![]() This gives us $100 on Rewards for advocates cost. ![]() Say, the advocate coupon costs you $5 and you will attract 20 advocates. Rewards for advocates cost + Rewards for new clients cost + Administration costs To calculate the total costs, you need to summarize following numbers: $2,000 x (30 x 5 x 20%)=$60,000-this amount of money your company gets with this very referral program.Ĭosts of the referral program include all the costs launching a new referral will possibly bring. Let’s say your LTV is $2,000, you will attract 30 advocates for the referral program, and each of them will refer you 5 times during the time of the campaign. LTV x (Number of advocates x Referrals per advocate per period x Conversion rate) Referral program value is the variable showing how big the influence of the referral campaign is on your business. Number of your advocates = Total number of the customers xįor example, you’ve got 100 customers, and you expect 30% of them to be a part of your referral.ġ00 x 30% = 30 advocates for this very referral program.Īdvocate conversion rate, total number of clients - these variables are very dependent on how successful the promotion channels for the referral program will be. 15 to 35% of existing clients participate gladly in a referral program - this is the Advocate conversion rate. The total number of the customers allows you to calculate the Number of your advocates. The number of customers your service desk speaks to, your website traffic - all those figures can be included to deduce the Total number of customers. Some companies summarize the numbers of their followers on all the social media they use. Some businesses have a database of all the clients. Total number of the customers is a valuable you can figure out in different ways. $10 x 100 x 2=$2,000- will be the LTV in this case. An average customer remains your active client for 2 years. An average customer uses your services 100 times a year. Number of transactions per customer per year įor example, an average customer spends $10 per transaction.Average revenue per transaction (in the monetary unit of your country).To compute it, you have to multiply the next three numbers: This value is expressed in the monetary unit of your country. ![]() The numbers we’re going to calculate now are essential to do the hardcore math of your budget estimation.Ĭustomer Lifetime Value (LTV) shows how beneficial a customer is for you. Join our next lesson on the budget estimation! On the other hand, it’s still essential to estimate the optimal budget for it. This means, on one hand, that you do not pay for the only fact you have a referral program. While setting up a referral campaign to market your taxi business, you need to keep in mind the only costs you will make are the costs of the actually redeemed coupons.How much are you willing to spend on it?.What are you giving people for their recommendations?.What will be the best way and time to ask for a referral?.What is the motivation for people to refer your service to their friends?.Who are the people you want to reach with your program?.Remember: characteristics of the target group of your marketing campaign matter most. In order to succeed, define and prioritize your goals for each referral program as detailed as possible. Building up a database of active clients.Raising the loyalty level of your customers.Promoting your booking app among a specific group of people.Attracting new, real and active users to your booking app.There are several general objectives for a referral program: So, ready to figure out your budget? Roll up your sleeves! □ĭefining the objectives of a referral campaign
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