If you have a small business, whether a local shop or a start-up company, it is always essential to get more new customers as fast as possible.

And as traditional advertising is losing its charm, referral marketing is probably the best marketing strategy to increase your customer base.

It is so simple. You refer a friend, and you get a reward for it. Yet, it is so effective. It can go farther than other forms of advertising and has a higher rate of customer conversion.

A lot of big brands like Google or Tesla use referral marketing. But is it an excellent choice for small businesses?

Well, as a matter of fact, small businesses are prime candidates for referral programs.

How so?

In this article, we will walk you through everything you need to know about the referral program for small businesses.

Why do Small Business Referral Programs work?

A Nielsen study has shown that over 90% of consumers trusted word-of-mouth recommendations more than any other source of advertising.

That is why referral marketing is so powerful. People trust referrals.

When someone wants to buy something or try something new, they always ask their friends and family about it.

The other way around, when people experience a good product or service, they would want to talk about it with someone they know, especially who shares the same interest.

As a small business, you depend on your existing customers. They are the ones who can help your business grow. Not only thanks to how much they spend but also how they can refer you to their friends. 

So if you can use the influence of your existing customers, the results can be outstanding.

But the problem is, word-of-mouth doesn’t happen enough. Thus, we can’t just wait for the magic to happen itself. 

To take full advantage of word-of-mouth marketing, you need a referral plan to motivate your customers to spread the word about your brand.

Long story short, a referral program for small businesses is really a must. But how exactly it can help you?

Referral Program For Small Business: How can it help?

How do Referral Programs help Small Businesses?

Referral programs can help your small business in many ways. But here are the top 4 benefits of a referral program for small businesses.

Gain loyal customers

Studies show that not only are referred customers 18% more likely to become loyal customers, but they also have a higher lifetime value.

After all, they do trust their friends and family.

On the other hand, your brand advocates, those customers who join your referral program, are also reported to be more loyal to your brand.

The referral rewards will keep your existing customers happy and give them a reason to keep coming back.

Truth be told, people tend to have a stronger attachment to a company if their friends share the same bond. That is why referral marketing can help you gain more loyal customers, both referrers and referees.

Spark virality

We all should thank social media for this. Word of mouth travels fast, even faster on social media.

Nowadays, it is easier and easier to share. The referral program makes it as simple as clicking a button, and words will fly.

When your customers share your referral program via social media, all their friends will immediately be aware of your brand. And because they trust what their friends share, they will also have a favorable opinion of your brand.

Let’s say a few of them become your customers. Now with the new customers, there is a high chance that they might go on and share your referral program on their social media profiles.

Thus, the cycle will keep going on and on.

And those referrals are shared on social media act like mini advertisements for your business.

This form of advertisement works out really great for small businesses. If you can get your customers to promote your business for you, you don’t have to spend much money on other advertising methods.

This is probably the most compelling benefit of a referral program for small businesses.

Build strong customer relationships 

Having a strong relationship with customers is vital for any business, but solid customer relationships mean everything for a small business.

Referral programs can create customer engagement. When your customers join your referral programs, they are engaged with your business on a completely different level.

Think about it, why do they refer a friend?

Sure, the rewards incentivize them. But there is something more than that: They trust you!

Referring you to their friends is the best compliment you can get from your customers.

So, referral programs can help create a better relationship with customers who refer you because they will feel responsible for being part of your community and part of your business’s success.


This is the best benefit of a referral program for small businesses.

As a small business, you don’t have a big budget for marketing. You have to use your resources wisely.

The best thing about referral marketing is it’s easier, and it’s cheaper than traditional marketing.

With traditional marketing, you need to take the time to figure out your target audience, which means spending money trying to get strangers to convert.

Referral programs allow you to market towards your existing customers. You almost cost nothing but some small gifts or discounts to encourage word-of-mouth to happen.

And remember that people trust their friends and family more than any other form of advertisement.

Referral marketing works well with small businesses because you are not targeting strangers. Instead, you are targeting your existing customers who have already developed a positive relationship with your brand.

Above are just some major benefits of a referral program for small businesses. After your business has grown bigger, there are still many more amazing benefits of referral marketing to help you continue growing your business.

Examples of successful Small Business Referral Program on Shopify

We want to show you some examples of a successful referral program for small businesses on the Shopify platform. How do they use it and why it works?

Hopefully, you can find some ideas that fit your business.


UNTUCKit began as a DTC brand that offers untucked shirts.

Now, they have expanded with offline physical stores and sell smart-casual apparel for both men and women.

Their referral program offers 25% for both referrer and referee. And their referral friend offer is more than the new customer welcome offer (only 20% off).

You will want your customers to focus on your referral discount and not be distracted by the welcome offer.

Founder Chris Riccobono claimed that “Men just want to find a fit and then not change from that.” So the 25% off makes it a no-brainer decision for existing customers to make a repeat purchase.

Alo Yoga

Alo Yoga is a sportswear brand focused on yoga outfits.

According to SimilarWeb, this was the fastest-growing activewear brand by web traffic.

Alo Yoga offers $25 in store credit to prompt an existing customer to repurchase.

But the referral link is only valid for 3 months, which pushes the customer to refer with urgency.

After that, they offer an additional 10% discount if you sign up for their newsletter.

The goal is to bring new customers into their ecosystem for remarketing with their newsletters.

Thrive Causemetics

Thrive Causemetics is a DTC makeup brand. Their mission is to empower women around the world through beauty. 

Their products are organic, and for every product purchased, they donate to organizations that support women or animals in need.

This mission statement is a big part of their branding.

They offer points as a reward, which is very common in the beauty industry.

The referral program reward is $10, more significant than what you get for creating an account (100 points = $1).

When a customer makes a referral, they are also telling the story of Thrive. It builds a deeper emotional connection which connects them to the brand more than reward points.

Tips for building the best Referral Program For Small Business

Tips for building the best Referral Program For Small Business

Now that you know about all the benefits of a referral program for small businesses. So how can you take full advantage of them?

Make it simple to understand and share

No one likes complicated things. So the best thing is to make your referral program as simple as possible. 

Keep your explanation concise but include all the necessary information. Help your customers understand as quickly as possible what they can receive and how to receive it.

Also, make your referral program easy to share on social media. Give your customers a custom code or link. Ask them to enter their friends’ emails so they can send out massive amounts of referral messages. Provide generic messages that can be customized, so they don’t have to write up their own.

Display a clear referral call-to-action CTA

The most effective CTAs must catch customers’ eyes right away.

Make sure your referral CTA is easy to find. Put it on top of your referral landing page. Display it in the big font. Consider bold or highlight it. Make sure your customer can see it every time they visit your website.

Use your position as a small business to your advantage

Your small business can have a unique personality that big businesses don’t. So why not bring your personality into your referral program messages?

Remember to emphasize that your customers are a part of a community. This is really important. 

As a small business, you should focus on friendship and/or community images.

Offer valuable but cost-effective incentives

You have to be extra careful about what you would reward them.

Offer something valuable but cost-effective that ties right back to your business (such as store credits, gift cards, and discounts).

You can consider offering free products or services after several successful referrals. If you choose this route, you should build a point system and reward them with points. Then they can choose what they want to trade from their points.

Or another route is a raffle drawing, where every referral enters a customer to win a larger prize from your business.

Moreover, double-sided rewards (rewards for both referrer and referee) are one of the most effective types of incentives for your referral program.

Track your data

After everything, how do you know you benefited from a referral program for small businesses?

You have to pay attention to analytics. Keep track of who referred to who, how many referrals are happening each day, how much those referred customers spent, etc.

And, based on those metrics to adjust your referral program.

BLoop – Best SaaS Referral Program Software For Small Business

BLoop – Best SaaS Referral Program Software For Small Business

BSS Commerce, the company behind the success of 5 favorite Shopify apps, has just introduced a brand new app named BLoop: Rewards & Referrals.

As an app that completely focuses on utilizing referral marketing, BLoop brings out some out-of-the-box features that guarantee to help you build the most robust and most effective referral program.

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.

Loop in with us, Grow Together!


You don’t have to be a big company to benefit from referral marketing. A fantastic referral program for small businesses can bring out a lot of benefits as well.

A referral program for small businesses can be the “secret sauce” to hacking your small business growth.

A referral plan is an excellent way for you to increase your customer base and build strong customer relationships.

After you built a good referral program, you can pretty much just sit back and enjoy its benefits. And a great referral marketing tool can help you set up the most effective referral program to take advantage of all the benefits without breaking a sweat.

I hope this article is helpful to you.

Best of luck to you!

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