LoyalAs Blog

Use Math + Motivation to Get Biggest Profit TL; DR Last week we talked about how much to pay for your referrals , this week we talk about how to reward your referrals to convert the most business. Last week was all about the math, this week is about considering incentives/motivation.  You need to consider the math and motivations to calculate profit. Profit is the big north star for determining the success of any marketing program, including referral programs. To determine the profit of referrals you’ll consider CAC (customer acquisition cost) against revenue earned: for the transaction,  for the year and  over the customer’s life-time. Converting the most business from referrals is a factor of three things:  i) reminding customers about your referral program;  ii) making it easy for your customers to ask for referrals;  iii) rewarding your customer and referral with enough of an incentive that your customer will send you referrals and the referral will...

TL; DR Referrals convert at the highest rate and are an inexpensive way to acquire new customers especially compared to ads Like any lead source, referrals have a CPL (cost per lead) and a CAC (customer acquisition cost), both CPL and CAC are notably lower for referrals than other lead sources CAC is lower for referrals because the conversion rate is higher than other lead sources and the hard-cost is mostly the cost of rewarding the referring party and the cost to incentivize the referral Determining how much you’ll pay each: i) the referring party and ii) the  referral, is based on the standard fee of your service, the lifetime value of a new customer and the CAC for other lead sources TIP: the best way to pay the referring party and referral is with credit towards your service. This incentivizes customers who are most loyal. The credit  not only builds their loyalty but also attracts the same type of characteristic in the referral. Plus, a service credit doesn’t increase yo...