Ecommerce Referral Programs Guide: Boost Customer Retention

Last Updated: February 2024

The growth of every business, irrespective of its size, depends on its customer growth. While acquiring new customers is critical, another equally important factor in a business’ success is customer retention.

Importance of Referral Programs in Customer Retention

Customer retention can be a fantastic marketing strategy to help businesses retain customers and stay loyal to their brand. Customer retention strategies are implemented in the post-sales period to engage with customers, so they continue buying products and services from the business.

Sometimes businesses may tend to spend most of their resources looking for new customers. In such cases, they may overlook or not fully understand how powerful a tool customer retention can be. No matter which customer retention strategies are used, the final goal is to ensure first-time customers become repetitive customers. The best way to achieve this is by using a well-thought referral program.

Here are some reasons why referral programs are essential for a business’ customer retention strategies:

As a Cost-Effective Marketing Strategy

Finding new leads and converting them into customers can get expensive for a business. Customer retention using a referral program can be one of the most cost-effective and inexpensive solutions to tackle this problem.

Popular research revealed that loyal customers are 23% more likely to buy from a business compared to other customers. Since they like the brand’s offerings, they speak positively about the brand among friends and family.

Retained customers are familiar with a business’ products and services and how valuable they are. They tend to keep going back to the brand, buy often, and spend more. A referral program that rewards the customers well encourages them to use the program often.

To Boost Sales


According to a study, 20% of a business’ existing customers contribute to 80% of the company’s future revenue. The results of the research also revealed that when a business increases its customer retention rates by 5%, its overall profits shoot up from 25% to 95%.

When a business’ revenue is fluctuating, it is usually not considered a sign of growth. Having a loyal customer base along with a referral program allows a company to earn a stable revenue.

A referral program can be a motivating factor especially since the customer knows they have a stake in a business’ success. When a customer refers the brand to friends and family, it can lead to a sale. If this doesn’t happen, the customer may lose out on the benefits of the referral program. The customers’ excitement of participating in a rewards program can help boost a brand’s sales.

To Build a Brand Image

Building and maintaining a positive brand image is essential to stay on top of the customers’ minds. In such cases, the company’s products or services will first come to the customer’s mind when talking about a specific category or industry.

When existing customers are happy with the brand, they share the information with family and friends, thus increasing brand awareness and reach.

In a referral program, when customers are given chances to win rewards or prizes at regular intervals, it persuades them to refer the brand to others.  If the rewards are worth the effort, they could be inclined to refer more people, thus helping the brand to build an image of trust, and reliability.

Also read: What is a Good Referral Rate – Do Referral Programs have Benchmarks?

How to Use Referral Programs to Increase Customer Retention for an Ecommerce Store


Referral marketing is a powerful tool, and it comes with a lot of perks. Referral programs can turn customers into brand advocates and help boost sales.

Usually, potential customers tend to seek the opinions of family and friends before making a big purchase. When a product or service is recommended by a friend, the chances of a potential customer making the purchase are significantly higher.

The success of a referral program depends on the kinds of rewards it offers. It’s critical to set up the right type of referral program to reap its benefits. A well-thought-out strategy is essential so a business can improve its customer retention with a referral program.

Understand Customer Preferences and Expectations

For an eCommerce store, achieving the intended sales targets is essential for its success. The best way to retain customers and encourage them to make purchases is by offering rewards.

Ecommerce platforms can offer innovative rewards to their existing customers and stand out from the rest of the competition. To ensure the effectiveness of a referral program, customers must be involved in its creation process. For example, a survey can be conducted to understand customers’ interests and preferences. If the right rewards are offered, customers will use the referral program often and bring in more potential customers.

Ease of Use

No one likes a referral program that’s complicated to understand and use. One of the most crucial features a referral program must have is simplicity and ease of use. Customers must know how the referral program works without any hidden conditions or clauses.

Reward Customer Reviews

For an e-commerce store, customer reviews can contribute significantly to attracting new leads. Potential customers will develop trust in a brand depending on its review. Brands can request existing customers to write a review. This makes customers feel their opinions are valued by the brand. In turn, rewards can be offered to these customers, thus enriching their interaction with the brand.

Use Gamification Techniques

Brands are increasingly using gamification to interact with customers and encourage participation in their rewards program. Gamification makes the rewards process gratifying for participants as they engage with the brand and sign up or make their first purchase. An element of competition in the process and prizes at regular intervals also act as motivational factors.

Gamifying the referral program increases brand engagement and drives more customers to the eCommerce store. The concept of gamification appeals to the competitive nature of today’s customers as they look for recognition, appreciation, and the chance to earn bonus points.

Update and Upgrade Your Referral Program Regularly

While creating a rewards program is essential, it is equally crucial to keep it relevant. Keeping track of customer reviews on social media platforms can help brands understand what their customers think and feel about the brand. Brands can also use this information to update their referral programs and offer unique, incentivized offerings to their customers.

Some brands may even offer personalized rewards to improve customer engagement and stay with the brand longer.

Offer Rewards to New Customers


In the referral program, brands can also consider offering rewards to new customers. When a brand provides bonus points or discounts to new customers from the beginning, they feel appreciated. They may even persuade others to try the brand’s offerings due to this customer service experience.

With several e-commerce platforms and their wide variety of products and services on offer, the tool of advertising is not enough to give a brand its desired results. A referral program can increase sales and customer retention. Without using the right referral program strategies, it is tough for a business to enjoy customer loyalty and business growth.

Customer service and support are critical components of a successful referral program. At Helplama, we provide your company access to trained and professional customer support experts. Companies can get the kind of support they need. Whether it is email support, live chat support, or phone support, they are available at the most competitive prices. Contact us today for more information.

Customer Service

Decision Maker App

Automate Support


Automate 100% of your common procedures

Group 6154
Group 6154
Order delay monitoring
Group 6154
Subscription modifications
Group 6154
Missing orders
Group 6154
Subscription cancellations
Group 6154
Much more
Claim Your 6 Months Of FREE Credits Now


Claim Your 6 months of FREE Credits Now!

Get the code. Use anytime in the next 6 months.

Helplama Helpdesk is now!