Referral Marketing ROI Calculator

The Referral Marketing ROI Calculator empowers businesses to estimate the potential return on investment (ROI) of implementing a referral marketing program. Follow the steps below to utilize the calculator effectively:

1. Enter Business Metrics

• Estimated Customer Base: Input the total number of existing customers or users.
• Referral Rate (%): Specify the percentage of satisfied customers likely to refer others.
• Average Referral per Customer: Determine the average number of referrals made by each endorsing customer.
• Average Lifetime Value (LTV) or Average Order Value (AOV): Enter Average LTV or Customer Lifetime Value for services businesses like SaaS, Consulting, Coaching etc. You can also enter Average Order Value for E-Commerce or any other products or Brick & Mortar Busines Models.

2. Enter Program Parameters

• Marketing Spend: Enter any one-time accessory expense associated with launching and promoting the referral program campaign.
• Referrer Reward:Specify the average incentive granted to referred users upon their signup.
• Referee Reward:Input the typical reward offered to referring users for each referee who signs up.

3. Click "Calculate"

After entering all relevant information, click the "CALCULATE" button to generate the results.

Understanding the Results

The calculator provides insights into various aspects of your referral marketing strategy:

• Total Referrals: The estimated number of referrals generated by existing customers.
• Total Investment: The overall cost incurred in implementing the referral program.
• Expected Payoff: The anticipated financial return from acquiring new customers through referrals.
• ROI %: The return on investment percentage, indicating the efficiency and profitability of the referral marketing campaign.

Referral Marketing ROI Calculation Formula

Result Values	Calculation Formula
Total Referrals:	Estimated Customer Base × (Referral Rate / 100) × Average Referral per Customer
Expected Payoff:	Total Referrals × (Average Lifetime Value - Referrer Reward - Referee Rewards)
Total Investment:	Marketing Spend + {Total Referrals × (Referrer Reward + Referee Reward)}
ROI %:	((Expected Payoff - Total Investment) / Total Investment) × 100

Example Scenarios

To illustrate the calculator's functionality, here are some use-case business scenarios:

SaaS Business - SassyPages Inc
Metrics	Input Values	Results	Result Values
Estimated Customer Base	10,000	Total Referrals	2,250
Referral Rate (%)	15	Total Investment	68,100
Average Referral Per Customer	1.5	Expected Payoff	157,500
Average Lifetime Value (LTV) / Average Order Value (AOV)	100	RoI %	131.278
Marketing Spend	600
Referrer Reward	20
Referee Reward	10

E-Commerce Business - TrendyKart
Metrics	Input Values	Results	Result Values
Estimated Customer Base	30,000	Total Referrals	8,280
Referral Rate (%)	12	Total Investment	332,400
Average Referral Per Customer	2.3	Expected Payoff	662,400
Average Lifetime Value (LTV) / Average Order Value (AOV)	120	RoI %	99.278
Marketing Spend	1,200
Referrer Reward	25
Referee Reward	15

Retail Business - Royal HyperMart
Metrics	Input Values	Results	Result Values
Estimated Customer Base	20,000	Total Referrals	4,000
Referral Rate (%)	10	Total Investment	100,800
Average Referral Per Customer	2	Expected Payoff	500,000
Average Lifetime Value (LTV) / Average Order Value (AOV)	150	RoI %	396.032
Marketing Spend	800
Referrer Reward	15
Referee Reward	10

Automotive Business - SpeedyStart
Metrics	Input Values	Results	Result Values
Estimated Customer Base	5,000	Total Referrals	1,800
Referral Rate (%)	20	Total Investment	72,500
Average Referral Per Customer	1.8	Expected Payoff	288,000
Average Lifetime Value (LTV) / Average Order Value (AOV)	200	RoI %	297.241
Marketing Spend	500
Referrer Reward	25
Referee Reward	15