Referral marketing is a customer acquisition strategy that works by turning existing customers into a customer acquisition channel. A customer recommends your brand to a friend using a referral link, code, or invite. If that  friend makes a purchase, the referral is tracked and the customer receives a reward.

Because the recommendation comes from someone the buyer already knows, referral traffic  usually arrives with more trust and less friction than traffic from ads. For ecommerce brands, that can lead to lower customer acquisition costs, higher conversion rates, and  more customers who go on to refer others.

Referral marketing works because it starts with trust. When a customer recommends your brand to a friend, that new shopper arrives with more confidence and less friction than  someone who clicked an ad. For ecommerce brands, that usually means lower acquisition costs, stronger conversion, and customers who are more likely to stay and refer others.