Referral rate is a crucial metric for e-commerce businesses, as it helps to gauge the effectiveness of referral marketing campaigns and the potential of existing customers to attract new ones.
Referral rate refers to the percentage of customers acquired through referrals as a result of your marketing efforts. It's a valuable metric because it helps you understand how well your customers are referring your business to their friends, family, and colleagues through referral programs or word-of-mouth. By tracking your referral rate, you can make informed decisions to optimize your referral marketing strategy, thereby boosting your sales and profits.
Referral rate = (Number of referral purchases / Total number of purchases) x 100
Imagine that your e-commerce store receives a total of 1,000 purchases in a month. Out of these, 200 purchases were made by customers who came through referrals. Using the formula mentioned above:
Referral rate = (200 / 1,000) x 100 = 20%
This means that 20% of your total purchases came from referral sources.
Referral rate is closely connected to several other e-commerce metrics, such as:
Repeat Customer Rate (RCR) is the percentage of customers who make a subsequent purchase from an online store.
Referral traffic is the visitors who came to your website via another site's direct link.
Receipt validation refers to confirming the authenticity of a purchase transaction to inhibit fraudulent activities.
Real-time bidding (RTB) is a digital ad-buying process enhancing tailored ads for consumers.
Return rate is the percentage of products returned by customers relative to the total number of items sold.
Revenue Churn Rate measures changes in a business revenue from existing customers, indicating the amount of lost busines...