One of the most common questions businesses have when setting up a referral program is: how much should I offer as a reward? The simplest way to answer this is to look at what you are already paying for leads through paid channels.

Step 1: Find Your Current Cost Per Lead

Log into your Google Ads, Facebook Ads, or whichever paid channel you use and find the cost per lead (sometimes called cost per conversion or cost per acquisition). This is the average amount you spend to acquire one new lead from that channel.

If you do not run paid ads, think about what a new customer is worth to you and work backwards from there.

Step 2: Set Your Referral Reward at a Similar Level

A good starting point is to offer a referral reward that is roughly equivalent to your current cost per lead. The reasoning is straightforward: you are replacing a paid lead with a referred lead that is likely to convert at a significantly higher rate. You are getting a better result for roughly the same spend.

For example, if you currently pay around £60 per lead through Google Ads, a reward of £50–£60 cash (or equivalent value) per qualified referral is reasonable and competitive.

Step 3: Make Sure the Reward Triggers on a Real Conversion

Set your reward to pay out only when a lead qualifies — meaning they complete a real transaction, sign a contract, make a payment, or whatever counts as a genuine new customer in your business. This ensures you are only paying for leads that actually convert, keeping your cost per acquisition in line with what you calculated.

Paying out on sign-ups or form submissions rather than real conversions inflates your costs and invites fraud.

Step 4: Review After 30–60 Days

Once your program is live, check whether referrers are sharing their links and whether leads are converting. If participation is low, the reward may need to increase. If you are getting a high volume of low-quality referrals, your qualification rules may need tightening. Start with a reasonable number and adjust based on real data.