What is a referral rate?

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A referral rate is the share of new customers in a period who came by referral. It is not the fee you pay the person who introduced them.

The referral rate formula

Referral rate equals the new customers who were introduced, divided by all new customers in the period.

Say 12 of 40 new customers in a month were introduced by someone. 12 divided by 40 is 0.30, so the referral rate for that month is 30 percent. Those counts are an example, not a benchmark.

Once you have your own rate, estimate what it is worth with the referral ROI calculator.

How to measure a referral rate from your own records

  • Choose the period. A month or a quarter is enough.
  • Count the customers who were new in that period.
  • Of those, count the ones someone introduced.
  • Divide the introduced count by the new-customer count.

The number is only as good as the record of who introduced whom. If that record is a memory or a notes field, the rate is a guess.

A referral fee is a different number

A referral fee is the share of a deal you pay the person who made the introduction. A referral rate is the share of new customers who arrived that way. One can be high while the other is low.

When the question is what to pay, use the referral fee calculator.

Keep the count of who introduced whom

A referral rate you can stand behind starts with a record of each introduction, not a reconstructed guess at the end of the month.

Keep reading
Monetize referrals →
How to capture the value an introduction creates.10 min
What is a referral tracking system? →
The record of who introduced whom, the deal, and the fee.6 min
Where referrals get lost →
The five leak points between introduction and payout.9 min