How To Set Up The Perfect Referral Program

*Disclaimer: Yes, we are a referral company - however the concepts introduced in this article apply not only to our product, and are meant to help inform you make the best decision when choosing a referral partner for your business.

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Referral marketing and “word of mouth” have been popular buzzwords in the e-commerce world the past few years. The evolving digital landscape has led marketers and advertisers to seek new ways to glean learnings and gain results from their efforts. Word of mouth has become a powerful tactic in this regard, but with a myriad of tools and strategies at your disposal, how do you set up a referral program that will actually work for your business?

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You have a great product. You know it, your customers know it, and so should everybody else. A great referral program allows you to not only encourage your customers to share your product, but can also help you take advantage of customers who already are. Not to be confused with affiliate marketing, which often involves paying commissions or fostering transactional relationships with influencers, referral programs enable you to turn your customers into spokespeople for your brand. If you’ve ever shared a product you love with someone you love, you know how powerful word of mouth can be. However harnessing that power can be a challenge due to the sheer amount of options you have available, and they aren’t one size fits all. There’s a plethora of resources out there that explain why referral programs are beneficial, but less on how to actually make them work for your business - so let’s take a look at some simple but effective concepts you can focus on when building a successful referral program for your business.

A common misstep brands make when utilizing referral programs is a lack of accessibility. Many companies will start using a referral program and treat it as an “add-on” to their business. This mindset makes it challenging to find ways to fit the program into a typical shopping flow, so naturally a company will create a new space for it… which leads to a dedicated webpage, or even more common, the dreaded footer link. 

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Ask yourself what you expect your customer to interact with when they visit your site: Do you use an email capture popup? Is there account creation or login? Asking them to sign up for a referral program on top of these things AND expecting them above all to make a transaction creates a lot of unnecessary friction. Look at your current processes and see how you can integrate. For example, try signing them up WHILE capturing their information. A Majority of companies have some sort of introductory offer for customers when they provide their email address - Why not funnel them into your referral program in the process?

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Aside from building an email list, giving out discounts for lead capture can be a dead end. Instead, ask for the same information and offer the same discount for signing up for your referral program. Now, a customer who would’ve converted just by providing their email and getting a discount code knows that they can tell friends and family about the product and get rewarded. Give your customers an incentive to share your product without them having to take any additional action. The beauty of this is that you are still generating leads and building an email list, and turning a dead end flow into a conversion loop.

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On top of capturing leads, Daisychain also cross references your existing customer database to let you know when previous customers are being entered as referrers. This enables you to identify which customers are already out there talking about your product, even if they haven’t signed up for your referral program yet.

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We talked about removing friction for the customers who sign up, but what about those they refer? With a great product, getting people to talk about it is simple enough. However some pain points arise when getting them to take action. In other words, the “word of mouth” element of referrals can happen in simple conversation, but how does the referee get their discount? How does the referrer get their reward? This requires a certain level of intent from your customers, and the more you ask them to do, the higher their level of intent needs to be for them to actually do it. For the majority of referral programs, the action required for your customers typically comes through the form of sending links or codes. But oftentimes making your customer send a link or code can actually be a deterrent.

Asking a customer to remember a lengthy code or send convoluted links requires a significant amount of effort and engagement. Make sure to look for a referral platform that provides features that can ease these pains and make the act of referring a friend passive if the level of intent is low.

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For example, many referral companies offer the ability to send an email or text right from your website. Some even offer pre-written messages with the discount code built in, requiring less effort from the referrer. Integrating social media is a common technique, however this usually requires the customer to login to those channels which involves a high level of trust. Simplifying this step is a great way to remove these barriers and streamline the referral process. Unique identifiers like contact info make it easier for the referee to obtain their referral discount. This also removes any extra effort from the referrer and saves them from having to send anything. The first thing that comes to mind would be a simple username, email address, or phone number. This can even be taken a step further, for example if the unique identifier is simply the referrer's own name. This way, there are truly no barriers to the “word of mouth” aspect to referrals because all their friend needs to know is their name.

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Another thing to look out for when building your referral program is integration capability. Many referral providers can integrate with your existing marketing platforms such as Klaviyo, MailChimp, Attentive, and so on. Integration features are important because they allow you to still build your email list and generate leads without creating any extra work for yourself or your marketing department. On top of syncing with your email marketing service, it may be beneficial for your business to have your referral provider be integrated with your web provider as well. Most referral programs can function on any store or website, but be on the lookout for solutions that integrate with the most common e-commerce platforms like Squarespace or Shopify. Having a Shopify app or Squarespace extension will help you streamline the process of both setting up and managing your program.

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There are many benefits here that range from security to discount management. Since these apps or extensions work through your store providers API, you get full transparency over what kind of data is collected, and extra control over the discounts created for your customers by these platforms. A referral provider that creates discount codes natively in Shopify for example will allow you to manage and edit the codes as you see fit. This also enables you to better prevent fraud or vulnerabilities, such as code leaks to Honey or other coupon-scouring services. It also enables you to override discounts if you need to. The more control you have, the better.

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 There are seemingly endless options for a killer referral program in 2023, and at the end of the day the success of these programs comes down to how you utilize their features and functions. Automated solutions can save time and money, but optimizing flows, reducing friction, and offering amazing incentives will allow you to turn word of mouth referrals into a highly successful and cost effective customer acquisition channel for your business.

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 Feeling inspired and ready to set up a seamless referral program with full control and low friction for your customers? Drop us a line, we’d love to see how we can help boost your organic traffic and conversions.

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