Referral Program ROI Model
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Determine the ROI of a referral program considering uncertain invitation rates and variable user quality.
NOTEAbout This Model
## Determine the ROI of a referral program considering uncertain invitation rates and variable user quality. This model estimates **Referral Roi** based on uncertain inputs: Invite Rate, Referred User Quality. Run the simulation to see the distribution of possible outcomes.
VARIABLEInvite Rate
beta(2, 18.9)
The percentage of existing users who successfully invite others; typically ranges from 1% to 10%.
invite_rate
VARIABLEReferred User Quality
triangular(0.5, 1, 1.5)
A multiplier representing the LTV of referred users relative to average users (0.5 = half value, 1.5 = 50% more value).
referred_user_quality
FORMULAReferrals Count
user_base * invite_rate
Number of successful referrals per 1,000 users based on invitation rate.
referrals_count
FORMULATotal Referral Value
referrals_count * referral_value * referred_user_quality
Total revenue generated by referred users adjusted for their relative quality/LTV.
total_referral_value
FORMULATotal Program Cost
user_base * cost_per_invite
Total program cost including the cost of sending invites (e.g. incentives or platform fees).
total_program_cost
FORMULAReferral Roi
ROI(total_referral_value, total_program_cost)
Return on investment of the referral program.
referral_roi
OUTPUTReferral Roi
referral_roi
Net financial return from the referral program after accounting for incentive costs. Positive ROI means each dollar spent on referral incentives generates more than a dollar in customer value.
CONSTANTUser Base
1000
Total active users eligible to participate in the referral program.
user_base
CONSTANTReferral Value
10
Average revenue per referred customer (lifetime or first-year value).
referral_value
CONSTANTCost Per Invite
1
Cost per referral invitation sent (incentive, email, or platform fees).
cost_per_invite
What is Carlo?
Carlo is a visual tool for Monte Carlo simulation. Model uncertainty by dragging probability distributions, connecting them visually, and running thousands of scenarios instantly.