity metric? A vanity metric is one that appears to demonstrate program growth but in reality doesn’t reflect the health of your initiative. Often, this happens when metrics are being looked at as standalone performance indicators instead of being connected to revenue producing action.
So how can you tell if you are relying on referral vanity metrics? By asking the right questions about your data and reports. This not only applies to referral programs, but marketing automation, CRMs, and much more.
How to avoid turning your referral metrics into vanity metrics
There’s no such thing as a stupid question. In fact, the more you question your referral metrics, or any metrics, the better off you’ll be. So where do you start?
One of the main causes of your metrics becoming a vanity metric is if you’re looking at them all individually instead of creating context by looking at how each metric relates to one another.
Follow this line of questioning to avoid having your referral metrics turn into vanity metrics and determine if your referral program is really paying off as well as you thought it was.
Questioning your referral email metrics
1. Your referral program promotional emails have a good open rate, but are you getting click-thrus?
While potential advocates (customers or partners) might be opening your emails, if nothing is motivating them to take the next step, it’s time to reevaluate your emails and pinpoint what is turning advocates off or what could be changed to motivate them to click-thru. However, by itself, click-thrus are not a constructive way to measure the success of a referral email.
2. If you’re getting click-thrus, are they translating into conversions?
Click-thrus are only as valuable as their next action. If click-throughs aren’t translating to conversions, then they don’t mean a thing.
3. What action do you want your potential advocates or current advocates to take?
One thing to consider is what you have defined as a conversion. If a conversion is something so insignificant that it won’t help get your program any closer to generating increased revenue, there is no point to it. In this current state, a conversion becomes a vanity metric.
However, if you define your conversion as registration into your referral program or current advocates making a referral from a promotional email they received, then you have conversions that are worth more because they are on track to producing revenue growth.
Questioning your advocate referral metrics
1. You have advocates, but are they making referral shares?
Let’s suppose a substantial number of advocates have registered for your referral program. What does that mean? While it is defiantly a good sign, it doesn’t mean your referral program is demonstrating growth. If your advocates aren’t making referral shares, they aren’t generating revenue growth for your program. Look into your rewards to see how you can better spark advocate referrals.
2. If they’re making referral shares, are they sharing it with the right people?
If advocates aren’t sharing referrals with the right people, they aren’t going to be accepted. Communicate to your advocates what demographic would lead to a successful referral. Tell them to keep a lookout for people who would benefit from your product or service, a person or business that has the resources to buy, the right person within a company that is or has the ear of decision makers, or all of the above.
3. If the referrals are largely accepted, are they closing?
The people your advocates are sharing referrals with might be accepting the referral, but no sales or not a large amount of sales are being closed from it. While a large number of accepted referrals might look good, if they aren’t closing, you’re not generating large revenue from your referral program. Try to determine what is making advocates decide not to buy (price, miscommunication, or features) in order to adjust your pitch and close more referrals.
When evaluating your referral metrics, or any program metrics, always ask whether this action contributes to your revenue growth. If the answer is that it doesn’t then you’ve encountered a vanity metric.
However, if you have tied your referral metrics to revenue growth but they aren’t showing that you are generating the revenue to meets your goals, your problems might be greater than vanity metrics. More likely the issue lies with your referral program itself.
This article was written by Jessica Edmondson from Business2Community and was legally licensed through the NewsCred publisher network.