customer retention
customer retention
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 min read
July 18, 2018

Referral Programs: Where Your Customers Vet Prospects and Do the Marketing


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As a shopper, you would have noticed the number of referral based offers that come your way. That’s because this strategy works very well in building loyal customers. However, there is a right time to get into it, and a few things to consider and set-up before taking the plunge. Remember, this is a full-fledged marketing campaign and requires a proper investment of time and resource in promoting it.

So how do you know you aren’t taking the leap prematurely or with lukewarm interest because you aren’t sure of what it really is? That’s what we explain in this blog.

Yes, or no to referral programs?

To start a referral program, you first need to have a sufficiently large customer base. Secondly you need to determine the product fit. Thirdly, you need to remember that it doesn’t generate brand new customers as it mostly magnifies the word-of-mouth marketing. Which means that you must already have customers promoting your brand through word-of-mouth, and you must be making a high number of monthly transactions so that even if people don’t make referrals or if some forget about it, this endeavour doesn’t flop.

The incentive

We assume people are already talking about your store. Typically, a referral incentive reads: when your friend shops with us using your referral code, you both get $x off. This motivates the shopper to get a friend to shop at your e-commerce store so they can both benefit from the incentive. The incentive must be tailored according to the needs of the shoppers. If it’s a product bought infrequently (like curtains) offer a cash incentive. If it’s something bought frequently (like food), then offer discount coupons for the next purchase. That way you are guaranteed two new sales!

Another aspect to pay attention to is the copy in your e-mails etc. that are promoting the referral program. You have to attract the attention of the reader here. This is a good place to introduce the character of your brand. For instance, a referral that reads: “Get a gift while also helping an underprivileged child study. Refer a friend. Your friend gets 15% off on their first purchase at our store. You Get 15% off on your next purchase.” This makes the referral something more than just another discount. It empowers the shopper to care for your cause, it lets them know that you aren’t just a money-churning business, and it makes them less cynical about you and more incline to shop with you again. And at the end of it, don’t forget a clear and straightforward call-to-action (CTA).

Promote the program

Like we said earlier, you have got to promote the referral program so that people are aware it exists. After all, it is a holistic marketing campaign.

  • Make sure you e-mail your entire customer database about the initiative. This works more efficiently for relatively established stores compared to newbies because they already have an e-mail list and their customers are a little more acquainted with their brand.
  • Take to your social spaces as well. But remember to tie in the messaging with a social media strategy so it doesn’t sound too sales-y!
  • Next, you have to remind these very distracted souls about the referral offers. You’d think they’d remember something like a discount but in an age where digital users are lapidated with so many other things, they almost always forget. So put in clear text in the header of e-mails, in your hero image, FAQ page and anywhere you can think of (without being pesky). And don’t hesitate to remind them about it every now and again through e-mail or SMS. Don’t forget to take into consideration your other e-mail campaigns, as you don’t want to flood them with your mails.
  • Of course it is one thing to e-mail your customers, but recent buyers are most receptive. They are fresh shoppers, they’ve just browsed through your store and are familiar with your wares. And chances are they have their eye on some other products that they may come back later for. That’s when you want to remind them of this offer. Ensure the messaging sounds fun for them, and not like a boring favour they are doing for you.
  • You can incorporate widgets into your store’s mobile app to aid with the referral program. E.g. Sweet Tooth – one of Shopify’s useful and budget-permissive plugins. This referral app makes it easy for you to work your loyalty program. In under 10 minutes you can set-up your points-based loyalty and referral program to give customers incentivised rewards motivating them to shop more. A good marketing tool!

Gain your best customers

If a referral works, you think it only means that someone liked your product and store experience sufficiently to want that incentive for the next purchase that they are certain they will make. However, remember that they are doing you a favour. They are taking a moment to carefully consider their friends, colleagues or family so see who would best benefit from the products you sell. They are doing the vetting for you.

But all in all, it shows that you have created something that they have been happy with want to share with others. And that is the basis for a good referral program to work!

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