What are e-commerce referral programs- A Guide

client retention

E-commerce referral programs are specifically designed by brands for their existing customer base. This program incentivizes and rewards customers for sending out referrals to bring new leads to the business. Most loyalty programs focus on the retention of customers to increase a business’s profitability. E-commerce referral programs target both retention and acquisition as they incentivize existing customers to bring new customers to the business.

Benefits of ecommerce referral programs:

It is four times more likely for people to make purchases from an unknown brand when referred from a friend or known one. Word-of-mouth marketing has a greater impact on customers as it comes from a reliable source and not directly from the brand itself. Below mentioned are few benefits that an effective ecommerce referral program offers:

  • Referral programs are easier to implement for e-commerce stores. With the help of referral program software, ecommerce stores can now easily link referral schemes to their site, without having to begin from the grassroot level.
  • Referral programs, unlike other marketing programs, are cost-effective. Customers love sharing and bragging about their good experiences. Referral programs are solely based on this one key factor of word-of-mouth marketing. 
  • The feedback adds to the goodwill of the company, on which other customers can rely. It is easier for brands to get their customers to leave a good review after a satisfactory shopping experience when they are already familiar and emotionally invested in the brand.
  • Ecommerce referral programs create a stronger base of return customers. In cases of incentives or bonuses that involve a return discount, the brand already gets assured of the impact of the business on the customer. It ensures the creation of repeat customers in the process, which is profitable to the business.
  • It is no secret that referral programs build trust and loyalty. Referrals, especially when coming from a close friend, are extremely trustworthy. It instantly creates a fine image of the brand in the mind of someone who hasn’t even purchased from the brand yet.

Strategies to launch Referral Programs:

  • Before starting out with any process, it is imperative to understand why your brand needs a referral program in the first place. Beside the very obvious reason of strengthening your customer base, the goal and the motive truly needs to be recognized. 
  • It is extremely crucial to have a message that can be well perceived by the target audience. Your motive and goal should not only be clear to you but your audience as well. It is important to have a referral program that the customers can easily understand and operate through.
  • The most important step to strategizing a referral program is choosing the correct incentive. For this you should thoroughly analyze the customer base as well as their buying behavior and previous purchases.
  • Irrespective of the fact that referral programs almost get the marketing job done by itself, it is crucial to spread the word no matter what. Send newsletters, personalized emails individually along with promoting your program on every social media platform.
  • Explain the scheme to your workers, train them well.

Examples of ecommerce referral programs:

Starbucks- Starbucks has definitely taken its coffee game one step ahead with a very effective referral program. Discontinuing its pre-existing referral program back in 2016, the brand came back hitting a massive success, close to owning a multi billion dollar franchise in today’s marketing arena. Emphasizing on creating and maintaining a standard of sophistication, this brand beautifully identified its target audience by coming up with an incentive of “Gold” with the combination of a visual showcasing two coffee mugs. On referring the program to a friend and making them sign up, the customer gets 6 stars along with incentive and free drinks on birthdays. 

Amazon Prime-  The world’s largest retailer established an empire worth 1.7 trillion dollars, implementing one of the best and strategically designed referral programs, as this huge retailing giant identified the importance of customer reference as one of the most effective customer acquisition channels. The brand has successfully designed a referral program that is meant to feel personal and is extremely feasible. From sending out referral mails to enabling the use of exclusive products for clients who do not have prime membership, the brand has perfected their referral game. Amazon has set its very own benchmark by introducing the first ever double sided incentive program, where both advocate and the friend are rewarded for engaging in the referral program. Conquering the ecommerce department, the brand’s app is already ranked first in app store and is rewarding $10 to customers who are using the mobile app for the first time.

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