Mastering Referral Program Marketing Strategy for Ecommerce

A well-executed referral program marketing strategy incentivizes your existing customers to become brand advocates and refer their friends and family members. For ecommerce stores, implementing an effective referral program marketing strategy can be a game-changer.

Not only does it foster customer advocacy and loyalty, but it also provides a cost-effective way to acquire new customers. After all, who better to promote your products or services than the people who have already experienced them and genuinely believe in your brand?

Still not convinced? Well, let’s look at a few examples that will provide you with valuable insights and inspiration to craft the perfect referral program and leverage the power of personal recommendations.

5 Examples of The Best Referral Program Marketing Strategies for Ecommerce Stores

Not only are referral programs easy to set up, but they also offer predictable customer acquisition costs. You decide the rewards that you’ll be giving to your referrer and the discounts you’ll be giving to your new users. Plus, you’ll face these costs only when you get a sale. This eliminates the need to invest in algorithms (like Facebook ads) without any guaranteed results, which often leads to higher acquisition costs. Especially in 2024.

Let’s explore 5 examples of the best referral program marketing strategies for ecommerce stores.

Example #1: Tabs Chocolate

Tabs Chocolate is a company that produces sexually enhancing dark chocolates made for couples. Their objective was to increase sales and brand awareness through influencer referral marketing since traditional advertising channels weren’t suitable for their adult product.

Strategy

• Organized a team of 100 micro-influencers in a Discord group, giving them access to Tabs’ top-performing videos for inspiration. They even created a landing page for their referral program with all the necessary information. 

• Each creator opened accounts on social media channels such as Instagram, TikTok, and YouTube, posting multiple pieces of content daily. This got them massive reach and engagement.

• Leveraged Social Snowball, a referral marketing platform, to streamline operations to:
  • Easily configure and organize multiple influencer programs with unique tracking and incentives.
  • Send all influencer payments with our bulk payments feature with just two clicks.
  • Configured a trustworthy attribution system to better track performance.

Results

The results they achieved were impressive. Within the first month, the content created by their affiliate creators received over 22 million monthly views. This led to a 17% increase in revenue, and a whopping 9.8x return on investment (ROI).

Not just that, partnering with Social Snowball solved all their issues around lost data and inaccurate attribution that previously hindered their referral programs.

Example #2: Latico Leathers

Latico Leathers is a boutique leather goods brand, founded in 1984. Their handcrafted bags have gained an impressive fan base over the years. However, with the rising cost of paid ads, they sought an alternative customer acquisition channel through a referral program to reduce their customer acquisition cost (CAC).

Strategy

Latico Leathers integrated Social Snowball, an automated referral platform, into their marketing tech stack.

• With us, they could easily integrate affiliate activation touchpoints in the post-purchase customer journey. This helps you add an affiliate coupon/discount code to your thank you page to encourage your new customers to promote you. Here’s what it looks like: 

• Started offering generous fixed incentives to customers when they are most likely to share. 

• Integrated Social Snowball with their Klaviyo and KnoCommerce accounts for sending automated emails reminding them about the referral program and collecting feedback through survey forms. 

• Analyze and iterate based on their feedback and improve the efficiency of the program.

Results

The results were impressive. A few months into using Social Snowball, Latico Leathers increased their referral revenue by over $18,000 at a 17.3x ROI. Their high AOV (average order value) allowed them to offer generous commissions while still generating revenue above a 15x ROI.

Example #3: Outway Socks

Outway Socks is a multi-million dollar ecommerce brand selling performance socks with a wide range of designs. Founded by ex-pro cyclist Rob Fraser, the company never disappoints in delivering continual innovation while perfecting their products. With the cost of paid ads nearly tripling in the past year, Rob realized it was time to explore new customer acquisition channels and see what other growth levers he could pull.

Strategy

After realizing that existing referral apps lacked the required functionality, Rob tweeted asking for recommendations. The top recommended app was Social Snowball. We were praised for our well-thought-out process from the merchant’s, customer’s, and Shopify’s end. Here are the key elements of their strategy:

• Social Snowball automated several tasks like turning customers into affiliates with their thank you page feature and regular email reminders. 
• Implemented a reliable attribution system, and managed the affiliate program – saving Outway countless hours.
• Instead of a percentage commission, Outway offered a generous flat fee per referral paid in cash, keeping it simple for customers to understand.

• An email was sent to Outway’s email list, informing them about the new affiliate program and directing them to a clean, simple landing page.

Results

The results were impressive. Over 9% of Outway’s total revenue started coming from referrals at a 5x ROI. Within 24 hours of launching, they had onboarded 1,000 affiliates, exceeding their initial goal for the entire first week. By the week’s end, over 5,000 active affiliates sharing their love for Outway across various channels.

Surprisingly, the average order value (AOV) of referral sales increased, contrary to the assumption that discounts would suppress it. Outway’s founder attributed this to the high-trust nature of referral sales. The 5x ROI was significantly higher than their initial 3x goal, making the program a resounding success. 

Example #4: Tailored Athlete

Tailored Athlete is a UK-based premium menswear brand focused on dress clothing for muscular athletes. Their objective was to diversify their customer acquisition channels and drive more revenue through a referral program. 

Why? Paid ads became too competitive, and their previous referral programs lacked proper incentives for their customers to refer friends at scale.

Strategy

Tailored Athlete’s Head of Marketing, Casey Parram, explored various referral and affiliate solutions before deciding that Social Snowball was the best fit. From the very first interaction, he found our customer service team to be genuinely invested in their success (which we are) – a rarity with other Shopify apps as he observed. Here’s the strategy they followed:

• They implemented affiliate activation touchpoints in the post-purchase customer journey using our Thank You page feature to offer commissions right after order confirmation.

• They created a minimalistic sign-up page to make the process easier. 

• Additionally, they offered a free shirt to one winner (amongst the ones who enter their emails and signs up as an affiliate).

• Offered cash rewards to their affiliates for every successful purchase through their unique Safelink. 

Here’s what Casey has to say: “Not a lot of other apps offer cash incentives, which has significantly improved our affiliate activation and retention rate.”

• Implemented a reliable attribution system to track organic sales and word-of-mouth referrals.

Results

After switching to Social Snowball, they saw a staggering 444% increase in referral revenue at over 10x ROI. Not only that, but the referral program also helped lower their overall customer acquisition cost (CAC) and consideration period as well.

Example #5: Goorin Bros

Goorin Bros is a family-owned hat company with a legacy dating back to 1895. They are known for their unconventional ideas and passion for craftsmanship. Their objective was to create a seamless onboarding experience for affiliates and referrers and drive incremental revenue through an omnichannel referral program.

Strategy

They decided to move away from traditional affiliate platforms that weren’t scalable. After trying out Refersion (an affiliate marketing management software), they found it lacked customizability and decided to try Social Snowball’s modern referral and affiliate program software.

• With Social Snowball, they automated the entire process of turning customers into revenue-generating affiliates with zero manual intervention. Here’s what Nini Nguyen, the Marketing Director of Goorin Bros has to say:

• The brand was very particular about the ease of the entire process and made sure all their customers could sign up and spread the word without jumping through hoops.
• They configured the right incentives that aligned with their products and their target audience’s needs.

Results

In just a few months, Goorin Bros onboarded over 30,000 new affiliates and drove $30,000 in new incremental revenue. Compared to their manual program, this automated affiliate program could scale better while delivering over 902% return on investment.

Best Practices and Tips

While every business is unique, adhering to proven best practices can help optimize your referral program and maximize its impact. Here are some valuable tips and strategies to consider when crafting your referral marketing approach:

1. Set Clear Terms

Word of mouth marketing is definitely a powerful marketing tactic, but it could backfire if there’s no clarity between you and your affiliates.

Clearly defining the terms and conditions upfront is crucial. What incentives will you offer to both the referrer and the referred customer? Are there any limitations or exclusions? What marketing channels do you want them to use?

Get your answers and lay out the rules transparently, to create a sense of trust and avoid any misunderstandings down the line.

2. Promote The Program Regularly

Let’s be honest, how often do you remember something that was mentioned to you once? Probably not very often. This is why you need to be consistent with promoting your referral program! 

How do you promote your programs? By Incorporating the referral program into your email marketing campaigns, and encouraging the sharing of the programs on social media by your team and current affiliates.

For instance, after signing up for the Latico Leathers customer referral program, the brand sends regular reminders to members with useful materials or information. They also talk about how much a customer affiliate can earn by promoting Latico’s products. Here’s one of their email reminders:

3. Gamify Your Program 

One of the best ways to increase engagement with your customer affiliates is to gamify the entire program. Here are a few things you can do:

• Add tiers within the program as per performance which will give them a sense of achievement when they move from one tier to the next.
• Give badges to each customer when they perform a certain task for a certain number of times.
• Give more attractive cash rewards and benefits once a person gets you a certain number of successful referrals in a month or a week, or whatever time period seems good to you. It’ll not just get you new business, but also improve your customer relationships.

Here’s how Divi, a brand selling hair care products, has divided their referral program into different tiers using Social Snowball. 

4. Send Regular Payouts 

No matter what you do, and how well you do it, if you don’t pay the people who are referring you on time, all your referral marketing strategies will go down the drain within a month. It’s not just a best practice, it’s your brand’s reputation at stake. 

However, if you don’t pay them on time, there’s nothing much to do about it because then you’ll lose their trust. And I think we both know that if a customer stops trusting you, they won’t invest their time to promote your products and get you sales. 

We know it’s complicated on your end as well since you’ll mostly be managing multiple accounts at a time and it gets difficult to pay everyone one by one manually. Your best bet is our ‘Pay in Bulk’ feature which lets you process payments to all the registered affiliates with just two clicks.

5. Protect From Coupon Code Leaks

Coupon code leaks have increased dramatically in the recent past and we’ve seen many ecommerce brands face huge losses for the same. We’ve heard of studies from our current customers who came to us frustrated with the rising software expenses and the hassle their CS team had to deal with just to ensure there are no leaked coupons floating in any site. 

Tumble, a brand selling home products, decided to switch to Social Snowball and safeguard their referral marketing campaigns with Safelinks.

Safelinks are coupon code replacements that allow affiliates to share a discount to their audience without the risk of a code leaking to a coupon site. They look like normal affiliate links and can be shared wherever your affiliates are sharing codes. 

Every shopper that clicks on a Safelink will have a single-use coupon code generated for them in real time when they land on your storefront. 

Here’s what Andrew Jetter, the Director of Growth at Tumble has to say about Safelinks:

3. Analyze Program Performance

Regularly track and analyze metrics to understand what’s working well and where improvements could be made to your marketing efforts.

You can easily check your metrics on your Social Snowball’s dashboard. Once you log in to the platform, your dashboard will show you metrics such as the total revenue you’ve generated through the campaign, the number of referrers or affiliates you have, the top-performing affiliates, and the number of referrals they’ve given you.

How to Implement the Best Practices? 

Implementing the best practices for a successful referral program marketing strategy can be a game-changer for your ecommerce business.

Social Snowball is a comprehensive platform that seamlessly integrates with your existing systems, allowing you to create a referral process that can turn your customers into motivated affiliates on automation.

Here are a few reasons why you should choose Social Snowball to build a successful referral marketing program: 

• The platform streamlines the process of onboarding new affiliates by automatically generating unique codes or referral links for every customer post-purchase.
• You can create multiple referral programs tailored to specific customer segments and offer incentives like cash, store credit, or free products.
• The bulk payment functionality streamlines affiliate payouts, allowing you to pay your affiliates with just two clicks.
• Our Safelinks feature generates unique, single-use discount codes for every customer who clicks on an affiliate link. This is a great way to maintain safety along with ease of use and scalability.

Conclusion

Customer referral programs are a scalable, low-cost strategy for attracting new leads and increasing your user base. Offering incentives to happy customers to advocate for you creates a win-win situation for both parties while increasing loyalty within your current customer base.

However, managing a successful referral program can be a complex and time-consuming endeavor, requiring meticulous tracking, analytics, and optimization. This is where Social Snowball comes in – a comprehensive referral marketing platform. It allows you to effortlessly create and manage multiple customized referral programs, offering tailored incentives to loyal customers as well as new ones.

The platform’s innovative features, such as automated affiliate onboarding after their first order, seamless payout management, and fraud prevention with Safelinks, ensure a seamless and engaging experience for both your customers and your business. Start your free trial now!