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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 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%.
If you are familiar with referral programs already and want to go deeper, I have also linked to some advanced guides below. Enjoy!
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:
These questions will make more sense as you 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 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 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 the 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 expiry. 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 the best if your products are not bought regularly, such as mattresses. The GLD Shop, a hip-hop jewelry brand, gives its advocates $50 when their friends spend $99 or more.
In ReferralCandy, you can set a fixed cash amount or a percentage of the referred friend’s purchase (e.g. 10% of 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:
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 notebook from Open Atlas, a minimalistic notebook brand, 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 logo and a banner image to the default theme, 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, you are all set! Skip to the next step. :)
If not, there are two things to do:
You can set this up without any technical knowledge. Here’s a help article you can follow.
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.
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").
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 at every step of the way. We have more than 1,000 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!
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