How to use the referral program ROI calculator
Referral programs usually reward both sides, so counting only the referrer bonus understates cost by roughly half. This calculator takes both rewards, builds the total reward per referral, then multiplies by the qualification rate so cost reflects rewards actually paid.
The cost swing comes from the reward trigger. Paying on signup versus paying after a first purchase produces very different totals from the same reward amount. The stricter the condition, the fewer payouts, so enter the share that actually qualified in the qualification rate field.
Results include CAC per new customer and the LTV ÷ CAC multiple. A higher multiple means more headroom, but the right threshold depends on your industry, payback period and growth stage, so comparing it with the CAC of your other channels is more practical than treating one number as the standard.
Frequently asked questions
Paying on signup produces many qualifying rewards and costs climb fast, while paying only after a first purchase cuts the number of payouts. The same reward amount can mean very different total cost, so put that difference into the qualification rate.
Use the LTV of referred customers specifically. Repeat behavior varies by acquisition source, so an overall average can distort the result. Using contribution-margin LTV instead of revenue LTV gives a more conservative read.