Referral Pipeline Calculation

How many referrals do you need to hit your annual referral revenue goals?
How many referrals are needed to keep your Referral Pipeline full?
What is the dollar value of referrals to your business?

Complete this step by step pipeline calculation to determine exactly what your Referral Pipeline looks like.

  • Revenue Goal: The first step in calculating your referral pipeline is to establish your revenue goal. How much revenue would you like to obtain by referral? It is important to be realistic. We have found that setting a reasonable and attainable goal will allow you to set the stage for continued referral success. Start by setting a goal that you would be embarrassed NOT to reach.
  • Typical Revenue per Client/Deal:¬†What is your typical revenue per referred client? It is important that your answer is consistent with the answer that you gave for your revenue goal.
    For example, you might specify how much income you wish to earn, in that case, we need to calculate the rest of the formula in terms of your income per referral (ie. your commission per sale). However, if you are a business owner, you may choose to calculate based on your business revenue. In any case, it is essential to compare apples to apples.
  • ¬†Enter a reasonable estimate of your closing ratio per referral. In other words, how often do referred prospects become customers when you present your product or service to them ?
    For example, you may close 7 out of 10 proposals that you present by referral for a closing percentage of 70%.
  • On average, how long does it take a referred prospect to say "Yes" or "No" from the time that they are referred to you?
    For example, a custom software developer might have an average of 4 weeks from the initial contact until the contract is signed.
  • How many referrals are in your pipeline now ? A qualified referral in your pipeline is a prospective customer that you have made initial contact with but have not yet closed the sale.
    For example, a web site hosting company might have 12 referrals in their pipeline right now.
  • The last step is determining how many weeks you plan on working to reach the revenue goal that you specify. Give yourself a break. You can take a week or two off.

The Pipeline Calculation is below. The most important statistics are the last two: the number of prospects that you need to add to your pipeline each week and the average value of every referral that you receive. Develop your marketing plan to obtain referrals to the number of prospects that you need to meet each week and you will be successful.

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