Video: Where do I start measuring my referral program?
The problem with trying to measure your customer referral program is focusing on the wrong metrics. In this section we go over the differences between Vanity and Key Metrics.
Hi, welcome to another session on customer referral programs, today, we’re going to talk about “Where do I start measuring my referral program?”. If you saw our earlier session on whether you need to measure your customer referral program, you’ll know that our opinion is “Yes”, the thing is, we don’t want to leave you hanging, wondering what do you measure. We want to start with an introduction to measuring your customer referral program.
Web Marketing Metrics
The reason this is important to break down step by step, is that people have been trying to measure web marketing for a long time, and a lot of us still get it pretty wrong. There’s two major concepts I want to explain to you right now, Vanity metrics and Key metrics. Vanity metrics can easily be described as numbers that go up and to the right.
Vanity Metrics versus Key Metrics
Let’s imagine that you’re a company, once again that sends email, and your vanity metric is emails sent over all time, if you think about it, you cannot un-send an email, so that number can never go down, and with an infinite amount of time, that number will grow to an infinite number. Now, we’re tracking this number that can only go and doesn’t really track our company’s health, but looks great on a web page or an investor report potentially.
Vanity Metrics Definition
These are the metrics that don’t really relate to the end goal, there’s no revenue at the end of this rainbow, there’s no user growth at the end of this rainbow, this is a vanity metric, and they normally look like this. Now, a key metric, is a metric that’s actually helping indicate the health of your company, this is something that’s going to let us know, it might be revenue, it might be users, but it’s something that’s being measured in a period of time that we can compare to other numbers that’s giving us an actual indication of how we’re doing.
Key Metrics Definition
Unlike vanity metrics, we might notice key metrics flatline, go down, but overall we’d hope to see an upwards trend, but they’re not going to be as pretty as these vanity metrics, and that’s kind of the gut check, you should see some kind of variation in key metrics, and once again, these key metrics are actually going to result in major business objectives. Now, we’ve talked about this idea of vanity and key metrics, but where do we start?
What’s the goal?
The reality is we have to go back to what is the goal of your customer referral program. If the goal of your customer referral program is brand awareness, if the goal is new users signing up and trialling your product, or if the goal is paying customer, those goals are the key metrics you’re going to want to track, how many people saw this referral, how many people signed up for trial, or how much revenue are we getting from new customers.
This is the starting point, and the importance of this one number, this key metric, is it’s going to allow anyone that’s in your company who’s working on your referral program, who’s watching your referral program, it’ll let them know that this is what I’m focusing on, this is what I want to put all my efforts towards helping and improving, and that really wraps up the basics of where do I start measuring my referral program.