.png)
Let’s be honest, referral programs aren't a new idea.
But I believe that in 2025, with customer acquisition costs higher than ever and ad platforms getting noisier by the day, they’ve become one of the most underrated growth channels for ecommerce brands.
If you’re here, chances are you already believe in the power of referrals (or at least you’re curious). So I’m not going to waste your time explaining what a referral program is. Instead, I’ll walk you through how to actually set one up, step by step, with tips, tools, and real examples you can use right away.
In my opinion, the best referral programs are the ones that are simple, brand-aligned, and easy to launch. By the end of this guide, you’ll have everything you need to create one that brings in new customers on autopilot and avoids the common mistakes that trip most brands up.
Let’s get into it.
Just like any other marketing activity, setting up a referral program might seem intimidating at first.
Nevertheless, if you follow this guide, you can remove the risk associated with starting a referral program. I will walk you through the most important things to consider during the set up process and start getting referrals.
One of our customers, iWader Fishing, runs a successful fishing equipment store with a pretty basic website set up. Yet, their referral rate hit 23% just after two months of using the referral program software ReferralCandy.
That's much higher than the industry average and shows what's possible when the referral message and strategy are aligned.
It is also worth noting that if you still face problems during your referral program set up, you get access to referral program experts when starting your 14-day free trial with ReferralCandy.
The most important ingredient of a successful referral marketing 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 customer 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:
These questions will make more sense as you go through your referral process and set up your referral program, but it is good to think about them first.
Now, let's dive into the mechanics of your referral program.
The first core piece is your referral rewards. This is a big section, so let's go through it together slowly.
There are two rewards to consider:
Reward for your advocates
Advocates are the customers who refer friends to your ecommerce store through the customer referral program. The referral reward is to encourage them to refer others and to thank them for bringing you more sales. Having a well-organized product catalog helps customers easily see which products qualify for rewards, making it easier for them to decide what to share with friends and boosting the success of your referral program.
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 a referral program software like 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 single-use coupons for you in your Shopify store.
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. One example of a brand that does this is Feel, which pays $5 via PayPal for each referred friend.
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 to refer their friends.
In ReferralCandy, you can specify the custom reward for your advocates. We will not be able to fulfil 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 in the same way 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 initially setting up your referral program.
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:
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:
For example, after someone buys a skincare product from DMD Skin Sciences, an automated post-purchase email will be sent:
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.
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 simple 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”.
If you are using Shopify, this step is easy. The top referral program software, like ReferralCandy can be found in the Shopify App Store.
If you're not using Shopify, there are two things to do:
You can set this up without any technical knowledge. Here's a helpful 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 and possibly AI testing tools to be involved.
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 will be ready to tell their friends 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.
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").
Customer referral programs bring many benefits to ecommerce merchants, such as:
Creating your own referral program brings many benefits as long as you follow the right steps.
Here are some common mistakes to avoid when building up your referral process.
While some ecommerce brands may start referral programs too early, a common problem is also starting too late. In turn, this results in missed revenue opportunities.
A good thumb rule is that once you get 100-200 orders every month, it makes sense to start a referral program.
Your referral program will likely generate enough referrals to be profitable once you reach this threshold.
Referral incentives, aka the things that motivate your customers to refer your program, should be clearly outlined.
To give you an example, see how clearly Honeylove outlines the referral program incentive here:
In a similar fashion, explain the benefit of your referral program to customers and then simply share the referral links with them.
For both a new and existing customer, you should make it as easy as possible to refer a friend.
Some of our customers with the best performing referral program do things as simply as possible.
For example, Farm Hounds uses a simple 'Refer your friend, get $20 OFF' offering, and they've generated over $600,000 in sales through their referral program.
Simplifying things is important, especially in the beginning.
To get your referral program work better, check out our referral program examples article, where we showcase some of the most successful referral programs.
If you have been following along and implementing your referral program, you are all set up now! Woohoo!
As much as we have simplified the process of setting up a referral program with ReferralCandy, setting up a referral program can feel daunting.
The above steps we went through will mitigate any risks involved in the process.
If you still feel like you need more help, 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
Raúl Galera is the Growth Lead at ReferralCandy, where they’ve helped 30,000+ eCommerce brands drive sales through referrals and word-of-mouth marketing. Over the past 8+ years, Raúl has worked hands-on with DTC merchants of all sizes (from scrappy Shopify startups to household names) helping them turn happy customers into revenue-driving advocates. Raúl’s been featured on dozens of top eCommerce podcasts, contributed to leading industry publications, and regularly speaks about customer acquisition, retention, and brand growth at industry events.
Grow your sales at a ridiculously
lower CAC.
.jpg)