Ecommerce Referral Programs
A strong referral program is one of the best ways to lower customer acquisition costs for sustainable growth. But ecommerce referral programs are not as simple and easy to operate as they seem. Like all aspects of ecommerce marketing, it requires an understanding of consumer psychology, entering the conversations where referrals take place, and of course, making sure your brand is worthy of a referral.
This article discusses the best ways to encourage an existing customer to recommend your product to a friend. You will understand the referral process from beginning to end and how much of an impact it will have on your ecommerce business.
Here’s what you can expect to learn.
When are the best times to ask for a referral?
How to request an existing customer to send you new business.
Specific strategies that are working for ecommerce brands in 2023.
Tips and tactics to take your referral marketing from good to great.
The latest ecommerce referral program software.
The importance of measuring the success of a referral program campaign.
At the end of this article, you will be itching to create your referral program strategy.
Why Ecommerce Referral Marketing Programs Matter
Moving past the ecommerce explosion that occurred because of the Covid-19 pandemic, ecommerce brands can no longer watch their revenues increase without effort. On top of this, data privacy restrictions prevent ecommerce companies from scraping 3rd party data to attract their perfect customer for minimal costs.
Now, with more ecommerce websites than ever, finding marketing strategies that can put us in front of the right eyeballs with a convincing reason to trust our business is of the utmost importance. A customer referral program is one of those strategies you can leverage to outpace the competition. In our experience, almost every ecommerce brand has one, but only a few are running a successful referral program.
When To Request A Referral
The most crucial time to ask for a referral was yesterday, but since that time has elapsed, the next best time is right now! I’m sure you’ve heard this saying before, but it puts a stamp on the first time you should request a referral to a current customer. The referral process for new or existing customers begins with their first purchase.
Immediately After The Purchase
A customer commits to your brand every time they make a purchase. There is an endorphin release that happens when we spend money. While some fall into the category of having buyer’s remorse, more fall into the category of excitement and anticipation.
Look on social media, and you will see this. How often have you heard someone say they just purchased something and are excited to give it a shot? It may sound like this: “Just ordered bulk strawberry roots for my garden, can’t wait to feed my kiddos healthy fruits!”
Anyone with a decent social media following will see comments drip asking about the variety of strawberries if they are planning to pot or place in the ground, and most importantly, where did they purchase them? When customers are excited, they will mention your brand, and if you provide them with an opportunity, they will be more likely to send you referred customers.
Tip: On your “order successful” page, ask for a referral with a referral link (track this!) to each social media channel.
On the Email Receipt
Assuming everyone will see your referral request on the order complete page is unrealistic. It’s equally unrealistic to think that everyone who sees it will take action on your referral request. That is precisely why an order confirmation email is such a necessary time to ask for a referral.
Depending on the depth of their relationship, asking for a referral within your confirmation email might lead to them simply forwarding the email, suggesting they check the product out. Here, the referred friend will receive personalized communication, increasing the likelihood of the conversion.
But it won’t always be this easy. Keep the same theme as your checkout page and put the link along with social media sharing buttons to increase the likelihood of them recommending a product to their friends.
Tip: Consider the font style you use for this referral section. Change the style to represent what people see in handwriting so that it triggers differentiation and personalization.
Ecommerce brands that don’t follow up have a bigger problem than their referral campaign. Bluntly put, they are showing how little they care about their ability to produce a happy customer. But that’s not your brand, right?
Assuming order follow-ups are within your ecommerce email marketing funnel, what are you doing to encourage referrals throughout this process? As we find in a sound customer review strategy, you can segment your audience based on their product review and request a referral to anyone who gives you a high enough rating.
Tip: Create a video on the follow-up “how would you rate this product” page where you kindly ask them for a referral. State how you love growing your business based on happy customers and not tricking people into trying your products. Authenticity will go a long way.
Through Social Media Activity
We don’t always have to speak one to one when making a review request. Sometimes requesting a referral to a large audience makes sense, which makes perfect sense on social media. You can make the request directly in your story or feed, but you can also make the request suggestively as a CTA in your video or post description.
We can also accomplish the referral request without asking at all. By creating sharable content about your product, existing customers are less directly suggesting that their friends purchase the same product.
Don’t be cheap about this, either. When you have shareable content or referral-worthy products, spend the money on social media ads where you boost the reach of your organic content.
Tip: Partner with micro-influencers with highly engaging audiences to promote your products through their referral program. We can accomplish this with a one-time promotion based on honest feedback or an ongoing affiliate campaign.
There are many other good times to send referral requests (such as direct mail & SMS), but we’ve discussed the principal ways to reach new customers through referrals. Now, let’s look at the specific strategies to increase the success of your campaign via engagement and orders.
Ecommerce Referral Program Strategies
Think of your referral program in the way you think of other ecommerce direct response efforts. The structure, words, and visuals all play a role in how impactful the request is. Remember this as we look at each referral program strategy you can use to drive referrals.
Incentives such as store credit, discount codes, and a direct cash reward are the most understood aspect of referral marketing. Unless a specific model works well across many product categories (think free books, just pay for shipping), a referral reward cannot become white noise to your customers.
Using tiered incentives, provide higher incentives for customers who refer more than once. Or, you could create a custom discount code for each customer, making it a personalized experience.
You also need to carry this intentionality in your affiliate program. Almost every ecommerce brand engages in affiliate marketing, so any referral incentive you offer to these less natural forms of customer referrals needs to be better than the competition.
Tip: Monetary offers only drive some customers to recommend products, so don’t lead with this tactic. Instead, use it to support another important reason or save it to bring up interest after making an authentic request.
Leverage Your Brand Advocates
Loyal customers purchase from your business regularly, but there is a level of customer who goes beyond this consistent and dedicated consumer. I’m talking about the brand advocate. These highly motivated brand supporters carry with them a desire to make your brand known worldwide!
Every brand has a handful of these; they are the perfect people for promoting your brand to those they do not know. We can use your brand advocate in all referral marketing efforts, from the checkout page to your follow-up email.
Tip: Create snippets of content your brand advocates use and recommend the products. One strategy is to fast-motion product uses and then real-time the recommendation. The result is a 20-second video that pops!
A portion of your existing customer audience is highly competitive. You can leverage this consumer behavior directly or indirectly with your referral campaign.
Directly: If you have a large enough audience, reward your customers with a referral prize that makes everyone’s heads turn.
Indirectly: Run a contest within your industry and give good reasons for their friends to enter. Contests work exceptionally well in the weight-loss industry, with brands such as EAS and 1st Phorm becoming global brands thanks to the worldwide recognition they receive from the competition.
Personalize The Referral
Personalization is critical and a tipping point for ecommerce brands hoping to turn a profit. Personalize well, and your revenues tip in favor of profitability; tip in the wrong direction, and you will lose money every time. There is too much technology for brands to lack customer personalization.
Send your referral offers based on customer segmentation. Also, add rewards that match the customer’s interest, which you can discover through purchase history and browsing behavior.
Ecommerce Referral Program Tips & Tactics
Here’s where we go from good to great. These subtle but significant differences separate OK results from profound brand impact.
Nurture Your Customers
We’ve talked about the difference between a loyal customer and brand ambassadors, but you must treat your entire customer base like gold if you want maximum results from your referral program. Customer loyalty isn’t static; you can increase every customer’s commitment to your brand by nurturing them like a part of your family.
Nurturing is harder to quantify, so you should sew it into the fabric of your company. Not having a solid foundation to build your referral program will eventually lead to one that crumbles back down to the ground—leaving a real mess to clean up.
Make it Easy To Share
Any friction with sharing your brand with their friends and followers will put the brakes on the success of your referral program. Many referral widgets are on the market, but while they may have referral marketing innovations, inconsistent functionality can do more harm than good.
One way to simplify the sharing process is to offer pre-written templates so customers can share with a single click. Offer this carefully, as personalized messages from your existing customer to a potential customer will have a greater impact than a template.
Use language that speaks to the urgency of sharing with their friends. You do not always need to be as direct as limited availability or time-ending promotion when hoping to attain a referred customer. Sometimes, a better strategy is to speak about your product's impact. For example:
“Did you know six out of every ten people struggle to fall asleep?” That means more than a handful of your friends and family will lie awake tonight with a racing mind, wondering when they will fall asleep. Consider sharing with them the advantages of the blue light-blocking glasses you just purchased, and let’s see if we can help your friends get a better night’s rest!"
Include urgency in your referral program whenever and wherever possible.
Measuring Referral Program Impact
Referral marketing is marketing. Therefore, you should continuously track the campaign for progress. Use tracking links to monitor the success of each referral effort and analyze the data to identify which customers are most likely to refer others and which incentives have the most significant impact. Take this data and test different referral offers with more narrow differences.
You will want to continuously hone in on your referred customer to identify what your existing customers are saying about your brand or product and how they are saying it. Referral program software exists for this exact purpose.
Referral Program Software
Referral marketing software exists because the ecommerce industry understands how much of a role referrals play in company revenues. Referral software can help you with the setup process, modify your visuals and copywriting, and provide detailed reporting for your campaign results.
Referral program software helps you understand more about reaching a potential customer, but only if you know how to manage the tool. Never invest in software you cannot onboard, understand, and monitor for progress. It is often better to leave this up to your ecommerce agency.
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