Last Updated: December 2023
Are you an e-commerce store owner in search of generating leads for your business in a budget-friendly manner? Well, then E-Commerce Referral programs are the marketing strategy that may be the best fit for you.
Do you know why? As per data, 54% of marketers say referral marketing has a lower cost-per-lead.
Referral programs, also known as refer-a-friend programs or affiliate programs, are word-of-mouth marketing tactics, where your existing customers informally market your brand to attract new customers. You can return the favor to the customer by giving additional discounts, gift cards, credit points, free products, free subscriptions, etc. So, it is a win-win situation for both your business and the customer.
To give you more insights into this budget-friendly marketing strategy we are sharing with you:
- Why Does Your E-Commerce Store Need A Referral Program?
- 10 best e-commerce Referral Program Models for 2022
Why Does Your E-Commerce Store Need A Referral Program?
Referral programs are already a tried and tested marketing strategy. Let’s have a look at the following statistics:
- Referrals account for 65% of companies’ new deals.
- In the US, 49% of shoppers get introduced to brands or products/services by their family members and friends. (Miller, n.d.) 65% of companies.
- For every 1 happy customer, you also get 9 referrals. (Ong, 2020)
- During the first wave of lockdowns, referrals grew by 425%. (King, 2021)
- 60% of marketers credit referral marketing with generating a higher number of leads than other advertising channels. (Nielsen)
The statistics clearly say that implementing a goal-oriented referral program for your e-commerce business can generate sales. Apart from this revenue, certain factors make e-commerce referral marketing so powerful. They are listed below:
1. Simple to launch and easy to use
Simplicity is the factor that accounts for the success of referral programs. Customers find it easy to share their favorite e-commerce store with friends and family. From your end, all you have to do is provide a QR code, a coupon code, or a link they can share through social media or email. The referee can visit your store, subscribe, or simply purchase your products by clicking on the link.
2. Improves Customer Retention and Loyalty
Since a referrer who is a part of a referral program is getting additional benefits, your customer retention rate will go high. In addition to that, the referee may purchase from you since someone known introduced your business to them. Consumers trust their friends’ recommendations seven times more than conventional advertising.
Once you launch your e-commerce referral program, it will go on automatically and you can enjoy the benefits as time passes. No need for any update, except for the incentives you are planning to offer.
4. Increases your reach
Normally, marketing strategies require a lot of time and money. But once you implement a referral program for your e-commerce brand, you can sell your brand name with ease, as the word-of-mouth technique is so powerful and can spread like a forest fire if your product and services are the best.
Now that you have got an idea regarding the benefits your business can achieve through e-commerce referral programs, you may be planning to launch one! In order to give your further insights into how to design and develop an ideal referral marketing program for your e-commerce store, we are providing below 10 best referral program marketing examples that actually gave results.
Have a look!
10 best e-commerce Referral Program Models for 2022
The features of these referral programs can be used as a reference while developing a referral program for your e-commerce store.
Dropbox is a file hosting service that helps to store your files in one place. As you know, what customers actually need in such a service is cloud storage space. That’s exactly what Dropbox rewarded its customers in the referral program – providing them with extra storage space. Here is how their referral program worked.
- Dropbox Basic accounts get 500 MB per referral and can earn up to 16 GB.
- Dropbox Plus accounts get 1 GB per referral and can earn up to 32 GB.
A two-sided reward policy is what made Dropbox referral program such a hit. Both the referrer and referee would get 500MB of extra storage. Clubbing their referral program with the onboarding process made the whole process user-friendly for customers. They also send gratitude emails to their customers for choosing their ‘Invite a friend’ option.
The outcome of Dropbox’s referral program:
- They got a 60% increase in user signups, with over 2.8 million referrals taking place in the first 18 months. Today, 35% of all signups come from the company’s referral program.
- By early 2010, Dropbox users were sending more than 2.8 million invites per month to their friends. The company had grown from just 100,000 users to 4,000,000 in 15 months — 3900% growth.
Link to referral program: https://help.dropbox.com/accounts-billing/space-storage/earn-space-referring-friends
Paypal is an online payment platform through which you can send and receive money. They have started a referral program as part of expanding their customer base. This platform also gives what customers need as a reward. Since it is a payments platform, the rewards are in the form of money itself. They also give two-sided incentives wherein, both referred, and the referee would get the benefit.
They started by providing $20 for both sides. However, the current rewards are:
- Once the referee spends $5, the referrer will get $10 as a reward in their account.
- A maximum of 5 referrals can be done by one person, capping the reward at $50.
The outcome of Paypal’s referral program:
Link to referral program: https://www.paypal.com/ca/webapps/mpp/invite/terms
Tesla– the name needs no introduction. Their clean energy solutions and electric vehicles were totally new to the market. Tesla’s referral program has evolved through time. They have changed their referral rewards at least 9 times so far. The referral rewards shown below are the ones that were top-rated by customers.
- The first version of the referral program gave referrers $1,000 credits in their Tesla account and gave their friends $1,000 off the purchase price.
- Later it changed to promising new Roadsters for top referrers and up to six months of free Supercharging.
- Again they changed the reward to 1,000 Supercharging miles for both referrers and referees.
- Currently, their active referral plan is limited to solar roofs and solar panels. The referrers and referees can earn $500 for Solar roofs and $300 for Solar panels.
The outcome of Tesla’s Referral Program:
Link to referral program: https://www.tesla.com/support/referral-program
Uber is an American company, that offers a range of services. Its ride-hailing app has gained great acceptance among its customers. As part of its brand promotion, Uber started their referral program. They have two independent referral programs- one for riders and one for drivers. Let’s see how they differ:
- Uber referral for riders – Initially, they offered a two-sided reward of $10. Later, they have altered it to $30 for both referrer and referee. Now they are giving free rides to both parties as a reward.
- Uber referral for drivers – A driver can refer someone by sharing their personal code, and when the referred person becomes a new driver, the referrer earns a bonus reward. Initially, the reward ranged between $200 and $500 for both. But, now the referrer could earn as high as $1500 and the referee could earn $500.
This referral program of Uber has made its customers and contractors happy. Both parties acted as word-of-mouth marketers; riders to avail services and drivers to develop their business. The number of referrals is capped to one referral per account.
The outcome of Uber’s Referral Program:
Uber’s double-sided referral program earned them 12x ROI.
Link to referral program: https://help.uber.com/driving-and-delivering/article/referring-drivers-and-riders
Airbnb is an online marketplace specially dedicated to lodging, mainly homestays, and vacation rentals. Even though this company started in 2008, the brand became popular in a very short time. One of the reasons for its success was its referral program. This referral program was also two-sided rewarding. The details of the referral program are as follows:
- A customer can refer his friend through a referring link. After successfully signing up and booking lodging, both parties will get $25 worth of travel credits.
The outcome of Airbnb’s Referral Program:
The program has had a dramatic effect on Airbnb’s 1st time booking rate. The company reported a 900% year-on-year growth since the program went live, according to ReferralCandy. A key reason for this was customers referring more people. For e-commerce companies, the lesson is clear: referral programs need time to show results, analyze customer data, and improvise until you find something that works. Secondly, get the messaging clear.
Even though this referral program is currently shut down, it is a successful model for e-commerce platforms to learn from.
Link to the referral program: https://www.airbnb.co.in/help/article/2269/airbnb-referral-programme-terms-and-conditions
Leesa mattresses are well known for their goodwill due to their 100-night trial, social impact programs, and incredible product ratings. They are the producers of custom-made mattresses. For every 10 mattresses they sell, 1 bed is donated to a child in need. They have an amazing referral program designed for them. The key takeaways of this marketing program example are given below:
- First of all, the customer has to sign up and become a ‘Leesa Ambassador’. A unique link will be assigned to the customer, and it should be shared for the referral. Once the referee uses the link and purchases a mattress from them, the referrer will be awarded a $75 reward directly to their Paypal account.
Even though there is no limit is the number of referrals a customer can share, only one referral can be done through a particular link.
The outcome of Leesa’s Referral Program:
Leesa has earned over 3,000+ Ambassadors (existing customers referring Leesa to their friends). Their referral program drives more than 33% of their sales today.
Link to the referral program: https://www.leesa.com/pages/leesa-referral-program-terms-conditions
7. Frank And Oak
Frank and Oak is a premium apparel brand that started in 2012. Rather than a referral program, what they are offering is an affiliate program. In comparison to a referral program, affiliate program rewards are generally cash payments. The details of this affiliate program are listed below:
- It’s free to register for this affiliate program and payouts are done on a monthly basis.
- Once a customer registers and refers, for every new customer order, 10% commission is given and for repeat customer orders 5% commission is given. Apart from that, the referee would also get a $25 discount.
The advantage of this program is that a customer can refer and earn without any restriction on the number of referrals. Customers would also be enthusiastic as they can earn a monthly reward.
The outcome of Frank and Oaks’ Referral Program
Almost 3% of Frank and Oak sales come through its referral program.
Link to the referral program: https://www.frankandoak.com/pages/affiliate
8. Koodo Mobile
Koodo is a Canadian company offering prepaid, postpaid, and home phone services. They started their referral program as a solution to bringing in new customers in a cost-efficient manner. This is also a two-sided reward program. The details of this referral program are given below:
- The referrer will get $25 off on their Tab and the referee will get $25 off on their first bill.
This referral program was a success as Koddo enabled a seamless experience for signing up and referring.
The outcome of Koodo’s Referral Program
Link to the referral program: https://www.koodomobile.com/en/help/refer-friend
Revolut is a London-based fintech company that aspires to be the all-in-one financial super app. They provide a referral program for their existing customers, which is a two-sided referral program. The reward details for this referral program marketing example are as follows:
- The referrer will get a cash reward when they sign up and the reward amount may vary.
- The referee will get existing introductory Revolut offers and cash-backs.
The outcome of Revolut’s Referral Program:
Revolut has reported a 700% increase in the number of customers acquired through its referral program between 2018 and 2019.
Link to the referral program: https://blog.revolut.com/become-a-revolut-affiliate/
10. T- Mobile
T- Mobile is a famous mobile communication brand operating in various countries. In 2020, it merged with another wireless company, Sprint. Together they are providing a referral program now. The details of the referral program are:
- The referrer can earn $50 per referral who joins, for up to $500/year paid via Virtual Express Prepaid MasterCard.
- The referee will get additional savings by joining through the referral link.
The outcome of T-Mobile’s Referral Program:
T-Mobile hasn’t shared accurate results, but the share price rose from US$40-US$60 in early 2018.
Link to the referral program: https://referrals.t-mobile.com/
Some of the main problems e-commerce businesses face are customer acquisition and customer engagement. E-commerce Referral programs are the all-in-one solution to these problems, and that too, in a cost-effective manner. The referral marketing program examples provided in this post are of businesses that have gained profit, customer base, and sales through this medium. So, what are you waiting for? Develop a referral program best fit for your e-commerce platform and leverage your profit margin!
And most importantly, Referral programs need to be backed by high-quality customer support for businesses to achieve their objectives.
Helplama is a leading customer support provider that can help you build and scale a fully-functional customer support team on demand while avoiding the costs of hiring and training. We have solutions for every need and budget, covered by a comprehensive Zero Risk guarantee. Also, try the Helplama Helpdesk – the customer service software that can help you automate and scale your customer support.
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