Power of Effective Referral Programs (and how to run them)

There are few eCommerce marketing tactics more reliable and beneficial than referral marketing. Also known as word-of-mouth marketing, referral marketing is simply the practice of buying products based on the opinions, influence, or referral of someone that has bought that product in the past. We’ve all done it. Maybe you’ve been recommended a new product by a friend or from an influential person that you follow on social media.

Referral Marketing a Powerful, Often Overlooked Revenue Growth Strategy

Referral marketing should be at the top of every eCommerce company’s to-do list. It’s an extremely powerful tactic. And besides: it’s cheap, simply managed, and easy to implement. Several factors make it a reliable (and profitable) lever in eCommerce, including:

  • Precision Targeting. Referral marketing is extremely targeted. When people recommend a product to friends, it’s because they know that they would be interested in it. Your messaging will spread more reliably through word-of-mouth marketing than it would through other channels.
  • Trust. This plays a huge role when it comes to convincing someone to buy your product. When you receive a recommendation from a friend, that trust is built-in. According to a Neilson study, referrals represent the most trusted form of advertising by a large margin.
  • Reach and Awareness Acceleration via Social Media. In previous decades, the reach of referral marketing isn’t what it is today. Now, anyone can take to social media and inform their closest friends and families about their favorite products. Accelerating awareness about your products through referral marketing can be just as quick and impactful as an advertising campaign.

If you want to start putting more focus on referral marketing, keep in mind these tips to help grow your sales and make a smooth transition:

It All Starts With the Buying Experience

Great referral marketing starts with the experience a customer has when dealing with your company. Great products are a must, but if shoppers don’t have a good experience when buying from you, they aren’t likely to recommend your company to their friends. A great buying experience lies at the core of any effective referral campaign. It’s also a core tenant of long-term referral marketing success for eCommerce companies.

Make The Buying Experience Share-Worthy

You want to impress your customers. You want to wow them when they receive your product for the first time. Going the extra mile to ensure exceptional presentation goes a long way toward helping your referral marketing experience.
Consider this example from Thelma’s Cookies:

Stand-out packaging has helped to grow brand awareness; largely due to exposure on social media. It makes their customers want to take a picture and share it with their friends on social media. It’s cool. It’s professional. It’s worth sharing. Find innovative ways for your own company to provide customers with that “wow!” moment and you’ll see your number of referrals begin to skyrocket.

Referring Can Be Simple

Nothing harms referral marketing efforts more than simply expecting your customers to share your products with friends. Sure, some will, but a majority will just enjoy it for themselves. Check out how the MeUndies brand made referring new customers simple and straightforward:

Even a simple menu button can go a long way. It gets the idea in front of your customers. They may never have thought about referring your product to a friend before seeing that button.

Provide Incentives with a Referral Program

People are more likely to do something for a friend when they receive something in return. If you want your customers to refer more friends to your company, giving them something for doing so can be a great way to drum up motivation and increase your referrals.
You don’t need anything complicated, like a points system or tiers. You can keep it simple. Check out how MissionCute incentivized their customers to refer friends:

A simple email form and a customer-specific link are all they need to increase their referrals.

Referrals an Effective Long-Term Strategy

Few sources of new revenue are as lucrative as referrals, and all eCommerce companies should look to improve this aspect of their business. What is there to lose? Compared to other forms of advertising, the cost of giving your customers options for sharing your products remains low. And the potential for long-term returns is much higher!

Unlock Retail Media Revenue with the 2024 Sponsored Products Benchmarks Report
This is default text for notification bar