fbpx

How to Implement a Referral Program for your Small Business

Have you heard? A referral program is a strategic way to cultivate brand loyalty and increase the lifetime value of your customers. Of course, referrals can also happen organically without the need for any referral program. Instead of waiting for that to happen, introducing a referral program can motivate people to tell others about you.

Referred customers are 18% more loyal, spend 13.2% more, and have 16% higher lifetime values than non-referred customers, according to SaaSquatch’s State of Referral Marketing report. That’s because they have pre-established trust in your brand thanks to a personal recommendation from someone who knows them.

To increase revenue and bring in new customers, we suggest launching a referral program using the tools and strategies outlined below. 

BEST SHOPIFY PLUGIN FOR A REFERRAL PROGRAM

ReferralCandy is our plugin of choice since it integrates with Shopify and Mailchimp. Plus, ReferralCandy is focused on referral programs whereas comparable tools are more focused on loyalty or affiliate programs. The customer support is well-reviewed and the plugin has a 4.8 out of 5 rating overall. 

It costs $49 per month plus a 5% commission rate for the first $1,000 and a lower rate as the referral sales grow (details here).

WHAT IS A STANDARD REFERRAL FEE?

Simplicity is key to engaging customers in your referral program. Dollars of credit are the easiest rewards to communicate to customers. That’s why they are the most common reward in referral programs, offered 2x as much as percent discounts. 

On the flip side, percent discounts for low-cost items can be perceived as a better value because the percent number is higher than the dollar amount would be. A 20% discount versus $6 in credit for a $30 item, for example. 

If your products range from about $15-35, we recommend offering a $5 dollar credit to both the referrer and the person referred.

 Another option is 15% off to both the referrer and person referred, but that’s not a very compelling offer for someone buying a $25 t-shirt or $15 cup, as it reduces those to $21.25 and $12.75 accordingly. 

HOW TO RUN A SUCCESSFUL REFERRAL PROGRAM 

Ready to launch your referral program? Here is a list to get started with a referral program that can have a big impact on your sales:

  1. Craft clear language to describe the program, incentives (Give $5, Get $5), and who might appreciate the referral (target customer)
  2. Create a landing page on your website with details on the incentives and ask customers to sign up (Example here
  3. Link to this from the Footer and on Homepage 
  4. Use a MailChimp or other email software integration to email your customers announcing the program and incentives, including an automated unique link 
  5. Mention the program and link to it in your purchase confirmation emails to encourage return purchases and promote brand loyalty 
  6. Make sure your online reviews are strong / encourage loyal customers to review since referred perspectives may research you there 
  7. Consider creating referral templates like emails or social media posts to make it easier for your customers to share 

 

Many customers rely on the referrals of their friends and family. This is exactly why starting a referral program can help you grow your customer base and reward your brand ambassadors. 

Latest Articles