How to Choose the Right Referral Incentives For Your Referral Program (With 20+ Examples!)
Our guide helps you choose your referral program incentives (with 20+ real examples!) and explains referral offers vs rewards.
Every successful business has strategies to improve both customer acquisition and retention. Simply put, you can’t have one without the other if you want to grow.
How can you measure the retention side of your business? Customer lifetime value, or CLV, is one metric you should be tracking closely to understand your success.
CLV tells you how much your business can plan to earn from the average customer throughout the entirety of your relationship with them. And in all honesty, improving your CLV is a never-ending battle.
Your strategy must be holistic, taking into account your engagement metrics, your product quality, your customer service, and your marketing initiatives. That’s why it’s important to monitor your data and discover new ways you can level up your customer experience and keep people happy long-term.
That being said, it’s important to note that improving your CLV isn’t a one-size-fits-all solution. What works for some brands won’t work for others. It varies by industry, product, and brand. You need to focus on finding out what your customers respond to and build your strategy around that.
Today, I’m going to show you a few different ways you can improve your CLV based on tips I gathered from ecommerce experts who have successfully raised theirs.
Improving your CLV is more than a single retention metric—it impacts all areas of your business.
As Lillie Sun, DTC Strategy Consultant, explains: “Acquisition is only one part of the equation. Your ability to retain customers and have them continue spending with your brand is ultimately what separates successful companies from ones that aren’t.”
Keep in mind that existing customers spend 67% more on average than new customers. While it can be difficult to find out what makes your customers tick, once you do, you’re well on your way to seeing fast growth.
We asked a few other ecommerce experts to share why this metric is important to them. From growth, and word-of-mouth marketing, to reducing your churn rate, there are many reasons to improve your CLV.
People are more likely to talk about your brand if they feel loyal to it.
What does that mean? If your products are a regular part of shoppers’ routines and they’re consistently impressed with the quality, they’ll share those experiences with friends and family.
“A strong CLV means your customers will help you grow as well through word of mouth marketing. As they become valuable, loyal customers, chances are they’ll spread your brand to their community and friends and that is a huge growth channel to take advantage of,” Lillie explains.
Considering WOM brings in 5 times more sales than paid media, you may want to take Lillie up on this advice.
Every team will always grind away at customer acquisition; it’s essential for growing your revenue year over year.
However, as Dave Rekuc, President and COO of BambuEarth explains, a high CLV means you don’t have to be 100% reliant on new acquisitions to succeed. Even during difficult times or slow periods, you’ll have a group of loyal customers you can rely on to drive your brand forward.
Dave shared with us that “CLV provides stability in the event of some rough times acquiring customers. Platforms make changes, CPMs rise, and your ads just aren't working. Brands that have high CLV can lean on their customers’ repeat revenue, and the ship won't sink if they have an off month or two.”
And for many brands, especially in high-competing industries, prioritizing CLV helps compound the expensive cost of customer acquisition.
For example, Robert Weatherhead, Co-Owner of BonCru Wines, shares how CLV is critical for his business because he is a reseller of wines that are typically available in certain brick and mortar stores.
“We face a constant battle with getting people to buy from us over our competition. This means the cost of acquiring the first sale is steep, so keeping them as a customer and optimizing for CLV is crucial to growing our business profitably,” he explained.
A high CLV is a good indication that customers are having a good experience shopping at your store. In fact, 49% of consumers tend to leave a brand due to poor customer experiences.
This means you can use your CLV to determine whether you need a CX tune-up.
If your CLV is lower than you need it to be, it’s time to look into techniques to improve it. Thankfully, we have a few tips on how to do that.
The good thing about growing your CLV is it’s never too late to start. We asked the pros to share some tips for you all, so here are five key considerations to improve your CLV both short-term and long-term.
I know what you’re doing… you’re scanning Twitter, reading articles, and following your competitors and inspirers closely trying to come up with super creative ways to impress your customers.
It’s okay to be influenced by others who are growing their CLV successfully, but remember, it's always good to go back to the principles and build a strong foundation. So don’t forget to start with the basics.
Robert Weatherhead explains why: “Our approach is not rocket science. It comes down to the basics of marketing in a competitive industry. We aim to consistently remind people we exist, and give them reasons to come back.”
What do we mean by basics? Essentially, these five components:
In fact, a consistent email marketing and social media strategy is a big reason behind Robert’s success. Even though he admits he hasn’t gotten overly creative with his approach to CLV, being consistent on these two channels alone has improved his customer return rate by over 50% in one year.
“We have customers who have spent thousands with us over their lifetime, and we still see customers return through our emails who haven't purchased in 18 months, sometimes longer. The cost of bringing them back via email is peanuts compared to finding a new customer and convincing them,” said Robert.
But when it comes to email marketing, the trick isn’t to just send customers anything and everything. To be truly successful, it requires a deeper strategy, so let’s look at what that means.
Lillie Sun is a full-time ecommerce consultant now, but before that she worked in-house at a successful beauty brand. As the growth lead for this brand for two years, Lillie believed it was important to invest resources into a thoughtful email marketing strategy.
To Lillie, this meant carefully segmenting the brand’s email list so customers received the right email at the right time. And instead of trying to constantly sell to shoppers after they just purchased, she would be more strategic about targeting customers when they were running low on products.
“We had our list segmented by skin concern so all of our messaging were extremely relatable. This led to our monthly revenue being about 30% driven by email and seeing 35%-40% returning customer rate consistently,” she said.
To gather this detailed customer information, Lillie invested in an Octane AI quiz to ask customers about their skin concerns and goals. She would then segment those customers in Klaviyo and create custom flows for shoppers to educate them about products that would target their problems.
Speaking of quizzes, did you know they can help your customers avoid user error too?
A quick recipe for customer churning is when they purchase the wrong product for their needs. But on the flip side of the coin—if they use your products successfully, they’ll be more likely to stick around long-term.
A quiz can help your customers by guiding them to the right products.
In most cases, shoppers don’t know which products in your catalog will help them overcome certain pain points. If a customer has oily skin, they may accidentally purchase something for dry skin. If a shopper has wide feet, they may accidentally purchase sandals for thin feet. You get the picture.
With a quiz, you can ask customers detailed questions about what they’re looking for and direct them to the right products.
“Our quiz helps customers select the right products for their skin. User error is real and customers don't always know what's right for their needs. Helping people buy the right product means they'll be more satisfied with their purchase. Increased satisfaction leads to more purchases on average,” said Dave Rekuc.
This strategy has been incredibly successful for Dave to increase Bambu Earth’s CLV. He uses a tool called Statlas to track CLV, and as an example, he found that if a new customer purchases one of Bambu Earth’s moisturizers (one of their most popular products) they’ll spend another 25-35% on average over the next 60 days.
However, if someone purchases a personalized mini kit through Bambu Earth’s skin quiz, they’ll spend up to 60% more over the next 60 days, which is more than double the 60-day post-acquisition value.
Consider this: 65% of all consumers find a positive experience with a brand is more influential than great advertising. Additionally, customers referred by other customers have a 37% higher retention rate.
Why are those two statistics important?
Because a good customer experience leads to loyalty which leads to those customers organically referring your brand to others. And since referred customers are more likely to stick around long-term, having a referral program is a great tactic for driving up both your acquisition and CLV through simple customer appreciation.
Note: a good referral strategy doesn’t mean launching a program and assuming it’ll work on its own. It requires deep planning, a proper launch, and additional promotional effort.
But when done well, it works.
“High CLV customers have a better chance at serendipity to mention your brand.” - Dave Rekuc, President & COO Bambu Earth
Remember when I mentioned earlier the importance of customers using your product correctly? Well, that goes beyond just finding the right product. It also includes educating your customers on how to use your products so they see the best results.
Bambu Earth does this in various ways: they have tips on product landing pages, how-to videos on social media, and application steps on certain product pages.
“We noticed many of our customers didn't make a repeat purchase simply because they didn't use our products correctly. This is a great problem to discover because it means there's a tremendous opportunity,” explained Dave Rekuc.
He suggests investing in how-to videos and educational email flows, while also making sure your customer service team is proactive about solving these questions for new customers.
So now you’ve learned how CLV impacts different areas of your business and different strategies you can implement to improve it.
Coming up with an actual plan.
And as experts in retention and word-of-mouth marketing, we can help. Let’s look at a few articles to kickstart your CLV strategy:
Alternatively, come join us at The CLV Revolution, the first ever global event dedicated to mastering Customer Lifetime Value. In a world rapidly shifting from acquisition marketing to lifecycle marketing, ecommerce owners are realizing the key to business success lies in building profitable and long-term customer relationships. Join us and 30+ global ecommerce leaders this September 22-23 and discover how to improve ROAS, reduce costs, increase retention rates, boost client satisfaction and grow revenue using the power of existing customers!
Scroll through TikTok or Instagram at any given time, and chances are you’ll find more than one influencer sharing about the latest find or purchase with their followers.
Regardless of how many followers an influencer has, simply sharing about a product or service is enough to increase traffic (and sales) back to the brand they’re sharing.
For ecommerce brands, in particular, the benefit of incorporating influencer marketing into the overall brand strategy works in two important ways: it puts products in front of a target audience and builds awareness through word-of-mouth marketing. Therefore, influencer marketing is one of the most popular strategies for ecommerce brands.
Word-of-mouth marketing, or more specifically, referral marketing, works by providing customers with referral links that can then be used in a variety of ways on social media, email, or websites. By encouraging others to use referral links, ecommerce brands increase traffic and revenue while offering loyal customers commissions or rewards as an incentive.
Just how powerful is influencer marketing for ecommerce brands? Let’s take a look:
For brands looking to build traction, increase revenue, and grow brand awareness consistently over the long term, a good referral program ticks all the boxes and adds credibility to even the most established ecommerce brands.
Ready to learn more about how to use influencer marketing as a stepping stone to creating an effective referral integration? Let’s dive in.
Implementing a referral program into your marketing strategy is an effective way to boost awareness and increase sales, but how do you get started?
It starts with utilizing the help of influencers to spread brand awareness.
This is where micro and nano-influencers come into play, too. For ecommerce brands, budget limitations are often a big hurdle—but that doesn’t mean small and mid-sized brands can’t reap the benefits of influencer marketing because they can (and do).
Micro-influencers help put ecommerce brands on an equal footing with bigger brands. In many cases, working with smaller influencers has a bigger return on investment (more about this in a minute!).
Connecting with the right influencers is an essential step in laying the foundation for a strong referral program.
It’s no secret just how powerful the relationship between influencer, brand, and consumer is today. Nearly every ecommerce brand has a social media presence (or at least they should!), and with that comes the opportunity to reach new customers daily.
Influencers help bridge the gap between consumers and brands by connecting with a brand’s target audience, creating conversations about goods and services, and offering valuable insight into what your audience wants.
For brands looking to create a stronger presence online or with consumers, influencers elevate brand credibility, too—especially with millennial and Gen Z shoppers.
Choosing influencers that align with your brand's goals and voice is key to creating an authentic and organic relationship with customers.
There’s a reason why connecting with micro-influencers is ideal for small to mid-sized ecommerce brands with a limited budget. With a “smaller” following than mega or macro-influencers, it’s typically one with greater engagement and loyalty than influencers with large accounts.
Micro-influencers also have more credibility and confidence from their followers than larger accounts. They’re typically more engaged with followers, increasing awareness and genuine connection for the brand.
Here’s a tip: look to influencers as a long-time partnership rather than one-off projects. In addition to building a loyal relationship, consumers are more apt to trust brands they frequently see from those they follow.
One of the biggest roadblocks for larger influencers is the idea that they’ll work with any brand as long as it pays well. Connecting with micro-influencers through long-term partnerships highlights brand authenticity and genuine trust for influencers and your target audience.
Integrating influencer marketing and referral marketing is the next step. Once you’ve got your referral program in place, it’s time to have influencers share about the program on their social media. Here are some tips on building momentum:
The key to creating an effective referral program is to keep it as authentic and organic as possible.
With every post an influencer makes, there are dozens of consumers asking questions about brands and products—by creating a genuine relationship with influencers (and future customers), a referral program has the potential to increase the growth of your ecommerce brand drastically.
Curious to see how influencers have helped boost referral programs for other brands? Here are just a handful of examples:
Working with influencers isn’t just about promoting products.
Using influencers or creators as brand ambassadors or spokespeople is one of the best ways to build brand credibility and interest in a way that makes sense for future customers and partnerships.
Can you have a referral program set up before you connect with influencers?
Sure. But that’s not all that needs to be done. Launching the program and spreading awareness is the step that will take your ecommerce brand to the next level.
With every new customer you bring on, there are more customers to reach! Promoting a referral program is the same as any other feature—it takes consistency and authentic messaging to attract attention.
Here are a couple of articles on referral marketing and influencer marketing that we think you might like:
The influencer marketing industry is expected to grow to $16.4 billion in 2022—a sign that this marketing strategy isn’t going away any time soon.
In addition, 61% of consumers are likely to trust recommendations from an influencer over the brand itself. Working with influencers helps you reach a much wider audience—after all, the brand Zara was the most mentioned brand on Instagram due to their influencer efforts, reaching over 2 billion people.
However, you likely already know how influencer marketing can help your brand. The question is if your brand is ready to dive into influencer marketing.
We’re going to walk through five major signs that you’re ready to hop on your first influencer marketing campaign and cover three brands that have done an amazing job with their influencer campaigns.
So you’re considering incorporating influencer marketing into your marketing strategy, but you need to know if it’ll work for your brand.
There are five main indicators that you can look into to help decide whether or not your brand is ready to start working with influencers.
A successful influencer marketing campaign means that your brand will be placed in front of an entirely new audience, leading to new sales and customers. If your infrastructure isn’t able to accommodate those new orders, you need to address that first.
For example, if you’re still managing the complete order process solo—from order to product creation to fulfillment—an influencer marketing campaign might bring in more sales than you’re prepared for.
And being unable to handle an influx of new customers could cause some serious damage to your business’s reputation. Delayed order fulfillment, being unable to keep up with customer service requests, and potential mistakes when fulfilling orders are all real dangers that can happen if your business gets overwhelmed. The last thing we’d want is for bad reviews to come in about the customer experience before your influencer marketing channel even gets to take off.
Before you start reaching out to influencers, take an audit of your business’s internal processes, especially when it comes to order fulfillment. Make sure you have enough staff to manage an increase in orders and that your team knows when your influencer campaigns go live so they can adequately forecast sales.
This might seem obvious, but you’re not likely to get many influencer partners—or many sales from the partnership—if you don’t have a good product.
But more than that, you need to have a good product that stands up to scrutiny. If you’re starting to put your product out there via influencer campaigns, you’ll get a lot more eyes on your brand. This opens the door to more scrutiny and more feedback.
This means you need a solid product that can stand up to any potential negative comments your brand might receive.
You also want to make sure you have a high-quality product that influencers actually want to promote. While working with brands is how influencers generate income, they still want to make sure they’re only providing legitimate recommendations, or their followers will start to doubt their authenticity.
Start by validating your product and only reach out to influencers once you’ve built an established customer base that has provided stellar reviews and feedback for your product.
Social proof is a psychological concept that means people are more interested in something (like a product or service) when they see others using/buying/doing it first. And influencer marketing is a great way to build up that social proof and increase trust in your customers.
Other well-known forms of social proof include:
But influencer marketing is one of the biggest as well. If your business requires that extra level of trust (as so many ecommerce brands do), influencer marketing is going to be a great option for growing your customer base even more.
Nycole Kelly, VP of Client Strategy at Outloud Group shared, “We work with a lot of brands who have optimized their paid social and SEM programs to the max and are looking for the next source of growth. Influencers provide an efficient way to increase reach to a new audience and also drive efficient customer acquisition.”
Many industries are becoming saturated, with competition popping up everywhere you look. We’re talking about vying for the same attention from potential customers, competing for high-volume keywords that rank well, and trying to top each other with better products. If you notice this happening in your industry, influencer marketing is a great way to stand out from the crowd. And in fact, it might be one of the only ways to stand out.
Instead of relying on customers to believe you when you say you’re the best option (because spoiler alert, they won’t), you can work with influencers who can do that for you—and be much more trustworthy when they do.
According to Nycole, influencers also work really great for “disrupter” brands, especially DTC. Those emerging brands don’t typically have the budgets to compete with the “big brands” in traditional media like TV and influencers are a space where they can win and really own the share of voice with a large, engaged audience at a very reasonable price.
Keep in mind that brands that aren’t in competitive industries can still see great results from influencer marketing. But if you’ve noticed that there are a lot of competitors out there, getting in front of new audiences is key.
The last sign that your brand is ready for influencer marketing is that you’ve already pinpointed relevant influencers that would make sense for your brand to work with. Finding the right influencers is a big part of getting started because you can’t work with just anyone.
We’ll look at an example to show you what we mean. Let’s say Burger King is looking to start partnering with influencers to promote a new menu item. They’re not going to reach out to health and fitness influencers as a part of this promo.
Because health and fitness influencers tend to promote healthy lifestyles, (a) they likely wouldn’t say yes to a Burger King (or any fast food) promo and (b) their followers would probably be pretty confused if they did.
Instead, Burger King would need to partner with general lifestyle influencers or food bloggers as a way to reach an audience that might be interested in their new menu item.
One great tip that Nycole shared with us was that YouTube influencers in particular work really well for high consideration or complex brands. “YouTube creators have such strong connections to their audience and can explain nuanced products in a way their audience understands and trusts. That trust between the creator and their audience can be that much more meaningful the larger the purchase or commitment.”
Once you’ve found influencers that align with your target audience and would be likely to say yes to a partnership, you’re ready to start your outreach and plan sponsored content together.
If you’re new to influencer marketing for your own brand, it can be helpful to get inspiration from other brands’ influencer campaigns. Here are three brands that put together successful influencer marketing campaigns that you can take reference from.
With over 100 million subscribers, YouTuber PewDiePie has consistently had one of the most subscribed-to channels. So to say the Swedish gamer is popular is an understatement.
This is why it was such a great idea for G FUEL to collaborate with him by creating their own PewDiePie line in 2019.
And this collaboration has been an ongoing one. In 2021, G FUEL released "Yuzu Slash” being the second flavor that G FUEL and PewDiePie co-developed and launched.
With PewDiePie likely getting a cut of each purchase, he’s incentivized to promote the energy formula in his videos and on his social media. This gives a bigger presence to G FUEL while being mutually beneficial to both parties.
TULA Skincare was on a mission to build confidence and promote body positivity after learning that the average person has negative thoughts about themselves 19 times a day. So they created a campaign with fashion and beauty influencers like Tess Holliday, Tennille Murphy, Nyma Tang, Chizi Duru, and Weylie Hoang.
These influencers create a diverse group of body shapes and sizes, as well as skin issues they’ve experienced in the past. As a part of this collaboration, each influencer created their own #EmbraceYourSkin kit, ideal for dealing with some of those skin issues.
While the kits are no longer available, this collaboration helped launch their #EmbraceYourSkin movement, where they focus on skin diversity and inclusivity, as well as body positivity.
Bespoke Post is a monthly subscription box that shares unique products with each of its customers. As they branched out and tested new marketing channels, they found success with YouTube influencer marketing.
With a subscription model like Bespoke Post has, unboxing videos—a popular YouTube video type—make for the perfect influencer collaboration.
Take a look at this video example:
To ramp up its influencer marketing strategy, Bespoke Post worked with the agency Outloud Group, and through that partnership, the company has generated 17.4 million YouTube video views and has been able to reach all of their marketing goals.
Is your business ready for influencer marketing? The next step is to find the right influencers, reach out to them, and start discussing your partnership. Just make sure that you more or less have the confidence hitting the five criteria we discussed earlier before you get started.
Here are some articles related to influencer marketing that we think might be useful in your journey:
Customer lifetime value, or CLV, is one metric ecommerce brands should be tracking closely to really grow. Here's what experts share about improving their CLV!
We take a look at influencer marketing and show you how it can be used to boost your referral program and generate referral sales.
We'll walk through five major signs that you’re ready to hop on your first influencer marketing campaign and cover three brands that have done an amazing job with their influencer campaigns.
What are the best Shopify themes available? Here are 21 of the most reviewed Shopify themes for 2022 based on our research!
Stuck on your own Shopify website and need some inspiration to design something breathtaking? We can help. Check out all you need to know here.
In our final chat with Happy Human, we identified what was working for Vinnie and her team with the adoption of new marketing channels with resources from the Growth Grant and learnt what their future plans were.
Boost sales and increase growth by narrowing in on your target market. Read our step-by-step process to define your target marketing with audience research.
Our guide helps you choose your referral program incentives (with 20+ real examples!) and explains referral offers vs rewards.
Like, Share, and Subscribe? Instead tell users to join the movement, treat themselves, and get started with our guide to effective call-to-action (CTA) copy.