A referral rate is an important metric used to measure the success of an organization's referral program. It is the number of customers that have been referred to the organization divided by the total number of customers that were eligible for referral. This metric is useful in determining how successful a referral program has been and whether it should be continued or modified. Let’s take a closer look at what a referral rate is, why it matters, and how to calculate it.
$$\frac{Count\:of\:Customers\:Referred}{Count\:of\:Customers\:Eligible}$$
A high referral rate can indicate that a company's products or services are valued enough to be shared with family and friends. If your company has a low referral rate, it may suggest that your product or service isn't resonating with customers as much as you'd like. A high referral rate also indicates higher customer satisfaction levels and increased customer loyalty, which can lead to more sales and better retention rates. Additionally, referrals are often one of the most cost-effective ways to attract new customers since they come from people who already trust your brand.
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