How to Set Up a Referral Program for Your Ecommerce Store in 6 Steps

Alfred Lua
Alfred Lua
August 26, 2022
2 min read
How to Set Up a Referral Program for Your Ecommerce Store in 6 Steps

In this article

Since you are researching how to set up a referral program, you likely know what a referral program is and are convinced of the benefits of having a referral program.

(If not, here’s why referral marketing is awesome.)

Let’s skip all that and get to the fun stuff: setting up a referral program for your ecommerce store so that you can start getting referrals.

Setting up your referral program in 6 steps

Setting up a referral program might sound intimidating but do not worry. I will walk you through the most important things to do to start getting referrals

Once your referral program is up and running, you can tweak and optimize it later. My good friend runs a successful computer accessories store, Mecha Store, with a pretty basic setup. Yet his referral rate is much higher than the industry average of 3.40%.

Mecha Store Share Page

If you are familiar with referral programs already and want to go deeper, I have also linked to some advanced guides below. Enjoy!

1. Understand your customers

The most important ingredient of a successful referral program is having a deep understanding of your customers.

This might sound cliche but it impacts every part of your referral program. You need to understand why they would want to join your referral program, what the best way to get them to join is, and what would make them refer their friends.

Here are some questions I would consider:

  • What do your customers like about your brand and your products?
  • How often do your customers purchase your products? Regularly or once every few years?
  • What are they motivated by? Helping others, discounts, free gifts, or financial rewards?
  • Where do they hang out online? On which social media platforms do they engage with your brand?

These questions will make more sense as you set up your referral program but it is good to think about them first.

2. Set your rewards

Now, let’s dive into the mechanics of your referral program.

The first core piece is your rewards. This is a big section, so let’s go through it together slowly.

There are two rewards to consider:

  • The reward for your customers (or advocates)
  • The offer for friends they referred

Reward for your advocates

Advocates are the customers who are referring friends to your ecommerce store. The referral reward is to encourage them to refer others and to thank them for bringing you more sales.

The most common type of referral reward for advocates is a discount coupon. This works best if your products are bought regularly. Baronfig, a brand that sells tools for thinkers, gives its advocates a $10 coupon for every friend they refer.

In ReferralCandy, you can set the discount amount or percentage, the minimum order required to use the coupon, and the coupon expiration. ReferralCandy will automatically generate create single-use coupons in your Shopify store for you.

The second most common type of referral reward for advocates is a cash incentive. This works best if your products are not bought regularly, such as mattresses.

In ReferralCandy, you can set a fixed cash amount or a percentage of the referred friend’s purchase (e.g. 10% of the friend’s purchase). ReferralCandy will help you pay out the cash reward automatically via PayPal.

The last type of referral reward is a custom reward. This is great if you want to offer a unique brand experience. For example, ThreadBeast, a men’s streetwear brand, gives its advocates a free package of streetwear for referring their friends.

In ReferralCandy, you can specify the custom reward for your advocates. We will not be able to fulfill this reward for you, given its nature. But we will inform you when a referral is made so that you can send out the reward.

Offer for referred friends

Next, you would also want to give an offer to people who are referred to your ecommerce store. Why?

We found that people love to offer something to their friends. When advocates can give their friends a discount coupon, they are more likely to refer their friends. Furthermore, the discount coupon will encourage their friends to buy your products.

In ReferralCandy, you can customize the discount coupon for referred friends, just the same as the discount coupon for your advocates.

Choosing the rewards can feel daunting. What type of reward should you use? How do you determine the amount? And so on.

But you don’t have to overthink it when you are setting up your referral program initially. A simple Give $10, Get $10 referral program has worked well for many brands such as Branch Basics. And you can always change your rewards later.

Whenever you want to test different rewards, you might find these guides helpful:

3. Customize your referral emails and pages

Next, let’s go to the customer-facing side of your referral program.

Generally speaking, there are two emails and two pages that you want to focus on initially:

  • Post-purchase email: An automated email to your customers after they have completed a purchase that invites them to refer their friends
  • Join page: The page where your customers sign up for your referral program (example)
  • Reminder email: An automated follow-up email for your advocates who have not referred any friends
  • Share page: The page where your advocates get their referral link to share (example)

For example, after someone buys a notebook from Open Atlas, a minimalistic notebook brand, an automated post-purchase email will be sent:

Open Atlas post purchase email

When the customer clicks on the “Get Invite Link” in the email, they will be directed to their Share page to get their referral link.

Open Atlas share page

ReferralCandy helps you send these emails and set up these pages so that you do not have to set them up manually.

To help you get started quickly, there is a default theme for your referral emails and pages. You can simply upload your brand assets to the autopilot theme—all of your referral program elements are automatically generated with the logo and banner, and you are good to go.

You can also customize your referral emails and pages further by adding a new theme in ReferralCandy. With a new theme, you can set the style and content of your referral emails and pages so that your referral program matches your branding.

When you want to be more sophisticated with your referral program, we recommend you also customize other parts of your referral program. You can read more about customization in the following guides:

Again, you do not have to customize every part of your referral program right away (especially if you are feeling overwhelmed). The emails and pages in ReferralCandy are designed to work “out of the box”.

4. Integrate your referral program with your store

If you are using Shopify, you are all set! Skip to the next step. :)

If not, there are two things to do:

  • Add a referral tracking code to your store so that ReferralCandy can detect successful referrals
  • Send your invoice emails to your unique ReferralCandy email address so that ReferralCandy can detect referrals or frauds and invite customers to your referral program on your behalf

You can set this up without any technical knowledge. Here’s a help article you can follow.

If you prefer a more advanced setup with your ecommerce store, you can check out our API and JavaScript integrations. You will need developers to be involved.

5. Launch your referral program

Your referral program is ready for new advocates!

Instead of waiting for your customers to discover it, you should proactively let them know.

The best place to start is to inform customers who have already bought and tried your products. If they love your products, they would be ready to let their friends know about it. Knowing they will be rewarded for referring their friends will give them an incentive to actually do it.

In ReferralCandy, you can upload your customers’ contact information and email them an invitation to join your referral program. When your customers join your referral program, you can see how many friends they have referred in your ReferralCandy account (under “Existing Customers”).

Whenever you feel ready to promote your referral program to even more people, you might find this guide, Promote Your Referral Program Without Sounding Desperate, useful.

6. Track, evaluate, and improve

Congratulations on setting up and launching your referral program!

While a referral program requires less maintenance and work than other marketing channels, you still want to make sure it is set up to maximize your referral sales. We do see a spectrum: some merchants choose to set and forget, some constantly tweak their referral program, and many in between.

In general, we encourage you to stay on top of your referral results and optimize your program, if necessary.

The fastest way to see your referral results is to look at the dashboard in ReferralCandy. You can at-a-glance see your referral sales, referral rate, referred traffic, and top referrers. A good way to know whether you should tweak your referral program is to compare your referral rate to the industry standard (which is available on the dashboard).

If you want to share your results or analyze them further, you can also download your referral report as a PDF or CSV file (under "Referral Report").

We are here to help

If you have been following along and implementing your referral program, you are all set up now! Woohoo!

Not to worry if you have not. As much as we have simplified the process of setting up a referral program with ReferralCandy, we know setting up a referral program can be daunting.

A good next step might be to check out some existing referral programs to get inspiration for your own:

Finally, we want to help you every step of the way. We have nearly 2,000 5-star reviews on Shopify App Store because our customers love the product and our customer service. If you have any questions, feel free to reach out!

P.S. If you enjoyed reading this, subscribe to our newsletter where we share our latest articles and helpful resources.

Alfred Lua
Alfred Lua

Alfred does marketing on the ReferralCandy team. In his free time, he reads a lot and trains for triathlons.

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