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What is Acquisition Rate?

Share Rate. Click Through Rate. Conversion Rate. It can be difficult to understand the effectiveness of your referral program and where to spend your time to bring in the most customers. After analyzing hundreds of programs, Extole has created a formula for Acquisition Rate, a rate that can provide a single measurement to quickly understand the efficiency of your program. Acquisition Rate measures the rate at which new customers are created from advocates, and is a rate that measures the odds that a share will result in a transaction. It is a great measure of the overall effectiveness of the friend funnel, and a gauge to see, at a glance, the effectiveness of the program for advocates who have started sharing. *Acquisition Rate = (transactors/advocates) 100 We use the term “transactor” for every* unique person who transacts/converts in the specified period*. In your program, the desired outcome may be a download, a booking, or a registration. Whichever event we reward will be the numerator – you know, the top number in the fraction! You can read this formula as, “In a given time period, for every 100 people who advocate, I expect X unique referred friends to transact”, where X is your Acquisition Rate. Again, a “transaction” is dependent on your program flow. Common transactions include conversions and registrations. If you have a Acquisition Rate of 16, for example, that means that for every 100 advocates who share, you can expect 16 unique referred friends to transact. We only count each person once, so if you have two transaction events (like registration and purchase), this will not affect your Acquisition Rate.

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What does a high Acquisition Rate mean?

A high Acquisition Rate means:
  • you have a product that people love
  • your incentive motivates conversions
  • your friend experience is solid
Most importantly, if you have a strong Acquisition Rate then most of your time can be spent promoting the program so that more of your customer base and your enthusiasts are aware of the program and will start sharing. Imagine building a machine to turn wheat into bread. If the machine takes an enormous amount of wheat to make a little bit of bread, then you should focus on improving its design so you get more bread from the same amount of wheat. However, once the machine is efficient, then you can produce the most bread by adding more wheat. The same philosophy works for your referral experience (the machine) and your customers (the wheat). The referral experience should be tuned so that it produces strong value out of each share. Once the experience is efficient, then the key goal is to generate more shares.