Why Every Shopify Store Needs a Referral Program

I recently appeared on an episode of the eCommerce Fastlane podcast hosted by Steve Hutt. Steve is a major player in the Shopify ecosystem. He’s interviewed all of the top names from companies like Klaviyo, ReCharge, Postscript and more.

Steve and I talked about why referral programs are essential for Shopify stores, and how Friendbuy has built technology specifically for Shopify merchants to accelerate customer acquisition while lowering customer acquisition costs. Below is a recap of our conversation. I’m sure you’ll find it valuable, and I hope you check out the full interview at eCommerce Fastlane.

And then to give you a few case studies to look at, I include a few Shopify merchants that used Friendbuy to grow their customer base and revenue.

1. Why Shopify Brands Need a Referral Program

Once you’re generating online sales, if you don’t have a referral program then you’re leaving revenue and growth on the table.

If you can get people to buy from you, then you can get people to tell their friends to buy from you.

At Friendbuy, we power referral programs that generate between 5% to 20% of total orders (and even higher for many clients). Every customer you acquire through word-of-mouth referral is one less you have to acquire through a paid channel, which makes customer referral programs incredibly cost-efficient.

Lower customer acquisition costs aren't the only major benefit that a Shopify referral program offers. A customer referral program increases your customer retention rate and the referral revenue can grow your business substantially. Referred customers typically convert 5 times faster and have a 2-to-3 times higher customer lifetime value.

As an e-commerce operator, you probably already know that you’re getting your best customers through word of mouth. What you may not know is how to get more of it and then how to scale it.

Our goal at Friendbuy is to make it super simple for every Shopify store to deploy superior technology and the best practices needed to scale a referral marketing program and grow faster.

2. What Friendbuy Offers Specifically For Shopify

Steve was very interested in how Friendbuy is building technology specifically for Shopify merchants. So we spent a good bit of time discussing features and integrations on this topic.

For example, Friendbuy’s one-click integration makes it really easy to get set up on Shopify. And the integration powers automated coupon code generation which eliminates the need to generate one-off referral coupons in bulk and manage code banks.

For Shopify Plus, we’ve recently launched stackable account credit (i.e. store credit) so that your high-volume advocates can accumulate referral rewards as store credit instead of being limited to non-stackable coupon codes. This has been a hugely successful feature that merchants love and during the interview we discuss the impact for our client Thinx (more below).

Furthering our commitment to Shopify, Friendbuy integrates with platforms like Klaviyo, Attentive, Okendo, Delighted, ReCharge, and more to come this year. These integrations allow merchants to grow their email & phone number subscriber lists and to display referral links at important touchpoints in the customer lifecycle to boost referral performance.

Further Reading:

• How to Build a Referral Program
• How to Install Friendbuy on your Shopify Store
• Thinx Case Study: How Friendbuy’s Shopify Plus Integration Helped Thinx Grow Referral Revenue by 114% Month-Over-Month

3. How Friendbuy Is Different From Other Providers In This Space

• The Shopify marketplace has many apps offering some kind of referral product, but very few of them are specialized for referral programs. The majority have added referral to a different core product (such as customer loyalty). As a result, they may offer a simple way to generate referral links for your customers, but they don’t give you the technologies you need to truly scale a referral program.

  
  

  Before we dive into what makes Friendbuy different, try this simple thought exercise:

  • What good is a referral program if you constantly suspect that the referrals are fraudulent (e.g. people are referring themselves or canceling the referral purchases to get the advocate reward)?
  • How would you accelerate growth through referrals if you can’t figure out whether your customers prefer sharing with a unique referral link or through or email or SMS? (hint: you can’t)
  • How long will you or your customer experience team tolerate inquiries about referral program confusion or lost rewards before you get tired and shut the program down.
  
  

  Friendbuy specializes in powering referral programs for high-growth merchants. We know what’s required to launch a program that truly scales. This includes:

  • Sophisticated fraud controls & business rules with automation for dealing with returns & cancellations
  • Multi-device attribution (increasingly important as customers shop using many devices)
  • Detailed tracking of every share channel: personal referral links, emails, SMS and social
  • Complete control over your program from offer management to creative control
  • A user experience seamlessly integrates into your website and mobile app (i.e. we don’t send your customers to a 3rd party portal or microsite)
  • A/B testing that no other referral provider can compete with
  • The ability to run unlimited referral campaigns (e.g. a campaign for top advocates or a limited time referral contest)
  
  
  

A successful referral program doesn't stop at launch. There are endless ways to improve your referral program so that it can continue to grow and the Friendbuy referral app is built to help you do that. 

4. What It Means To Scale Your Referral Program On Shopify

You’ll know your referral program is scaling when referrals are a significant portion of your total customer acquisition and you’re not doing things manually.

To scale your referral program means you’ve got automation and the integrations necessary to make referrals a seamless part of your brand experience. Only then can word of mouth referrals represent a true growth engine for your business

When you’re just starting out, maybe you’re ok with manually approving referral purchases to check for fraud or returns & cancellations. But when you’re scaling, you need referral automation.

You want a system

• that validates referrals automatically,
• that integrates into your tech stack to grow your email and phone numbers subscriber lists,
• and that integrates with product reviews & Net Promoter Score surveys so you can prompt customers to refer after they give you positive reviews.

In addition to these capabilities, Friendbuy has developed various triggered emails that automatically send as well as referral email templates that you can launch during setup. These referral emails boost referrals from advocates and boost conversion rates of referred friends. We also provide customer friendly features like the advocate referral dashboard so your customers can track their own referral history and rewards instead of bombarding your team with customer service inquiries. 

Our experience working with startups as well as global e-commerce enterprises means you can launch with Friendbuy at any point in your company's journey and rest assured that your referral program will scale as your business scales.

5. FIGS: A Shopify Merchant Doing Referral Really Well

If you love being inspired by amazing brands on Shopify, be sure to check out FIGS, an apparel brand serving healthcare professionals. FIGS makes it very easy to refer friends throughout the customer journey, with a strong primary call-to-action and other strategic placements.

They even incorporate referrals into their Net Promoter Score surveys and product reviews. For any customer who gives them an NPS score of 9 or 10, FIGS automatically shows the customer their personalized referral link on the survey thank you page.

This functionality is made possible through Friendbuy’s integration with Delighted (an NPS survey platform). Similarly, after a positive product review, Friendbuy’s integration with Klaviyo triggers an email from Klaviyo with a thank you note to the customer that also contains the customer’s referral link.

These techniques place the referral program in front of the best customers who FIGS wants to spread the word about their amazing products.

For FIGS, integrations plus automation come together to drive up referral program performance.

FIGS achieves very strong referral metrics with higher average order values (AOV) for referral sales, exceptionally higher customer lifetime values (LTV) and much lower cost per acquisition (CPA) compared to other acquisition channels. Check out the interview to hear more about what FIGS is doing with A/B testing and converting new customers at the top of their funnel using the referral program as an enticement.

6. Thinx: Another Shopify Merchant Doing Referral Really Well

Steve and I also talked about Thinx, another e-commerce company on Shopify that is direct-to-consumer and super high-growth. Thinx is using Friendbuy’s new account credit feature for Shopify Plus, which has allowed them to switch from single-use coupon codes to stackable store credit as their Advocate reward.

Thinx has always been very successful with referral, but coupon codes in Shopify are non-stackable, so advocates who referred a lot could become frustrated by having to use coupons on separate orders.

With Friendbuy’s account credit feature, these high-performing advocates can stack their earnings to spend on larger orders. This feature has been so popular with Thinx’s customers that it helped Thinx to double their referral program performance.

During the interview we also covered how Thinx uses Friendbuy to run limited-time referral contests to boost referral engagement. Listen to the interview to learn what contest they ran that significantly raised referral performance even after the contest was over.

7. The Future Of Referral Programs On Shopify

Steve was curious about where referral marketing is going and how this will impact Shopify merchants. I explained that from our experience, we see optimization playing a huge role in how referral programs are evolving.

As I mentioned above, no other referral solution can compete with Friendbuy’s A/B testing capabilities, and A/B testing has been huge for our clients to optimize every part of the referral funnel and maximize performance. 

We’re also seeing audience segmentation emerge as a technique to further personalize referral offers and boost engagement. So for example, maybe a VIP customer should get a better Advocate reward for referring friends because their friends are more likely to become VIPs.

In addition, we see referrals expanding from brand-level programs to campaigns designed to promote different business objectives.  For example, our clients are already using referrals to drive awareness for a new product launch or to get people to download their mobile app. Friendbuy is leading this evolution by developing workflows and integrations to make these techniques standard in the marketer’s playbook.

Rather than having a cut and dry referral marketing program that can only be used in a single way, we've built software that allows you to create a referral program that is just as unique as your customer base. Built into the software is the ability to automatically A/B test your copy, your referral reward, and everything in between. Friendbuy truly is ready for the future of ecommerce marketing.

8. Interview Takeaways

Steve and I concluded the interview at the same place we started it...

If you can get people to buy from you, then you can get people to tell their friends to buy from you.

Word of mouth referrals can and should really be your best channel for customer acquisition. But to really succeed at referral marketing, you need great technology that integrates with your tech stack and automates the referral marketing best practices that are proven to work. If you do that, referrals can be a big driver of customer acquisition for you.

5 Friendbuy + Shopify Merchants That Grew Their Referral Programs

Your Shopify store is thriving, and it is time to take it to the next level. That’s great news, but how do you do it? A referral program is a proven way to gain new customers, increase sales, and build brand loyalty. With Friendbuy's Shopify Plus integration, you can quickly get your entire referral program up and running with one click!

Once integrated, the Friendbuy platform enables referral tracking, widget functionality, stackable account credit, and a referral dashboard for advocates to track their referral invitations and send reminder emails. These five brands implemented referral programs in their Shopify stores and saw measurable results. Check out their stories for inspiration, and get your referral program started today. 

1. Flo by Moen

Flo by Moen is a smart water security system that detects water and shuts off the system if a leak is detected to protect homes from damage. Flo by Moen leveraged our one-click integration with Shopify Plus to launch its referral program. For this high-consideration purchase, the referral offer to give friends 20 percent off and get $100 for each qualified referral is a strong motivator for advocates to share.  

This referral campaign is a shining example of Shopify’s Friendbuy integration because it incorporates all of our recommended best practices, including:

• Having a clear primary call to action: “Get $100 when your friends join the family.”
• Building a landing page for the referral program.
• Incorporating a post-purchase overlay to prompt sharing when the advocate is excited about the product.

2. Wild Earth 

Dog food brand Wild Earth added a referral program to capitalize on its initial success from exposure on Shark Tank. To keep the momentum going, Wild Earth linked Friendbuy to its Shopify store with a “Refer and Earn” CTA that offers friends 60 percent off a large bag subscription and advocates a $60 gift card. 

Wild Earth incentives repeat referral behavior by rewarding advocates with gift cards using our Tremendous integration, which automates the reward fulfillment process. Similar to Flo by Moen, the brand employs the best practice of having a primary CTA, a landing page, and a post-purchase overlay. Wild Earth also includes some compelling suggested copy for email shares, describing the benefits of the product and having a subscription plan.

3. Hill House Home

DTC lifestyle brand Hill House Home wants to keep its customers coming back for more and build its customer base at the same time—so referral marketing was a perfect fit for its Shopify store. The company includes a clear “give $20, get 20 percent off” CTA in the footer and directs users to an elegant landing page. 

Coupling promotion of the referral program with product launches is an excellent way for Hill House Home to attract repeat customers while also building its customer base. Hill House Home is also able to couple its referral and SMS strategies through Friendbuy’s integration with Attentive, allowing the brand to seamlessly capture a user’s phone number and further drive referral awareness.

4. Alen Air Purifiers

Innovative brand Alen produces air purifiers for homes, businesses, and schools. The company is also known for giving back to the community, so it makes sense that this spirit of giving would extend to a referral program. Alen offers a “give 10 percent, get 10 percent” referral incentive with some key elements in the referral widget, including:

• A personalized URL that users can copy with a single click
• The option to send emails to multiple recipients from one place
• Compelling copy that highlights the benefits of the brand
• The option to send friends a reminder after three days
• Icons for sharing via Messenger, Facebook, and Twitter

Alen also leverages Friendbuy’s integration with Klaviyo, which captures a user’s email address, stores distributed coupon codes, and generates personal referral links in a customer’s Klaviyo profile.

5. BOTE

Paddle board brand BOTE sells high-value products such as stand-up paddle boards, kayaks, and skiffs, but it also generates revenue from accessories such as towels, coolers, and gear. Using Friendbuy’s stackable account credit, customers can accumulate account credit instead of receiving a non-stackable, single-use coupon code for every friend they refer. This keeps customers engaged with its brand after they make a major purchase. BOTE offers $100 of account credit to advocates when friends make a purchase of $550 or more. Friends also benefit from a 10 percent discount, which is a meaningful amount for this Shopify store.

The Friendbuy Integration with Shopify Plus

Integrating Friendbuy into your Shopify store is easy. In fact, you can do it with a single click—no additional code is required. After integration, coupons are automatically generated, so you don’t have to upload and replenish them manually. 

The out-of-the-box referral dashboard for advocates allows them to have a complete view of their referral activity, including the date of the referral, their credit amount, and their credit status.

Marketers love how easy it is to implement and manage a referral program, and customers love that they can accumulate account credit instead of non-stackable, single-use coupon codes. It’s a win-win for everybody!

Shopify integration is just one of the many tactics that can be employed in referral programs. To learn more, download The 2022 Referral Marketing Blueprint for E-Commerce today.