How To Set Up A Customer Referral Program On Shopify?
Sep 4, 2024
How To Set Up A Customer Referral Program On Shopify?
Acquiring new customers has always remained a challenge for businesses. If, like others, you have tried paid advertising, email marketing, or media marketing but still fail to reach the target audience, grow your business with the Shopify referral program!
Compared to traditional marketing strategies, a referral program is more efficient and cost-effective for reaching more customers. The program turns your actual loyal customers into brand ambassadors who spread the word about your products or services and receive rewards.
Worry not if you are also planning to start your Shopify referral program but are confused about where to start. This article will help you understand a referral program, how it works, and the right way to create one. So, let's get started!
What Are Customers Referral Programs?
The customer referral program is a low-cost but high-impact marketing strategy that turns your current customers into brand advocates and lets you generate new customer acquisition via word-of-mouth sales. An interesting aspect of the Shopify customer referral program is that it benefits everyone involved.
For example, building a referral program can grow your customer base. You can reward loyal customers for referring your products or brand to their family, friends, colleagues, and social media followers. Likewise, referrals (new customers) enjoy the same reward.
The reward can be anything from cashback to free products or discounts on a new purchase. Remember that asking someone to recommend your product without incentives often yields poor results. Rewards, on the other hand, motivate people and urge them to take action and spread the word about the products they love.
The stats prove that Shopify's referral program is a great way to grow your business. The referrals you get through this customer rewards program are 18% more loyal than those through other acquisition channels.
So, in this scenario, investing in a referral program makes sense for businesses that aim for sustainable growth in a highly competitive market. Dropbox, for example, launched a two-sided referral program in 2008. The company rewarded (free cloud storage space) both referee and referrer.
With this referral program, Dropbox grew its customer base from 100,000 registered users to 600 million by 2019, with over 14.3 million paid subscribers. The company gained over 34 millions direct referral signups and generated $48 million in revenue. Does that sound impressive? If so, we should create our referral program and set up another success story like Dropbox!
Why Set Up a Referral Program For Your Shopify Store?
Acquiring new customers through traditional marketing strategies can be expensive. Plus, you need a massive workforce to do it successfully. Fortunately, a Shopify referral program eliminates all of these difficulties.
Plus, there are 4X times more chances to purchase a product when a friend or family refers a product, and referrals can increase your revenue by 16%. However, these are not the only referral program benefits; there are various advantages that you can enjoy after setting up referral programs. Let's look over the other perks of a Shopify referral program:
Increases Customer Acquisition
Businesses can attract new customers with a referral program by tapping into the current customer base. For example, when your existing customers tell about your products or brands to others, they act as your salesperson. This approach has been proven to be highly effective in reaching potential customers who are already interested in your products and offers.
Generate Positive Word-Of-Mouth
The other benefit of the Shopify referral program is that it helps you generate positive word-of-mouth for your business. When any of your loyal customers recommend you to their friends and family, they give you a glowing recommendation. This recommendation is way more powerful and effective for building brand awareness and attracting new customers, as people trust more what their loved ones say.
Boost Sales
The referral program on Shopify also helps you boost sales by encouraging current customers to make repeat purchases. Remember that when a customer refers any of his friends or family members to your store, they find that your existing customers are happy and satisfied with your products. It motivates them to make a quick purchase without another thought. Also, the chances are higher that he will purchase for himself. The reason is the reward or incentives they get for a referral.
Cost-Effective Marketing
Traditional marketing strategies require costly partnerships and sponsorships. Unlike them, the referral marketing program helps you to reduce the customer acquisition cost. You are not paying any upfront costs when you get a new customer through this marketing strategy. You only have to reward the customers, and that is often done with in-house credits. Resultantly, it helps businesses save a huge amount, especially for those running a large-scale referral program.
Amplified Reach
Satisfied and happy customers spread the word about your brand on their social networks, far from your target audience. If your products appeal to new customers, it can start a chain of referrals for you from places you never expected.
Opportunities For Collaboration And Partnerships
Businesses setting up referral programs in Shopify opens up various opportunities for partnerships and collaborations. For instance, a business can establish strategic alliances with other brands and offer joint referral incentives. Resultantly, it helps both parties to grow their customer base further. The other advantage of this referral marketing strategy is that it also helps you enhance the brand's credibility, as customers witness your business aligning with other trusted businesses.
Fosters Loyalty
The customer referral program is a valuable asset for every Shopify business. The program allows businesses to leverage the power of social proof to attract new customers and fosters loyalty among their current customers by offering them referral incentives or rewards.
Build Trust
After 2020, it was noticed that reviews had lost 30% of their influence on customers (as most buyers considered them fake). So, in 2024, personal recommendations and referrals have become more important than ever.
Customers may not trust random reviews but will trust their friends or family. So, it would not be wrong to say that a successful referral program helps businesses build trust. Customers are more loyal to buyers who purchase after a personal recommendation.
How Does A Referral Program Work?
The Shopify referral program combines the right products, advanced technology, messaging, and tempting referral incentives. The program incentivizes current customers to refer your brand to friends and family members, helping you access new leads. So, when your current customers join your referral program, they receive a unique discount code to share within their personal network or social media handles.
Customers get rewards if someone uses that discount code to purchase from your store. You must integrate the third-party referral application with your Shopify Store to run the Shopify referral program and track the customer's link or code activity. DUO, for example, is a Shopify referral app that you can easily install and integrate. The app lets you set up the referral program within 15 minutes.
When loyal customers purchase, DUO generates and shares a code with them. Customers can receive and share a discount code through the Thank you page. When anyone with whom they have shared the code redeems it, your existing customers can get an instant cashback as a referral reward.
The amount is directly transferred to their account. Therefore, these instant cashback referral rewards are the best rewards for your Shopify referral strategy. You can also use this application to track and optimize your referral program.
What Are The Different Types Of Referral Programs?
Businesses value their referrals because they help to grow customer base, and their cost per acquisition is pretty low. There are different types of referral programs, and below you can find the details of three of them:
Incentivized Referrals
It is the most common and popular type of referral in which the customer has a reason to promote your products or services in their circle. In exchange, the current customers can get a discount for the next purchase, a cash incentive, or a complimentary product.
Take the example of Erin Condren, a lifestyle brand with a double-sided referral program. Through this referral program, both new and existing customers get $10. Likewise, a coffee shop that offers a free cup of coffee to existing customers for every customer they bring in can be an example.
These referral incentives motivate current customers to promote your products and increase your reach to more customers. So, you should always offer compelling referral rewards to your customers and consider the following when choosing the rewards for your loyal customers: Understand your customers. Try to find out what they truly value and ensure that the incentives resonate with your brand value.
Direct Referrals
When your current customers refer your products or services to people looking for the same products or services, they will become your direct referrals. It is a traditional type of referral, and there may not be an incentive for the referrer. When customers are fully satisfied with your services or happy with your products, they will share good words about your brand in their network.
Advertising your brand and growing your customer base is cost-effective and powerful. You can choose customers who can be your referral partners, and you will find them better than Brand ambassadors.
Reputation Referrals
When you successfully build a brand and positive reputation, people will feel confident in recommending you to others who are looking for the same products or services you offer. This is how you can get reputation referrals.
But getting this type of referral is not easy. It usually happens due to having a strong brand reputation and a great product. Businesses with great reach usually get this type of referral. They used to build awareness regarding their services by participating in the community via offline and online engagement.
Why Are Post-Purchase Instant Cashback Referral Programs The Most Efficient?
But all of these are old tactics to attract new customers. These days, cashback incentives ecommerce referral programs are becoming popular. In instant cashback, instead of any other referral incentive, customers get the cashback on their order..
Instant cashback rewards have been found effective in motivating consumers to make purchases. They are popular among customers because they provide direct financial benefits. Another advantage is that these rewards are easier to understand and use, which makes them more appealing.
Cashback rewards also offer immediate benefits to customers, creating a sense of gratification and satisfaction. They also help build an association with customers and motivate them to make repeat purchases. You can efficiently use these referrals for new customer acquisition, seasonal promotions, and referral programs.
How To Create A Referral Program For A Shopify Store?
Customer referral programs have gained huge popularity over recent years, and this has happened because of the rise of direct messaging and social media. People are now more connected, and sharing their experiences or recommendations has become far easier.
A recommendation from your loved ones carries more weight than any other marketing strategy. So, it can easily do your business and take your brand to another level. If you believe the same and aim to generate more leads than last year, you probably already have asked yourself, "How to set up referral program”?
If so, let this referral program guide help you and follow up the referral program steps mentioned below and set your referral marketing strategy:
Step 1: Start With A Great Product
Start creating your Shopify referral program with a great product. You will have to go through the "product development process." The process refers to taking a product from an idea to the market, and it does not end until the product cycle is over.
The businesses can continue the product development even after the product launch by getting customer feedback and making new versions. To make it clear to you, let's take a closer look at all these steps here:
Generate a Great Idea: Most entrepreneurs get stuck at the first step, idea generation, and brainstorming. They usually want to launch a great product in the market and wait a long time.
Conduct The Market Research: starting production before validating your idea can lead to failure. The validation helps you ensure you would not waste your time, money, or efforts on the products that won't sell. There are several ways to validate your idea, such as researching market demand, getting feedback on forums, and sending online surveys to get feedback.
Plan Development: Product development can be complicated. So, it is a good idea to plan before building the prototype. Having a clear roadmap can be very helpful here.
Create the Prototype: This phase aims to create a finished product that can be later used as a sample for mass production. Here, you can experiment with different product versions before finalizing. Later, you can eliminate options and make improvements until you are satisfied with the final product. The products that you can prototype can be cosmetics, jewelry designs, or recipes.
Source Materials And Production Partners: Once satisfied with a prototype, you can search for the materials and partners required for production. This process is also known as building the supply chain.
Determine Your Costs: Determine the cost of producing your products. It will help you calculate the gross margin and retail price.
Launch Your Product: Your product is ready to be launched, and the last step of this process is to introduce it to the market.
When you follow these steps to create your products, you will have a reputable, high-quality product that customers will value. Happy and satisfied customers ultimately refer your services or products to others, building a solid reputation for your products in marketing.
Step 2: Understand Your Customers
Determining your target audience's values and why they will buy your products is important to create referral program. Once you have information regarding your ideal customers and have determined what influences their behavior, it can help you educate them about joining your referral programs.
This way, your customers can better understand your referral program, which can help them effectively connect with their networks. E-commerce analytics tools like Shopify can help you obtain the required information.
Understanding what incentives will drive more referrals for your business is equally important as understanding your audience. Rewarding customers for referrals can be an effective strategy to urge more people to use your program. You should make a plan to determine which customers got the rewards and clearly state this on your website.
There are also some campaigns where the referrer and new buyers get incentives. It is a win-win situation for both parties. The rewards can be anything from free dollar credits to percentage discounts, free products, points to redeem (on future purchases), or free month subscriptions.
Aside from the reward you choose for your audience, understanding CLV (customer lifetime value) is the key to the success of your Shopify referral program. Remember that the cost of acquiring each referred customer or the price of the incentive should be less than the total revenue generated by the customers in return.
Step 3: Choose the Right App
Now, you must choose the Shopify app referral marketing, which will handle all your referral invitations, generate links, and help you track conversions. These Referral program tools can help you customize your program, messages, and incentives.
Various referral applications are available on the Shopify App Store. So, take some time, research, and pick an app that best fits your needs. When choosing the Shopify referral app, ensure that it is flexible, can easily integrate with your Shopify store, offers features, and is easy to use.
The best app for successful referral programs in this regard is DUO, which can help you set up the referral program within 15 minutes. DUO owns your Shopify referral strategy end-to-end and suggests various new discount strategies to Shopify store owners.
DUO allows you to ultra-personalize your referral messages to hit the right target. Each message will perfectly match the vibes of your customer and enhance the chances of your referral turning into your loyal customer multiple times. Also, DUO ensures GDPR compliance, which means none of your data will be stored or shared with third parties.
Step 4: Install and Integrate the App
The DUO can be found on the Shopify App store. Once you've found the application, follow the simple steps to install it. It won't take you more than 10 minutes to set up the application on your Shopify.
Step 5: Set Up Referral Rewards
Loyal and happy customers are always ready to spread the word about your products. But only a few pump your lead generation channels, which is not enough. So, to ensure more engaged audience participation, you should always offer them tempting ecommerce referral incentives. It is the best way to ensure that your advocacy will remain their major goal.
Remember that every brand offers incentives to its loyal customers in the competitive market. So, to set yourself apart, you should offer the most attractive rewards that set you apart and higher in the competition. It will urge more customers to choose your brand over others for advocacy.
Referral rewards or incentives could be anything, depending on your niche and target audience. Discount codes and coupons are the most common rewards, where businesses offer a fixed dollar amount or a percentage discount to their customers on their next purchase.
If not, many offer store credits, which customers can use during future shopping. Free products from your catalog can be a great idea, or you can also give customers exclusive access to your new products.
However, a referral incentive that truly sets your brand apart from others is instant cashback rewards, and this is where DUO helps you out. Instant cashback has been found more tempting, and data reveals that it attracts more customers. Another plus is that you don't have to deal with refund requests.
Remember that transactions between two parties should be transparent, and DUO truly understands this. DUO directly transfers the cash to your customer's bank account and does not use a proxy refund solution.
DUO also lets you define how customers can participate in your referral program, generate the referral link, qualify them as successful referrals, and reward them when they do. So, by clarifying the terms and payment transfer, DUO makes it easier for potential customers to trust you.
Step 6: Design Your Referral Program
Most store owners are impressed by other successful referral programs and try to copy them. Well, it is unnecessary that what has worked for others will also work for you. So, don't replicate the same results if you want to get the same results. Instead, understand your audience, their behavior and preferences, and their communication channels.
As a marketer, you will have to design a referral program that resonates with your target audience in terms of communication and the rewards you offer them. An audience-centric referral program reinforces your brand's identity and ensures a consistent customer experience.
When your customers feel and believe that the referral program is tailored to their preferences and rewards their loyalty, they will become the most active advocates of your brand. That is why DUO lets store owners customize the appearance of their Shopify referral program to match their brand.
For instance, you can fine-tune your cashback SMS or emails by personalizing the content, fonts, colors, or anything else without code. It will help you match your customers' vibes perfectly and boost your chances of turning referrals into real success stories. You can also design your referral links and other promotional materials.
So, to simplify everything and optimize your referral program, integrate DUO with your Shopify store and make your story a real success!
Step 7: Promote Your Referral Program
You have set up and optimized the Shopify referral program with the help of DUO. Now, to maximize its reach, you can promote your referral program to your customers using different channels like:
Email: You can use email to reach your customers and inform them about your referral program. You can also send them periodic reminders and welcome emails to new customers.
Your Website: Your website is another great platform for promoting the referral program. Display your Shopify referral program on the website and include the link to the program in the footer. You can also create a dedicated landing page for your referral program.
Social Media: You can create social media posts about your referral program and share those posts. Encourage your customers to share their referral links on their social media handles. It will significantly increase your reach.
Run A Referral Contest: It can be a great way to boost customer engagement and excitement about your referral program. In the content, you can offer small prizes to all customers or grand prizes to loyal customers who refer new customers.
Word-Of-Mouth: Customers who are satisfied and happy with your products will refer you to their friends and family. To encourage them, you can offer them a referral bonus, which is more valuable than standard rewards.
Referral Landing Page: The landing page can better explain your referral program and provide clear instructions to customers on participating. Remember to include a link to the landing page in your social media posts, emails, and other promotional materials.
Partnership with Other Business: Partner with other businesses. It will help you promote your referral program and increase your reach multiple times.
Step 8: Track and Optimize
Tracking and optimizing the referral program is crucial to ensure its success and make the required improvements. You can get help from the analytics tool the referral app (DUO) provides. These tools help you gain insight into important metrics like conversion rates, number of referrals, number of clicks on the link, number of times the link was shared, number of customers, and revenue generated.
You can easily point out the areas that need improvement. Later, you can take the necessary steps and make adjustments to enhance the effectiveness of your referral program. You can also automate referral program with DUO to make things easier.
In addition, keep records of your top referrers and the reach of your customers' unique referral codes. It will help you know which customers are pushing their friends and family to purchase from your store.
Just to conclude
Setting up a shop on platforms like Shopify has become much easier. However, your business's success depends on how you present your products to the target audience. So, for now, more shoppers are turning towards referral marketing. Data reveals businesses generate 20% more revenue than average through the Shopify referral program.
Now that you know the true value of a referral program, take a step forward and create your referral marketing strategy. But before that, understand your audience, pick the best incentives and right app (DUO), and make it easier for loyal customers to recommend your brand. So, what are you waiting for? Go and grab your potential customers via the Shopify referral program!
