Referral Marketing – Everything You Need To Know To Master It

A report of the Word of Mouth Marketing Association points out that every day, in the US alone, there are over 2.4 billion brand-related conversations.

And do you know that, on average, two-thirds of customers make their purchases because someone they know recommended that brand?

This process of referring a friend is called Referral Marketing, or Word-of-mouth Marketing.

It is one of the best, if not the best, marketing strategies, which is used by many big brands. Titan companies like Google, Dropbox, and Tesla are some of the best referral marketing examples.

Needless to say, knowing about referral marketing will bring a significant advantage to your business.

And in this article, we will walk you through everything you need to know about referral marketing.

What is Referral Marketing?

Referral marketing is a marketing strategy that encourages your existing customers to become brand advocates who recommend your brand to their friends, family, and colleagues.

The most popular way is to offer the referrer (or brand advocate) a reward for referring their friends. And in return, the referee would also get a reward.

Usually, those rewards could be free shipping, discount, gift card, etc.

This way, the brand will get both new and repeat customers.

Why is Referral Marketing so effective?

Referral marketing brings so many benefits to your business.

Increase engagement

A referral marketing program can help you develop a database of brand advocates and their behaviors.

This allows you to remarket to them with special promotions/offers and to reward them.

This is a great way to create a loyal relationship with your customers.

Gain loyal customers

People referred by their friends usually stay loyal to a brand longer than others who found the brand in other ways.

And according to a Goethe University study, customers who recommended the brand are 18% more likely to stay with that brand than other customers.

The article mentioned that people tend to have a stronger attachment to a company if their friends share the same bond.

Spread brand awareness

Your existing customers talking about your brand is the best way to improve your reputation.

In fact, 49% of USA buyers say that their friends and family are their top sources of brand awareness. 

The more referrers talk about your brand, the larger your reach becomes.

Those 3 benefits can boost your sales or even make a growth hacking.

So why is referral marketing effective? Because it’s reliable.

A Nielsen report shows that the trust in traditional marketing has fallen over the past 5 years.

But the report also says that over 90% of consumers trust recommendations from people they know.

Moreover, referral marketing is basically free. It is the most cost-effective way to advertise because it costs customers nothing to tell their friends about a good product or service.

This is a win-win-win situation.

Your business gets free marketing. Your existing customers get social validation for recommending something great. Their referred friends get a recommendation from a trusted source.

Then their friends will refer to their friends, who will refer to their friends, etc.

It will be unstoppable.

How to build a successful referral marketing program?

Nowadays, with the help of third-party referral program apps, building an attractive referral marketing program is an easy job.

The real challenge is to ensure the referral program actively encourages your loyal customers to recommend your business.

Like any marketing program, you can build it, but it doesn’t necessarily mean it will work.

An Advisor Impact study shows that 83% of satisfied customers are willing to refer the brand to their friends. But the truth is only 29% of them actually do.

So what can you do to make sure you get as many referrals as possible?

Offer great products or services

Obviously, your product and/or service is the core of your business. It’s what attracts your very first customers.

But a product that can satisfy your customers isn’t enough. You should think bigger.

One way to make your products stand out is to create something that can solve a specific problem better than anything else.

The iPhone is the best example of a revolutionary product.

Before the iPhone was introduced, the mobile phone was only used to text or call.

But Apple decided to design a phone that can do more than that. They wanted a phone that could be as powerful as a computer.

When Steve Jobs introduced the first iPhone, it immediately became newsworthy. And the rest is history.

But of course, not everyone can do that. So a slightly easier way is to make a shareable customers’ experience.

For example, Trunk Club goes above and beyond to make the unboxing experience share-worthy.

And thousands of Trunk Club unboxing online videos have amplified their word-of-mouth.

But it’s not just about your product.

Provide amazing customer support

Happy customers will share more.

And obviously, exceptional customer service is the only way to make your customers happy.

Even though everyone knows the importance of great customer support, great customer services are still very rare.

There is a famous story about a FedEx employee who went the extra mile to save the wedding of an unfortunate bride. The wedding gown that she had ordered online failed to deliver before her big day.

Bustillos, a FedEx driver, had spent over an hour and a half finding the wedding dress and delivered it to her.

And, of course, the lady had become a FedEx ambassador after that.

Fantastic customer service isn’t rocket science. Sometimes your customers just expect after-purchase support.

Another thing to consider is live chat. A live chat allows you to answer your customer’s questions immediately. It will reduce the shopping cart abandonment rate.

Optimize your customer support process. And if possible, add a little humor or personality to it to make it unique and fun.

Create viral content

In theory, word-of-mouth marketing is really cool.

But some products are so boring that no one wants to talk about them. For example, do you want to talk about blenders?

But Blendtec – a blender brand – had managed to turn those boring blenders into an internet phenomenon.

They made videos where they blended everything with their blenders, from a ball to an iPhone.

Currently, they have over 800,000 subscribers on their YouTube channel. But more importantly, they are now a well-known blender brand.

Another interesting content is a meaningful and inspiring story.

Take TOMS as an example. Their branding story is so touching: For every pair of shoes you purchase, they donate a pair of shoes to a child in a poor country.

That means when you purchase a pair of shoes at TOMS, you don’t just buy a pair of shoes, you are helping to make the world a better place.

Clearly, there isn’t a one-size-fits-all recipe for viral content. You will have to find the story that will work for your business.

And don’t forget to leverage the power of influencers.

Best Referral Marketing examples

Google Referral Program

That’s right. Even a search engine giant can get benefits from a referral marketing program.

After joining their Google Workspace referral program, customers will be provided a personalized link.

Then for each new account activated using that link, the referrer receives $15 directly deposited to their bank account.

Dropbox Referral Program

Dropbox is one of the most popular hosting cloud services. 

It was founded in 2007, and at that time, like any other startup, Dropbox struggled to grow its user base.

They had tried search engine marketing, but it was an epic failure.

Eventually, they decided to set up a referral program. And it was a game-changer.

In only 15 months, their users grew from 100,000 to 4,000,000 users.

Tesla Referral Program

With a $0 marketing budget, Tesla went viral thanks to its extraordinary products and generous referral program.

At one point, they even gave a 100% discount on their next-generation car – basically giving a free car.

The story about the “World’s #1 Tesla referrer” is a really famous one. A man referred over 1,200 people to buy a Tesla car, and he earned himself two free cars worth half a million dollars.

Airbnb Referral Program

It’s hard to find someone who has never used Airbnb or even heard of them.

Airbnb is one of the first brands people name when they think about a startup unicorn.

Even though their referral program is no longer open for new referrals, it is a touchstone example of how a referral program can drive massive growth.

Their team has set a new standard for a referral system.

Uber Referral Program

This ride-share app assigns each customer a personalized referral code as soon as their account is activated. 

Every new account is created using a referral code, both the referrer and referee get their next Uber trip free.

3 Best Referral Marketing Apps for Shopify

BLoop: Rewards & Referrals (Free)

Overall Rating: 5/5 stars.

BLoop is a growth-hacking solution that empowers merchants with an easy-to-use referral program to grow the customer network.

This app will delight both brand advocates and referees with a set of sales-hook rewards tailored to each side.

Moreover, you can leverage the strengths of multiple channel sharing. It allows you to customize messages to motivate your customers to refer friends via many social channels like email or Facebook.

In fact, this is the one-and-only referral app on the market that allows tailoring sharing messages on multiple channels.

BLoop also gives you an effective way to keep track of your referrers’ and referees’ activities. And it provides a dashboard to show your referral program status.

This app is easy to set up. No code is required.

And the best thing is, this app is completely free. You can use all of their whole bunch of cutting-edge features without paying a penny.

Highlight features:

• Easily set up specific rewards rules for referrers and referees to target better
• The one-and-only referral app tailoring sharing messages on multiple channels (Email, Facebook, Twitter, Whatsapp, and Messenger)
• Able to customize and show a unique referral page on your Shopify storefront to impress visitors. Needless to say, it’s a perfect alternative for other expensive apps like ReferralCandy.
• Design your own referral program style with tons of attractive referral templates.
• Show referral program metrics on the referral program dashboard
• Wonderful support team.

Pricing

They only have one FREE plan, which includes all their amazing features.

Any downsides?

Compared to other apps on this list, this app is rather new. That means they may lack some features. But the good news is, they are still developing and expanding to give you the best service.

Referral Candy

Rating: 4.8/5 stars (1480 reviews)

ReferralCandy is one of the most popular Shopify apps that focuses exclusively on referral services. Thanks to ReferralCandy, you will have more time to manage the business, and the incentives will be charged directly with no human work.

This app helps you to reward your customers for suggesting their friends to your store. It can simplify your referral systems.

ReferralCandy also provides a dashboard so you can monitor referral traffic and retarget customers.

You can customize every design, from your landing pages to emails to pop-ups, to match the theme of your brand.

ReferralCandy also integrates with other common marketing platforms such as MailChimp and Klaviyo, which enable you to leverage your email marketing to produce further referrals.

Highlight features:

• Drive and track referral sales
• Automatic rewards payout
• No limits on advocates or redemptions
• Detect active referrals automatically
• Fraudulent practices would be prohibited immediately
• Integrate with third-party apps like ReCharge, ChargeBee, PayWhirl 
• Support JS and API integration

Pricing

Their plan starts from $49 per month, which includes all their features.

Any downsides?

Their pricing plan is very expensive, and not recommended for small businesses.

Conjured Referrals

Overall Rating: 4.9/5 stars(168 reviews)

With Conjured Referrals, your customers can refer your Shopify store to their friends to earn discounts.

The app is fully automated. It can help you choose your incentives and build your campaign. All you need to do is wait for the sales to roll in.

It also makes it easier for your customers to share a referral link via email, SMS, Twitter, Facebook, or WhatsApp.

Conjured Referrals provides a dashboard so you can quickly manage your referrals, campaigns progress, reviewing results, etc.

Highlight features:

• Create a static link for each supporter or a unique link for each referral
• Easily choose the referral reward for each campaign
• Free personal styling to complement your brand’s look
• Shared referral links through email, SMS, Twitter, Facebook, or WhatsApp
• No commission/transaction fees

Pricing

They have 4 plans to choose from, each plan has an external list of features.

• Intro plan: $29 per month, up to $500 referred revenue a month, unlimited referrals, free customization and support, no commission/transaction fees
• Small business plan: $99 per month, Intro plan feature list plus up to $2000 referred revenue a month
• Plus plan: $299 per month, Small business plan feature list plus unlimited referred revenue
• Enterprise plan: $1000 per month, Plus plan feature list plus custom features and integrations

Any downsides?

The design of the app isn’t eye-catching enough. And there are some complaints about their slow support system. 

Conclusion

Referral marketing can be the most powerful element in your marketing campaign, which can help grow hacking your business.

But remember, don’t wait for the magic to happen itself.

Build some strategies to motivate your customers to talk about you and increase your customer referrals.

I hope this article is beneficial to you.

Best of luck to you!

About BLoop Loyalty

After the huge success of their 5 previous Shopify apps, BSS Commerce has developed a brand new app named BLoop: Rewards & Referrals.

As the company’s latest app, BLoop brings out some out-of-the-box features that hadn’t been included in our other apps.

With a mindset of never stop growing, BLoop Team appreciates every constructive criticism about our app to make it better and better.

If you have any problem or a new feature suggestion, please contact us via email at sales@bsscommerce.com or Whatsapp at +84 793 366 094 (Free support 24/7).

Currently, our amazing app is completely FREE, so every business, even the smallest one, can test it out and build your own sales-boosting referral programs. 

Read more about Top Best Shopify Referral Apps.