Do referral programs work when you have thousands of eCommerce customers? Undoubtedly, yes!
Referral programs are not just for small businesses. Many D2C stores and big referral programs have used eCommerce referral programs too. And we’re not just talking about Tesla or PayPal. Referral programs can form part of a brand marketing strategy, incentivizing customers to become brand advocates that can help boost their customer base.
Not convinced? Here are 8 reasons how referral programs can help enterprise retailers grow their sales and customer base through word-of-mouth:
How Enterprise Retailers can Benefit from Referral Programs
1. Referral programs can grow your customer base…
Referral programs are one way you can get new customers to your online store.
According to ReferralCandy, 92% of consumers trust recommendations from people that they know. Customers also pay twice more attention to recommendations that they received from friends.
Given these numbers, just imagine the multiplier effect for enterprise retailers that launch a referral program. You get a big customer base that you can expand even more.
2. …and provide Actionable Customer Data for Enterprise Retailers
Big brands have more resources to make use of referral program data better. Enterprise retailers have used referral programs to discover influencers & communities among customers, and build affiliate programs from there. MiaoMiao, the retailer of blood glucose monitoring devices, made use of their referral programs to identify influencers in the community and invited them into their Global Ambassadors program.
By tracking the engagement and actions of referrers in your program, you can create personalized shopping experiences and discover improvements. Certain products or customer segments may prove to be more popular through referral programs, while you may discover new niches or demographics for better targeting when you examine the referral marketing traffic.
3. Referral programs help build your brand through word of mouth…
Current customers will endorse your brand to their friends and family. A single social media post highlighting their positive experiences can definitely put your business on their network’s radar.
4. …while Enterprise Retailers can easily recruit Customers as Brand Ambassadors
We buy products that reflect our identity. Customers love showing off their Nikes because they want to be part of the brand. Bigger brands have more established brands and can rely on customers to spread the word
Referral programs can ‘recruit’ medium and smaller influencers to be brand ambassadors in a self-service way. Instead of engaging influencer agencies or direct approaches, referral programs reach all potential customers at once.
For example, Airbnb’s brand ambassadors refer to people who could act as potential hosts for the brand. They guide them through the process of welcoming their first guests and making money through the platform.
Airbnb’s Ambassador program also serves to turn customers into brand spokespersons and micro-celebrities
5. …while enterprise Retailers also have bigger Chances of Going Viral
Social media is a prime platform for word-of-mouth marketing.
You can incentivize brand advocates to share their experiences online to get more mentions and become a topic of online conversations. In fact, 49% of consumers depend on influencer recommendations on social media.
While there are social media gurus with a large following, micro-influencers such as friends and family can also create posts that impact customer decisions. A study found that 81% of U.S. online consumers’ purchase decisions were influenced by the social media posts of their friends, as compared to 78% who are influenced by the posts of the brands they followed on social media.
6. Referral programs offer High ROI…
Many businesses have debates about their marketing budget but referral programs will always be a worthwhile investment. Referral programs have one of the highest ROI compared to any marketing channel.
It works at scale, is relatively low-cost, has high ROI, and seems more authentic. It’s a lot faster to get customers to convince their friends than to persuade a new customer to move along the sales funnel through your own means.
7. …for Enterprise Retailers, it’s a Low-Cost Customer Acquisition Channel
Bigger retailers are often investing heavily in video content marketing. Pay-Per-Click and influencer advertising. These channels work but require significant investment and high Customer Acquisition Cost (CAC). Referral programs can serve to complement these higher-volume, higher-cost channels with low CAC.
Here are some real-life examples:
- Riff Raff & Co became a million-dollar company by acquiring 50,000 happy parents through their referral program.
- Mellow got $200,000+ in preorder sales in less than a month thanks to referral marketing.
- Paypal gained 7 to 10% daily growth which catapulted their user base to 100 million members.
These businesses stood out from hundreds of online businesses thanks to their referral program. They generated more ROI from word-of-mouth than paid ads or campaigns.
Now that we’ve seen some reasons why referral programs work, here are some big brands that can serve as your inspiration.
Examples of Top Brands with Referral Programs
1. Adore Beauty – Beauty Products Online
Adore Beauty – an Australian online beauty store – has 128,000 followers on Instagram. Their shop has a curation of 200+ beauty brands including The Ordinary, Dermalogica & Estée Lauder.
Their marketing strategy involves providing first-time customers with new deals and coupons.
The brand also stands out through its referral program. Their customers can get a $10 reward for promoting the brand to their friends.
2. Threadbeast – Fashion Subscription Box with Personal Stylist
Threadbeast lets users create a style profile and get a personal stylist to assemble a unique package. The business has a thriving social media presence thanks to more than half a million followers on Facebook and 400+ thousand Instagram followers.
Their referral program rewards brand advocates with $50 for their first package, while they receive a free package in exchange.
3. Leesa – Online Mattresses with 10 Year Warranty
Leesa is an online seller for mattresses.
They share their pictures of their products with more than 150,000 followers on Facebook.
Each mattress has a 10-year warranty and free shipping is easily available. Since their reliable products last for a long time, they rely on word-of-mouth for customer acquisition. As a result, they offer a generous $75 reward when customers refer a friend.
4. Miaomiao – Blood Glucose Smart Monitors
MiaoMiao is a business that provides smart readers with continuous glucose readings every 5 minutes.
They run a global ambassador program. This incentivizes customers who need glucose readings to share their experiences through word of mouth.
To complement their ambassador program, they also have a referral program that lets customers give friends $10 off and get 6% of their friend’s purchase amount in return.
P.S. Check out Miao Miao’s referral program success here: MiaoMiao Referral Case Study.
5. Girlfriend – Ethical Sustainable Athleisure Activewear
Girlfriend Collective boasts more than 290K+ followers on Instagram.
The brand has gained popularity thanks to their activewear. This is made through ethical materials and sustainable manufacturing.
They catapulted to success by making 10,000 orders on the day of their launch. They gave away free $80 leggings to people who shared their post on social media (and paid for shipping).
Since the initial strategy was a success, they implemented an eCommerce referral program. Customers can give friends $10 off their first purchase of $95 or more to earn a free pair of leggings in return.
6. Bombas – Comfort-Focused Socks and Apparel
Bombas sells comfort-focused sock and apparel.
The brand stands out by donating a pair of new socks in exchange for every pair purchased. So far, they’ve been able to donate more than 33 million socks.
A single purchase equals a good deed to the less fortunate. Hence, customers can encourage their friends to become good samaritans through a referral program. Referred friends and family can get $25 off their purchase, so they get $20 to spend on Bombas.
7. Outdoor Voices – Fitness Apparel for Flexibility
Outdoor Voices offer fitness apparel designed for comfort and flexibility.
Customers can encourage their pals to join them at the gym through a referral program. Their pals can get 20% off their first purchase while they get $20 in return.
8. Saje – Plant-Based Essential Oils
Saje sells plant-based essential oils and natural products to millions of customers.
They have a blog, podcast and Youtube videos featuring empowering conversations about personal wellness.
Customers are encouraged to promote wellness through the “Give wellness, get wellness” referral program. Share Saje with your friends to get $10 off your first order, so you can get $10% off your next purchase.
Now that you’ve seen referral program success stories, it’s time to jump on the bandwagon. For more examples of referral programs, check out our Epic List of 80 Killer Referral Program Examples to see the best of the rest.
Launch your own referral program to grow your customer base as soon as possible.