What’s more important than a strong marketing campaign? The element of trust. People trust other people’s experiences and word of mouth more than anything else when it comes to purchasing. A study by Nielsen concludes that around 92% of customers trust the recommendations of their friends and families more than any other form of marketing (Source: Big Commerce). Thus, referrals generate hot leads and increase sales.

Today we will talk about referrals and how to build a referral program for your online business.

Image Credits: TFG Crowd


What Is a Referral Program?

A referral program is word-of-mouth marketing where real customers advocate for your product/service on behalf of the brand. Rather than giving written feedback or online reviews, customers share their experiences with people around them, such as family, friends, and colleagues.

Referral programs help you generate new leads, but these leads are not just another prospect. These are leads that are the perfect fit for your brand. These are the people who will benefit from the product or service. Marketing and sales teams can easily nurture and engage such leads and turn them into long-term customers as these people are already familiar with the brand and the company’s reputation.


Why Do You Need Referrals?

A referral program offers a lot of benefits to online businesses. Any online business that wants to survive in 2021 needs to have a strong referral program. Nearly 95% also read online reviews before making a purchase. This is how effective word of mouth is. It allows you to attract new customers without spending thousands of dollars on marketing campaigns.

Image Credits: The Invite Referrals

Here are some benefits of a referral program for an online business:

Brand Awareness – Encourage your current customers to speak about your product and spread awareness about your business for a promise of reward. 

Hot Leads – Referrals help you attract new customers and generate brand awareness. 

Long Term Customers – The leads generated by referrals also come with a high level of trust and are more likely to become long-term customers. Did you know: referred customers spend 25% more and are more likely to make a repeat purchase.  

Affordable – Plus, referral marketing is much more affordable as compared to other types of marketing tactics. 

It Works – PayPal, Dropbox, and Uber are popular online companies that have seen tremendous success through referral programs. 


How To Build Referral Program for Your Online Business?

Here are six steps to creating a referral program for your online business:

1.Know and Understand Your Customers

The most critical element of any marketing tactic is to know your customer. you should have a deep understanding of your customer to design a referral program for them. You should know why they want to join your address program and how best to get them to join.

Here are some questions you should ask yourself:

• Why do your customers like your brand?
• How often do your customers purchase your product/service?
• What motivates customers to purchase?
• What will motivate your customers to refer to your brand?
• Where do your customers spend time online? On which social media to engage with you?

Such questions will allow you to understand customers and design a referral program they will be interested in.


2.Set Your Rewards

Any referral program is incomplete without a reward. There are two types of rewards:

i. A Reward for Advocates:
Advocates are the customers who recommend your business to other people. A report for advocates is anything that will encourage them to refer your product/ service to the people around them. The reward works as an incentive and Gesture of gratitude for bringing more sales to your business. A few examples of referral rewards for advocates are discounts, coupons, and cash.

ii. A Reward for Referred Customers:
This is an incentive for the referred leads to make a purchase. It could be anything from a discount to free shopping. In simple words, it motivates referred customers to buy your product/service.


3.Customize Your Referral Emails and Pages

Today’s marketing campaigns are about customization. 80% of consumers are more likely to purchase from a brand that provides personalized experiences (Source: Forbes). Hence, a personalized marketing strategy attracts more customers.

To build a highly effective referral program, so you customize your referral email and page. Mostly there are two types of email in a referral program:

Post-Purchase Email – This is an automated email to the customer once they make a purchase. It invites them to further your brand to their friends or family.

Image Credits:Omni Send

Join/Subscription Page – This is the phase where your customer signs up for your referral program.

Image Credits:Dreams Time


Reminder Email – An automated follow-up email for your advocates who have not referred any friends to remind them.

Image Credits:Referral Candy

Share Page – The page where your advocates get their referral link to share.  

Image Credits:Squareup


4.Integrate Your Referral Program to Your Store

Your referral program should be integrated into your website, and make sure it is seamless integration. Remember: even the most loyal customers will not participate if there are too many steps involved before collecting their reward.


5.Launch Your Referral Program

Once your referral program is ready, launch it! Promote the program so your customers can discover it. The best way to promote it is to inform the existing customers through social media platforms, email marketing, etc. Mention the reward prominently as it will give them an incentive to participate.


6.Monitor, Analyze, And Improve

Any marketing effort will go to waste if you do not monitor the performance. The good thing is that a referral program requires less maintenance, but you still have to make sure it is running smoothly. Optimize your program wherever necessary to get the best results!



SEO alone is no longer relevant and effective when it comes to digital marketing. With Google’s ever evolving algorithms and tough online competition, you must put in extra effort to grow your online business. Building a referral program can give you that edge over your competition. This article tells you how to build a referral program into your online business. So, go ahead and start creating your referral strategy!


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