Referrals · Customer referral value measurement and targeting framework
Driving Profitability by Encouraging Customer Referrals: Who, When, and How
Journal of Marketing · 2010
Summary
The useful point is that maximizing referral-program profitability requires managing both long-term customer value and customer referral value, and that referral behavior can guide targeting of profitable prospects.
For your marketing
Possible founder application
Track who refers, how often, and the value of referred customers. Combine referral propensity with customer economics when selecting advocates for a program.
Reported result
What the study found
The research argues that maximizing referral-program profitability requires managing both customer lifetime value and customer referral value, and that referral behavior can guide targeting of profitable prospects.
Research question
What the authors investigated
How can firms measure customer referral value and use it alongside lifetime value to target referral campaigns?
Design
The authors develop a method for computing customer referral value from past referral behavior, analyze its behavioral drivers and propose targeting based on customer lifetime value and referral value.
Sample and setting
Customer and referral records used to derive CLV and customer referral value; the accessible abstract does not identify the firm or sample size.
Scope and transfer
Limitations to keep in view
The model and targeting evidence depend on available referral histories and a particular business context. Referral volume alone does not reveal the marginal profitability of a campaign.
Research sources
Journal of Marketing publisher abstract and citation metadata; profile remains at abstract level.