Conversion

How to Create a Referral Program To Increase Sales for your Ecommerce Brand

how-to-create-a-referral-program-to-increase-sales-for-your-ecommerce-brand

Customers that have a positive ecommerce experience will likely recommend the business to their friends and family. That’s why referral marketing is so powerful.

Referral marketing has a lot of perks. Your potential customers are likely to seek out the evaluation of friends and family first before they can make a purchase. People do this to ensure their hard-earned money is well-spent. 

Many referral experts see people share and ask for referrals on a daily basis. In fact, ReferralCandy found that 80% of all B2C and B2B purchases involved some form of word-of-mouth marketing during the sales cycle. Consumers are also 4 times more likely to purchase when the product is recommended by a friend. 

Now, how do you create a referral program that increases your brand’s sales? Here’s what you need to know. 

1. Set goals for your referral program

Determining the goals of your referral program will help you maintain a consistent approach. 

Here are some questions you need to ask:

Sales and marketing teams must be able to determine the estimated number of brand advocates and possible referral sources. Consider launching a survey amongst your customer base to determine its potential revenue from a referral marketing campaign.  

2. Choose incentives 

Recommending a product seems easy, but it also requires time and effort. Obviously, people are more likely to act if they will receive something in return. 

If you want more successful referrals, then provide incentives. You can reward customers with freebies, discounts, and exclusive offers to boost their motivation. Nielsen found that 67% of customers like to receive points or rewards for referrals, so that’s a great incentive to offer to start! 

For example, MeUndies’ referral program lets brand advocates give friends 20% off. In exchange, they get $20 credit after their friend uses their referral code.

MeUndies Referral

3. Launch a referral program 

Launching a referral program doesn’t have to be difficult. There are tools that let you instantly set up the program to make it hassle free. 

For example, ReferralCandy lets users launch a referral program in just 10 minutes. Ecommerce entrepreneurs can choose their preferred rewards, while the app does the rest.  

Referral Candy Homepage

You can also increase your chances of success by creating referral widgets and embedded signup forms to appear on your store-front. 

Referral Nudges

4. Promote your referral program 

The next step is to promote your referral program. 

Notify customers about your referral program’s existence through social media campaigns, emails, website banners and videos. To guide customers along the referral process, marketing teams need to create a sales plan and marketing plan to facilitate the referral process. 

Create referral emails for onboarding customers. For instance, Airbnb’s email clearly explains the gist of the program: customers can earn $30 in travel credit by sharing their love of travel with friends. 

AirBnB

Businesses will also need a landing page where customers can invite friends. Kobo’s landing page lets brand advocates indicate the name and email address of the referred friends. Invited friends can get a $5 gift, while the referrer gets a $10 account credit. 

Kobo example

5. Thank customers for referrals

The referral process seems like a piece of cake. But it’s important to let customers know that you appreciate their efforts too. Send a thank you email with instructions for claiming the reward. This encourages members to keep referring their friends so they get more rewards, while you get more new customers in the long-run. It’s a perfect win-win situation. 

Allset’s email congratulates referrers for earning a $10 reward. Now that they’ve made a successful referral, the store encourages them to invite more friends on the platform. 

Alliset example

6. Track your success

There is always room for improvement and the same can be said for referral programs. That said, utilize analytics tools to track the success of your program. 

Identify how people interact with your promotions. Determine the click-through-rate for landing pages and promotional emails. And, if some resources aren’t effective in boosting your program’s membership, redirect your efforts elsewhere.  

Consider experimenting on rewards. You may get more successful referrals through cash rewards, rather than discounts. Those with loyalty programs may give customers the option to earn points for word-of-mouth marketing, in exchange for exclusive offers or freebies. 

Analyzing the results of your program will help you determine if rewards are worth it or too costly. You can even launch an onboarding campaign for new customers to boost your customer retention rate. 

7. Training your sales team

By utilizing a referral program, your brand advocates will persuade customers for you.  

More importantly, it’s a cost-effective customer acquisition process.  

According to Harvard Business Review, it costs 5 to 25 times more to get a new customer than to retain an existing one. After all, it takes a lot of time and effort to get a customer along the sales funnel. You need to train your employees to seamlessly implement the program.

That said, your customer support and sales team are your best promoters, so educate them about the referral process. Provide scripts to explain the referral process to interested shoppers. Demonstrate how the referral program works so they can easily respond to customer issues. 

Remember that the main purpose of referral marketing is to get new customers. So, discuss strategic ways to improve your results with your team. 

Monique Danao is a writer for ReferralCandy and CandyBar, two SaaS tools helping online and brick and mortar businesses grow their customer acquisition and retention through customer referral and loyalty programs.

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This article originally appeared in the OctaneAI blog and has been published here with permission.

About the author

Steve Hutt

Steve has entrepreneurship in his DNA. In the early days of online commerce, he achieved Power Seller status at eBay, which then propelled him to become a founding partner of VisionPros.com, a contact lens, and eyewear retailer. After a successful exit from his startup, he embarked on his next journey into agency work in e-commerce and digital strategy.

Currently, Steve is part of the Merchant Success Team at Shopify Plus, where he is a Strategic Advisor helping brands continue to grow and scale with the Shopify Commerce Platform.

To maintain a competitive edge and life of learning mantra, Steve also hosts and produces a top-rated weekly podcast show, eCommerce Fastlane, where he interviews Shopify partners and subject matter experts who share the latest marketing strategy, tactics, platforms, and must-have apps, to help Shopify brands build and scale lifetime customer loyalty.