Referral program examples
Check out these real-world referral programs for some inspiration:
MeUndies has a referral program in addition to its affiliate and ambassador options. The program is available to customers who have made a MeUndies purchase before. It’s straightforward, rewarding $25 for every referred new customer when they purchase at least $12.
Pop culture subscription box company Loot Crate also has a refer-a-friend program. Loot Crate customers receive a referral link they can share with their networks. The corresponding customer receives a reward when someone makes a purchase using the referral link.
Outdoor apparel brand Outdoor Voices has a referral program. The program is points-based, rewarding shoppers for referrals, writing reviews, attending store events, and engaging on social media. Rewards include everything from discounts to exclusive access to products and promotions.
Tentree is a sustainable apparel brand with its own refer-a-friend option. The referral rewards both the referring and the referred customer—they each receive a 20% discount on their first or next Tentree purchase.
Rothy’s is a Shopify merchant that sells shoes and bags online and in its retail stores. Its referral program is straightforward with a minimum purchase requirement.
Referred customers get $20 off a purchase of $50 or more, and referrers receive the same discount when someone makes a purchase using their referral link.
707 Street is a retailer that offers a unique variety of trendy apparel and accessories. The brand has gained a loyal following among fashion and pop culture enthusiasts for its commitment to quality and exclusive collections of highly sought-after styles.
The 707 Street Loyalty Program is a points-based system that rewards members for referrals, signing up for the email list, making a purchase, or leaving a review, among other actions.
Junglück is a German sustainable skincare brand, offering natural products from facial cosmetics to shampoo and hand soap, with a referral program.
Referring customers get a €10 “gift card.” When someone spends that gift card, the referring customer earns their own €10 discount voucher. Junglück uses the Yotpo integration for Shopify to manage its referral rewards.
Swan is another Shopify merchant with a referral program. The household appliance brand also uses Yotpo to manage its referral program.
The program is straightforward and similar to Rothy’s referrals—just with different amounts. Shoppers can refer a friend, each of whom receive a £10 discount on their next purchase of £30 or more.
Undergarment brand Negative Underwear uses the same structure as Rothy’s and Swan for its referral program.
Referrals are worth a $20 discount to both the referred and the referrer, with a minimum purchase amount of $75. Currently, the brand uses Shopify Plus to manage all of its commerce channels in a central command center.
Hockey retailer BAUER is another multi-channel Shopify merchant. The BAUER MVP Loyalty Program is a tiered points-based customer loyalty program that rewards members for referrals and other actions.
Members can redeem points for discounts as well as be automatically entered for sweepstakes and giveaways. Additional benefits include free returns, early access to products and promotions, free shipping on qualifying orders, and more.
Add yearly revenue numbers
You can also check the referral value by adding up the total revenue from referred customers within a year. Subtract the referral program annual cost, which could include advocate incentives and referral software subscriptions. After subtracting the costs of acquiring referral customers, you will get the net referral revenue. Here is a simple formula:
Net Annual Revenue from Referred Customers = Total Revenue from Referred Customers – Annual Cost of Referral Program
For example, for a business with $100,000 in total revenue from referred customers and $25,000 in annual cost of the referral program, the net annual revenue from referred customers will be 100,000 – 25,000 = $75,000.
Compare the net revenue from referred customers to that from the non-referred customers. To calculate the net revenue from non-referred customers, subtract the acquisition costs from the total annual revenue.
How to calculate customer referral value
Every business owner should know how to calculate customer referral value. This will help them determine how much they can sell thanks to referred customers and the resulting returns on investment. The following are the three most effective methods.
Use strategic rewards
It’s more effective to increase customer referral value by rewarding referrers as well as the referred leads. This is known as a double-sided reward structure.
For example, you could give gift certificates or cash awards to referrers. But for the referred leads, a reward related to your brand is more appropriate. It could be a discount, free products, or credit to encourage referred customers to purchase your products.
Then, once referred customers refer their own peers, they can earn further referral rewards which encourages them to be repeat advocates themselves.
What makes a good referral program?
A good referral program is transparent about what it is and what it offers. It provides reasonable incentives for customers sending referrals its way and gives out those incentives in a timely fashion to maintain its reputation.
Choose a referral marketing tool
Select a referral marketing platform that handles referral invitations, generates unique codes or referral links, and tracks conversions. Some options that integrate with Shopify stores include:
Next, design and create a landing page explaining how the new program works (plus, any referral incentives you give). On this page, include a form for people to join. Ensure that people who fill out the form receive a unique referral link by email.
The best referral marketing platforms let you monitor the progress of your referral campaigns, and your referrers get access to a dashboard to track how many customer referrals they’ve made.
Ways to increase customer referral value
Given the many benefits of referrals, businesses must take steps to increase the referral rate. That essentially means increasing the revenue brought into the business by referred customers. And the way to achieve that is by increasing successful referrals. Here’s how you can go about it:
Types of referral programs
There are multiple types of referral programs, including:
How does a referral program work?
A referral program works by inviting your current customers to become brand ambassadors. When they join your referral marketing program, they receive a unique code or link to share with their personal network.
There are a few components to every referral program:
Your referral program software tracks the activity of a customer’s code or link. If someone uses the shared code, for example, the referrer earns a reward. Most platforms will do this automatically, so you don’t have to worry about keeping up with and applying discounts for referrals.
Promote the reward scheme
Customers won’t know about your referral program unless you tell them about it. You could use email, your website, or social media to promote your referral program. On social media, you could also encourage people to share your posts with their connections. And if you know customers are satisfied with your products or services, don’t be afraid to directly ask them to refer!
