The best way to include a referral in a cover letter is by writing the name of your referral, how you know them, and why they chose to refer you in the first paragraph.
Including details about why they thought to refer you allows you to highlight some key qualifications and achievements from your resume as well.
Here is an example:
Dear Catherine,
I am writing to express my interest in the Senior Management position, which was referred to me by Kate Bartlett. Kate and I worked together for 2 years at the Sine Group where Kate often remarked that my expertise in managing and inspiring the sales team was essential to the success of group overall, and resulted in a growth in overall sales of more than 170%. I would love to utilise my experience as a senior manager to create similar success in your organisation.
