Customer Referral Program in eCommerce

Customer Referral Program in eCommerce

Customer Referral Program in eCommerce

Sales gurus have always taught us that as a business you need to focus on

  • first getting a customer,
  • then getting them to buy again,
  • and then getting them to refer others.

Each one of these steps helps in reduction of cost of sales per revenue metric. Since customer referrals are so important, they have to be thought through strategically.
eCommerce store owners sometimes tend to concentrate on the tactic of a referral. There is also a confusion between customer referrals and affiliates. This blog post lists some ideas on how to structure your referral program and try to link the tactic back to a strategy.

Why are customer referrals important?

  • Customers that come through referrals are generally prequalified and ready to buy.
  • Referral customers motivation to buy often times is not the discount and hence also offer a higher lifetime value.
  • If you have not paid for the referral they are free to acquire.
  • The referring customer has a reason to be pleased with what you have to offer.

How would a referral look like – or how do I ask my customer to refer?

  • Social share
  • Email
  • Review and rating on your site

It is not always a pure financial reward

Most sales people feel that what motivates them will motivate others. They offer a financial advantage to a customer to buy their referral. This probably works for selling at the low end or to people whose primary motivation for purchase was financial. Jon Jantsch the Duct Tape Marketing guru and a huge referral advocate says : “The problem with this approach (offering financial benefit for customer referral) is that it forces the customer into making a financial decision when referrals are fundamentally social. It forces the customer to think ‘what can I get’ rather than ‘what can I give'”

But thank the referrer

Even though it may not be financial, learn to thank the referrer.
Editors Note : A future blog post will cover this topic.

Get innovative

customer referral example
Example referral program : B Dancewear’s “Dancer of the month”.
Travis Marziani reports that this tactic has generated huge referrals. Imagine you are featured on a article – you are obviously motivated to share it. The blog is on the home page of the eCommerce site. Great free advertisement for the dance clothes store.

Customer referral as a sole sale strategy

OnePlus gives exclusivity to a referred customer. You can buy a new model before it opens to the public, only if you have a referral key from a previous buyer.

Gamify your referral program

Gamification is a good way to get a customer referral program working. Promote the game among your customers as well as on the site.

Games could be as simple as take a selfie with your product and upload to your fb page. The picture that gets the most likes or shares gets a prize.

Reward can be a charitable donation

While a financial reward may not be the right motivator for a customer referral, try using a charitable donation to reward your customer for a referral. Select a charity that may be right for your audience.

Email customer referral program a few days after the purchase

Not a one size fits all email campaign but focused on the product that was purchased. Find out how they would refer you on email and make it easy from the email to act. For example, if you are selling fashion a pinterest page you create for that line of fashion or a blog. Or a link to write a review.

Segment your customers (even for referral)

Segment based on first time vs repeat customer, no of items purchased, type/price of items purchased, etc. Based on this information, set up referral campaigns. For example, if you feature a customer on the site, you might want to start with someone who is a regular buyer on your site. If you are looking at gamification, a younger audience may be a better target.

Track the success rate of each customer referral tactic – right down to the conversion

There is no magic formula that applies to all – you need to find what works for your store and audience. Hence it is necessary to track each tactic tried. Put your social share on different pages and see which one works via google analytics. Run a best liked photo campaign on your fb page and then run an ad campaign on fb targeting the likers and measure their conversion.

References – some of the ideas in this blog were influenced by :

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