The Complete Guide To Setup A Referral Program For Shopify Store

Say you’ve already figured out what to sell on Shopify. You have your Shopify store up and running and have even gained some loyal customers. Congratulations! Because a loyal customer is worth 10x the money they first spent on the first purchase. But did you know that these loyal customers can be your key to winning more customers? How? Through a Shopify referral program!

Running a referral program that rewards customers for referring others to your business may boost sales owing to the explosive nature of word-of-mouth marketing. Why? For the simple reason that 90% of buyers put faith in personal recommendations. 

Want to setup a referral program for shopify store? We’ll explain everything you need to know, including what it is, why it is used, and how you can plan for one. 

What is a Referral Program?

A customer referral program is marketing with word of mouth. Businesses reward customers for spreading their enthusiasm about your business to their friends and acquaintances and bringing in new quality leads. Through this program, current customers may tell about their positive experiences with your business to their:

• friends,
• coworkers,
• and acquaintances.

For example, if you sell Spotify merch on Shopify, your customers can refer you to their music friends who love Spotify. Since new customers come to you with personal recommendations, they’re more likely to convert to paying customers. 

You may save a lot of marketing money on acquiring new clients and converting them into loyal ones by saving on customer acquisition costs (CAC). Statistics show a fivefold increase in sales when people spread the word about your business in contrast to when they see ads. 

You may save a lot of marketing money on acquiring new clients and converting them into loyal ones by saving on customer acquisition costs (CAC). With the right setup, such as using a Shopify 3PL store, you can focus more on growing your customer base organically. Statistics show a fivefold increase in sales when people spread the word about your business in contrast to when they see ads.”

There’s more to it! Referral programs also boost customer retention and add lifetime value, increasing your loyal customers because who doesn’t love getting incentives to spread the word to their social circles?

So, when you start a referral program for your Shopify store, you not only get organic customer growth without much acquisition cost but also:

• retain your current customers,
• and create a loyal customer base.

The Intentions of Your Referral Program

Now that you understand the referral program let’s dig into why you’d be interested in starting it. There are several intentions of eCommerce store owners behind starting a referral program. They all come from a plethora of benefits it offers. Some of the common intentions for starting a referral program can be: 

Reduce customer acquisition cost

Using referral marketing, online businesses may save money while bringing in more valuable clients. Referral marketing saves costs compared to more conventional advertising methods since it leverages your existing clientele to spread the word and bring in new business. 

Drive sales and Revenue

Companies that engage in referral marketing activities enjoy sustained revenue development because they attract qualified clients that are more inclined to make purchases. Let’s look at a successful example:

To draw in more online shoppers, Good AirX developed a unique referral program. Referrers receive a discount coupon for 10% off future purchases, while new customers receive a voucher for 7% off their first order. 

GoodAirX was able to lower its per-customer cost of acquisition with the help of its referral marketing initiative. It also grew orders by 21% and raised sales through referrals by over 73%!

Increase customer loyalty

Customers acquired via a referral program tend to be more loyal than those you get through more conventional advertising. According to research from Wharton Business School:

• There was less churn among incentive recipients compared to non-reward recipients.
• The retention rate for referred customers was 18% greater than that of non-referred consumers, and this difference remained stable over time.
• Referrals brought customers with an 82% chance of still being active 33 months later.

In addition to this, by offering incentives to current clients for referring friends, family, and acquaintances, businesses even promote engagement and loyalty amongst them. 

Increased social media visibility and brand awareness

In terms of reaching your target audience, referral marketing is unparalleled. The new social media reposting options in referral offers makes it easy for your client base to promote a refer-a-friend promotion to their wider networks.

So even if your intention is to simply create brand awareness, get more followers, and increase exposure, a referral program is a good choice. Plus, the other benefits will follow and only add to your bottom line! 

What is your motive?

Before we get into how to set up a referral program, you’ll need to set goals and define your motive. Since you already know what intentions could go behind the referral program, you can use them to clarify your motivations for creating the referral program. 

Are expansion and increased income your primary concerns? Or do you intend to include retention in this equation? Do you work in a field where establishing credibility is crucial? In that case, you may benefit from referrals from credible influencers in your field. 

Your motives will define how you go about designing the template, content, and CTA of your referral. If you take the time to carefully consider and articulate your objectives, the path forward should become clearer.

How to setup a referral program for shopify store

As long as you’ve got the best things to sell to start a business, you’re ready to setup a referral program for shopify store after knowing your motives behind it. Follow the steps below to create a plan for your referral program: 

Step 1: Understand Your Target Audience

This will include gaining an understanding of who exactly is your ideal client. Get down into the customer psychology and understand their buying behaviors.

Step 2: Figure out Potential References Sources

Once you’ve figured out your target audience, understand who’ll be your brand advocates– the people who will refer your business to their friends or family. These can be current and former customers, missed clients, experts in your field, reliable suppliers, etc. 

Step 3: Decide on Rewards and Incentives

Decide what referrers will get for referring your business to friends and family. Define the criteria they must meet to receive these benefits. Don’t forget to give a bonus to new customers too. 

Step 4: Plan how to reach out

When reaching out to potential brand advocates, timing is very important. Time your requests for advocates to participate in your referral campaign strategically. Some businesses wait before they initiate this relationship, while many merchandise businesses initiate with the first sale. 

Step 5: Create Templates for Referrals

Lastly, create a template that can be used by anybody in the company, be it employees or customers. Use your understanding of your target audience and create one that creates a strong appeal and can be modified with ease to reflect the brand’s tone, style, and character.

How to Track and Analyze Referrals

You must have tracking systems in place when you’re thinking of any marketing strategies. Take this as an opportunity to learn about customer relationship management systems (CRMs) if you haven’t previously. One of the most important aspects of customer success is account and relationship management since it allows you to treat each client distinctly.

You can use referral marketing tools that may manage invites, create tracking codes or links, and monitor referral-based activity. These tracking systems help you remember every little detail, such as: 

• Who are the referrers
• Who are they referring
• How many of them convert
• How many don’t convert, and why
• Ways to follow up and build a relationship, etc.

Think About Promoting Your Program

The last thing to do before you launch your referral program is to promote it. To let clients learn about your Shopify store’s referral program, use promotional tools like:

• website banners,
• social media campaigns,
• email,
• and others.

Creating a plan and marketing strategy designed to encourage client referrals must be developed by marketing departments. 

It is Time to Optimize and Launch

 

Starting a referral scheme will be easy and smooth once you’ve planned it well. Several tools facilitate quick and simple program configurations. They take care of everything when an e-commerce business owner sets up their desired incentives. 

One thing we’d like to point out is that there is no one-size-fits-all approach to developing a successful Shopify referral program. 

Based on how you analyze your clientele’s wants, needs, and demands, the optimal referral program for your company will be refined over time. It’s natural to take some trial and error before you find out what is effective and what is not. Regular testing can help you determine the strengths and weaknesses of your program.

Conclusion

It’s expensive to find and attract new customer, which is why your business could benefit a lot from referral programs. With a referral program, your current customers will promote your business and bring in new ones as brand advocates. 

Provide attractive incentives and rewards for both the referrer and the referred customers and see how you increase your revenue, improve customer loyalty and engagement, and shoot up ROI. We hope this guide will help you setup a referral program for shopify store.