E-Commerce Referral Program: The Secret to More Sales

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E-Commerce Referral Program: The Secret to More Sales

What is the secret of a successful e-commerce referral program? Right off the bat, we’ll just lay it out there.

There are 2 key principles to drive more sales with your referral program – share volume and consistency.

In other words – the average number of people your customers refer to you and how often they are willing to do it. The combination of both these factors could have very beneficial results for your business and could very well determine the potency and success of your referral programs.

Most e-commerce stores do a lot to carefully consider their rewards and make sure to set up their referral pages in a way that aligns with their brand – but one way or the other – they all essentially end up looking the same. Even promoting the same message and more or less the same reward. In other words – they are driving more fatigue and apathy in customers instead of excitement or enthusiasm.

(Despite all considerations – most e-commerce referral programs end up looking the same)

Even when e-commerce stores do get it right and manage to genuinely excite customers to make more referrals – the share volume and recurring consistency required to drastically affect bottom-line revenue remains amiss. The program sees good results – but they stay far from being great.

So what can you do, as an e-commerce store, to change this? How do you achieve not just guarantee engagement on your referral program but also a high share volume and repeat referrals from the same customer? Read on to find out.

Gaining higher share volume per customer

At its simplest – share volume is the number of referrals a customer makes per referring session. And the hard truth is – that number isn’t very high. It means you put all this effort into curating and promoting the right referral campaign to your best customers and still only manage to get two to three referrals, at most, from them. It would be acceptable if 71% of your active customer base was not just blatantly ignoring all of your word-of-mouth promotions.
So the only way to exceed or impact your growth via referrals is to increase the number of referrals being made per customer. Vis-á-vis ‘share volume’.

(More Referrals = Better Rewards. The Milestone Referral Program)

The easiest way to achieve this is to have an unbelievable (read desirable/aspirational) reward for your top referrers. And have them compete for the unclaimed prize. Programs like these that level up the rewards based on how many referrals a customer makes are called ‘Milestone’ referral programs. And its potential rests in the success of online newsletters such as the Hustle, or e-commerce brands like Harry’s have witnessed first hand.

When done right – milestone referral programs could drastically increase your share volume per customer. And while it could still be a hit and a miss depending on how attractive your rewards seem to your customers and how expensive your increasingly valuable rewards get (Morning Brew, at one point, offered an Apple Macbook Pro to its highest referrer) – it’s highly profitable in the long run and miles better than the over-saturated “15$ or % off” scheme most e-commerce stores default to before calling it a day.

Driving consistent referrals per customer

(Capped rewards disengage motivated users from coming back)

A straightforward way to curb this is to employ a milestone referral program again that rewards repeat referrers and chugs out better rewards at each milestone. But it’s not a definitive solution for e-commerce sites that either cannot afford or wish to start a milestone program. The solution? Timed referral campaigns.

E-commerce sites are extremely proactive with their seasonal discount campaigns or time exclusive offers to push faster conversion of casual shoppers. Small sites like PrettyLittleThing or giants like Amazon, both use this strategy to push faster purchases and rack up overnight sales. And this strategy can be applied to referral programs as well.

(Ever so often, promote timed offers to drive more referrals instead of conversions)

Using the same model to offer timed discounts, refreshed rewards, or bonus pay-outs in exchange for referrals can greatly entice customers to keep coming back to make new referrals. 

Functioning the same way as any seasonal promotion – reward customers for making referrals instead of direct purchases. This modified strategy plays out a lot like milestone referrals in increasing share volume but also makes customers come back to drive consistency in your referral program performance.

Unlike milestone referrals, it can also save your business a fortune on sourcing, promoting, and tracking valuable reward payouts to top-performing customers.

Sharing Volume + Consistency = Successful Referral Program

Now that we have dived into both principles of a successful referral program and learned how to achieve each independently – you should know that it’s probably still not going to drive the results you want. And the prime reason for that is that people just do not engage with referral programs. It can easily be chalked up to customer fatigue and apathy towards such programs – but the real reason is all too common for us to be aware of: the sharing process, aka how people can make referrals on your site, sucks.

Your customers are either stuck sharing a referral link via socials or a ‘mailto’ form field that expects customers to input a list of email addresses, separated by a comma. The former fails because instant messaging on social platforms is not exactly an ideal place to archive recommendations made by friends to revisit and purchase from later, and the latter is just a diabolical waste of your customer’s precious time.

(Forms that make your customers do all the work are designed to fail)

The customer’s experience while engaging in your sharing process is at the core of every successful referral program. Your best customers want to share about you because of a great shopping experience – but if that experience loses its momentum while making a referral – it breaks and disengages their motivation to do so. Even your most highly motivated customers will never engage with a referral program that not only expects them to recall essential contact info of their peers but also to type it down meticulously so as not to make any mistakes.

It’s almost silly for e-commerce stores to expect this given the varied combination of characters an email address can be. The only (and worse) alternative is for customers to constantly switch browser tabs (read exit your website momentarily) to get the contact information they need to fulfill your sharing process and make a referral. Something you need, more than them.

Even if you implement the best milestone program to push for higher share volume or drive consistency via promotional bonuses for referrals – your customers just won’t engage with a sharing process that’s non-intuitive, poorly designed, and overall a hassle to get through. And even if some of them do – they are definitely not repeating it over and over again.

Thankfully – the solution is simple: an ‘Add from Address Book’ option that rests on your referral form and lets users simply select contacts off their preferred email address books to make a referral.

All within the referral page of your website – with no nasty redirects, no need for memory recall, no tab switching, no typos, and with just a handful of button clicks.
It makes the whole sharing process highly efficient and non-time consuming for customers to engage with over and over again.

When making a referral to your business does not require an investment of time, energy, and effort from your customers – it becomes more accessible and doable for a repeated number of times.
Thus directly having an impact on the share volume and consistency of your referrals.

(A contact picker saves time and improves your customer’s sharing experience)

A contact picker increases share volume by loading a populated list of contacts for your customers to choose from (as opposed to recalling a handful from memory) and enables referrers to repeat the process by making it super simple and fast to do so. When set up to extrapolate key contact information – it can even personalize your referral emails to give you better email open rates and faster conversions of new referrals.

Wrap Up

While e-commerce referral programs can be of all shapes and sizes – The importance of an optimized sharing experience cannot be understated in driving its success. So go ahead and carve out your unique propositions to drive more referrals, more frequently – but be cautious, conscious, and extremely considerate when designing your customer’s sharing experience to guarantee success. And speaking of success, check out what strategy today’s successful e-commerce owners implemented while starting their business.

Author: Nader Rehaan Mohammed

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