Understanding Attribution & Incrementality in Referral Marketing

"Are the referrals Mention Me delivers truly incremental?"

Yes. And you don't have to take our word for it.

Every referral on Mention Me is tracked against a real customer email address, so you can follow its influence well beyond the last click. Name Share® picks up the recommendations made in-person, and our upgraded experience tracks recommendations made over WhatsApp and DMs which standard analytics file under direct traffic.

When a referred friend buys, you know exactly who sent them and what that referral was worth.

And referred customers tend to be better customers. They spend more on their first order, stick around longer and go on to refer friends of their own.

Here's how referral attribution works in a multi-touch world, and how to prove the value of your programme with your own data.

The Challenge of Measuring Incrementality

In referral marketing, measuring incrementality means determining whether the customers you acquire through your referral programme represent true growth. Essentially, we ask: Would this customer have made a purchase without the referral?

In an ideal scenario, every customer gained through your referral programme would represent new business that wouldn’t have been captured through other marketing efforts. However, identifying true incrementality is challenging due to the mix of marketing activities that contribute to a customer’s journey.

Naturally, you might wonder: "How do I know that these customers are here because of Mention Me? How can I be sure I’m not paying for customers who might have been influenced by other channels like Meta or Google?"

This concern is valid, especially in today’s complex, multi-touch customer journeys. Research (123) shows that most customers interact with multiple touchpoints before making a purchase. They might see an ad, hear a recommendation from a friend, browse your website, and then finally purchase after a promotional offer.

This raises a key question: Which touchpoint deserves credit for the sale?

Attribution Models and Referral Tracking

Traditional attribution models often assign credit to the last interaction before purchase, but this can overlook the impact of earlier interactions. Fortunately, Mention Me’s referral platform is uniquely designed to track referrals using customer email addresses, enabling us to monitor the influence of referrals over a longer period. 

This allows you to capture the full value of referral efforts, even when a customer is influenced by multiple channels before making a final purchase.

It also matters for the referrals your analytics can't see. Much of word-of-mouth happens in dark social: WhatsApp chats and face-to-face conversations that show up as direct traffic, with no referral attached.

Mention Me's Name Share® technology captures those too. Instead of sharing a link, a customer tells their friend to use their name, and the friend enters it at checkout. The referral gets attributed and the advocate gets the credit, wherever the conversation happened.

And with the upgraded Mention Me experience, that data is easier to act on. Self-serve reporting lets you build dashboards around the exact question you're asking. Slice performance by region, by subscriber versus one-time purchaser, by local currency and across the full click-to-conversion funnel, without waiting on a report from us.

The Monzo Example

Monzo, a digital banking platform, ran a successful test to measure the incrementality of their referral programme (4). Although they haven’t publicly shared the results, they continue to invest in prompted referrals, highlighting the value they see in this channel.

Designing a test to isolate the incrementality of referrals is difficult—it requires comparing customer segments where referrals are promoted and not promoted while ensuring these segments don’t overlap in their communications.

 (1) Schmitt, P., Skiera, B., & Van den Bulte, C. (2011). Referral Programs and Customer Value. 
Journal of Marketing Research, 48(1), 94-108. Link

(2) Godes, D., & Mayzlin, D. (2009). Firm-Created Word-of-Mouth Communication: Evidence from a Field Test. Marketing Science, 28(4), 721-739. Link

 (3) Ryu, G., & Feick, L. (2007). A Penny for Your Thoughts: Referral Reward Programs and Referral Likelihood. Journal of Marketing, 71(1), 84-94. Link

(4) Chris Doughty, Designing a regional experiment to measure incrementality, Monzo.com

The Real Value of Referral Programs

Referred customers are some of the most valuable customers you'll ever acquire. And now there's hard data to prove it.

In Harvard Business Review, Reichheld and  Cleghorn draw on Bain & Company's analysis of more than 10 million people in referral programmes run by Mention Me. Here's what they found:

• Referred customers make up just 20% of new customers on average, yet generate 72% of new-customer profits over their first three years.

• Early results show clicks on shared referral links convert at more than three times the rate of paid ads, with more profitable sales.

• True promoters, the 15% of customers who bring in at least one new customer, generate almost three times more lifetime revenue than passives. Superpromoters, who refer several, generate five times more.

• Incentivised programmes account for only around 7% of referrals on average. The rest happen organically, mostly out of sight.

• The value compounds down the chain. Take Sally, a Bloom & Wild customer who spent $112. Her direct referrals spent $3,015, and the full chain of referrals that followed generated $8,793. That's about 78 times her own spend.

It shows up in acquisition costs too. After ButcherBox launched its referral programme, referrals rose 57% in a year and its CAC halved.

This value stems from three factors: 

1. Pre-selection by referrers: existing customers tend to refer friends who they believe will benefit from the product or service, acting as a filter for high-quality prospects. 
2. Trust transfer: the trust between the referrer and the referee transfers to the brand, resulting in faster adoption and higher engagement. 
3. Higher satisfaction: referred customers often have more accurate expectations, which leads to greater satisfaction and lower churn rates.

Increasing Natural Word-of-Mouth

It’s important to remember that many brands benefit from organic word-of-mouth recommendations. When satisfied customers share their experiences with friends, it can lead to new business.

However, by introducing a referral programme with prompts and incentives, you amplify this natural behaviour, ensuring you capture more of these valuable interactions.

Mention Me tracks which customers are your most active referrers, giving you insights to refine your acquisition and retention strategies, targeting the highest-quality customers more effectively.

In the upgraded Mention Me experience, the Customers page puts each customer's full referral timeline in one view, alongside their rewards and emails. So it's quicker to understand your best advocates and keep them sharing.

Through organic word-of-mouth alone, this feedback loop is simply impossible to achieve. 

Moving Forward with Confidence

Attribution will always be messy. Referral value doesn't have to be. The upgraded Mention Me experience gives you faster, more direct control over your programme, from building campaigns to reporting on what they deliver.

See what's new in the upgraded Mention Me experience, or get in touch if you want to explore how to maximise your referral programme. Our team is here to help.