Guest post by Omnistar 

A referral program is one of the best things you can do for your eCommerce website. Not only will it increase your traffic, it can dramatically increase your sales.

Referral programs are effective because it utilizes the power of trust. With it, your customers can refer their family members and friends to your site. Since the customer is closed to them, the response is often better than having a customer service agent cold call someone.

Also, it can be powerful once launched. The power comes from the capability of each referral to refer even more people. As more people know about your site, the more traffic you get. This also means that you have a greater chance of closing a sale.

So how can you create a referral program? In this article, you’ll learn the 10-step process on how you can set up a referral program in your online store. 

1 - Set a Goal

It starts with a goal. Why do you want to have a referral program in the first place? Is it to build traffic to your site? Is it to increase shares? Is it to get more customers?

Your goal will ultimately dictate the type of referral program that you should set up.

So if you want to have a referral program with traffic as a goal, you’ll want to reward anyone who refers other people to your site. For this, a referral program which allows customers to key in the email addresses of their family and friends is ideal.

But if you want to get more sales, you may want to tweak the referral program to only reward people who bring in new customers. This way, a purchase is necessary for the referral to be counted.

But if you like to build your social presence, you can just run a sharing campaign. This is where you reward anyone who shares or engages with your site. This allows you to get traction in the social space and allows other people to find you as well.

As you can see, the type of program that you should create depends on your goal. So choose your goal with care. Do it before you launch your program so that it is aligned with your objectives.  

2 - Choose an Incentive

A referral program will not be complete without an incentive. Incentives are the rewards that you give your prospects every time they complete your desired action. This desired action can vary depending on your goal. This can be a referral by inputting the emails of people that they know. It can also be a social share. Or it can be a referral of new customers to your site.

Ideally, you’ll want an incentive that’s attractive to your target market. This is where you try the achieve the balance between having an incentive that will not make you lose money but it will be attractive enough that your market will stop, pay attention and sign up.

In fact, some companies are willing to lose money to get referral users. Take PayPal for instance. They have given away $50 for every referral back in the old days. Did they lose money? Yes. But they are willing to lose that money to gain more users on their website. The result speaks for itself. Today, PayPal now has a billion users all over the world. That shows how worthwhile their referral program has been.

Now, incentives have different types. It can be cash (like what PayPal did) or you can give a discount code or a freebie. What you should choose will depend on what’s attractive to your target market. Don’t be afraid to test incentives to see what works best.

3 - Create Your Referral Landing Page

Your referral landing page is where your prospect sees all the details about your program. This should include the reward as well as the mechanics on how to join.

However, you should not follow the normal route of just displaying the mechanics and the reward. You can get creative. You can implement a point system for all of your referrers. This way, referrers get to unlock certain rewards based on the number of their referrals. Also, you can implement contests. This is where you have different rewards for referrers that perform the best.

For this, you’ll need referral software. This will allow you to automatically generate the referral landing page as well as automatically allocate prizes based on your rules.

4 - Test the Call to Action

Creating the landing page is only one part of your referral program. The other part is about driving traffic. For this, you need to use marketing methods such as Facebook advertising, email marketing and influencer marketing.

But more than marketing and traffic, you should learn to optimize your program. This is where you test certain calls-to-action in your pages to see what works best for your target market.

This is where the headline testing begins. You now start changing the headlines like "Get [REWARD]", "Refer-a-Friend" or others. Try to see which type of headline works best for your target audience.

In my experience, those that show the reward works best. However, for some niches, being too reward-focused can be quite overwhelming for them. So you may want to simply state your program as a way for them to refer people that they know.

5 - Test the Appearance of Your Referral Program Ads

How you promote your program is just as important if you want to get the most out of it. And I am not talking about the process. I am talking about the appearance of your ads on your own website.

Here’s the thing. People tend to respond more to visual cues in 2018. There’s a reason why more people respond to videos and images on Facebook and why visual-oriented social platforms such as Instagram, Snapchat, Pinterest and Youtube continue to thrive. And this is because visuals win.

True enough, I found that images work best when it comes to referral program promotion. I tried having a pop-up with just text compared to the one with an image. The one with an image wins because it manages to get more clicks and conversions.

6 - Test Incentives on Different Markets

One of thedilemma of eCommerce sellers, when they create a referral program, is who to reward. This is because there are two types of people that you can reward in a referral program: the referrer and the friend.

The referrer is the actor. This is the person who sends people to your website. They can do this by sharing your site to the people that they know or by simply liking your page or doing some action that can support you.

The friend is the person that finds your site because of the referrer. Usually, this person needs more than just a referral to take action. They need a reward too. If they find that the ‘being referred’ is a worthwhile action. They’ll do what is asked just to get that reward.

Now that you know the two of them. You have to decide. Which will you pick and what type of reward should you give them? Should it be the same reward? Or will you give more to one party? This will depend on the nature of your site and its target market. If you don’t know the answer, it may be best to test it.

7 - Create Exclusive Incentives for Certain Markets

The people on your website can vary. There are buyers, elite buyers, subscribers and prospectors.

Buyers are those that have bought from you. They are your customers. However, they are not the most loyal. They may have bought from you once or twice.

Elite buyers, on the other hand, is like a brand ambassador. He had bought from you multiple times and have even bought expensive items on your website.

Then there are subscribers. These are the people who have subscribed to your site for deals but have not yet bought anything.

Lastly, there are the prospectors. These are people who have visited your site but have not bought from you or subscribed to your list.

You’ll want to approach these markets with a different reward. Test which ones will convert for you the most. The best choice for me are elite buyers. But that doesn’t mean that you should ignore the other people on your website for they can also be wonderful sources of referrals.

8 - Create Exclusive Incentives for Influencers

One of the ways to get on an influencer’s good side is to give them exclusive rewards. You may have seen several influencers on Youtube give you an exclusive discount code on a certain store with their name. This is an example of an exclusive discount code.

Why do these codes work? Well, influencers love them because their followers can get a discount. By sharing these, they are actually giving value to their followers.

And the best part? They also get to promote their brand. Since your discount code will have their name on it, it adds to their credibility. It shows that brands are supporting them as an influencer.

This is by far the easiest way to get an influencer to promote you. It is far better than asking them for a link in which they will not get anything in return. Sending them an exclusive discount code is easy. You can automatically generate it and you can link it to your referral program. This way, you can tap the influencer’s followers to increase referrals to your site.

9 - Optimize Referral Program Emails

What is the quickest way to inform your customers and followers about your referral program? It is by email. If you have done your share of capturing your prospects either through a simple pop-up or a screen takeover, you’ll already have a list of prospects that you can contact once your referral program goes live.

Why is this effective? Well, the best marketers for your referral program are your prospects. These are people who have already established a relationship with you by either subscribing to your site or buying something from you. Because of this relationship, they may already have the motivation to promote you to the people that they know and this is what you’re going to tap.

But don’t just broadcast your program. Use tip #7 and tailor your rewards based on your prospects. Choose a different reward for your most loyal clients so that they’ll be more motivated to promote you.

10 - Include Referral Program Cards in Products

If there’s one thing that customer likes more than amazing customer service, it is free gifts. The gifts need not be a physical item. Some eCommerce sellers even include cards of discount codes on purchased products.

I have seen a company called Althea do this. This is an eCommerce website for Korean makeup and skincare products. What they do is include a discount code in all of their deliveries.

The result is tremendous. They were able to increase their sales just because of that card.

Now, you can also do this for your referral program. Simply include a card linking to your program and this will invite more customers to refer people to your website.

While the process of creating a referral program is easy, it is not a straightforward process. Testing is necessary if you really want to see its full power. You may need to test visuals or headlines to see which works the best for you. You may also need to test rewards and markets.

Testing may take time but it is all worth it. Once you gather enough data about your market, you can now easily deploy a referral program that is designed to convert each time. It is at this stage where you’ll finally see the power of a referral program on your eCommerce marketing .

I hope this article has helped you in the creation of your own referral program. Hopefully, you’ll find the right incentive, visual and headline for your site. Happy testing!