Boost Sales Through Word-of-Mouth! How to Launch a Referral Program with ReferralCandy
In this post, we'll show you how to set up a referral program on your Shopify store using Referral Candy.
Referral marketing is the crown jewel of growth hacking. Familiar growth hacking success stories like Dropbox and Uber are prime examples of referral campaigns done right.
At the same time, referral marketing is also one of the most challenging tactics to execute well.
First, referral programs are not a good fit for products that customers don't repurchase, or for products in sensitive categories that people feel uncomfortable recommending to others.
Additionally, if your retention (repeat purchase rate) is low, focus on improving your repeat purchase rate and LTV first. After all, customers won't want to recommend a store they're not satisfied with.
Once your repeat purchase rate is strong, give a referral program a try. If you're already running one, we'd love it if you shared your experience and results in the comments below.
Download the Store Design Guide (Free)
StoreHero helps merchants grow their business by leveraging our proprietary growth platform to enable fine-grained operations and large-scale campaign execution that would be impossible with manual workflows.
If you're struggling to increase sales on Shopify, feel free to reach out. =>Download our free service overview here
What Is Referral Marketing?
Referral marketing is a strategy that creates a system where existing customers bring in new customers.
Referral strategies fall into two main categories: incentive-based referral programs and organic referral programs.
Referral programs are widely used in SaaS and web services, so let's first look at some examples from those industries to build a mental model, then explore how to implement them in a Shopify store.
Incentive-Based Referral Programs
Incentive-based referral programs use rewards such as points or gifts to artificially encourage referrals.
This is the most common type of referral program used in e-commerce businesses.
Dropbox famously used an incentive of 500MB of extra storage to accelerate growth through referrals.
Organic Referral Programs
Organic referral programs create a system that generates referrals naturally, without the use of explicit incentives.
Sometimes referrals happen organically simply because a product or service is genuinely great, but a well-known intentional approach is to promote your service as a form of exchange for offering it for free.
Below is the sign-up form for the free version of Hubspot, which features a Hubspot promotion at the bottom. You'll often see this in free versions of Shopify apps as well.
Now that we have a solid mental model, let's look at how to implement an incentive-based referral program in your Shopify store.
Steps to Launch a Referral Program
Here are the steps to launch a referral program on your Shopify store.
- Define your offer.
- Choose a referral program app.
- Create a landing page (LP).
- Promote the program.
- Analyze and optimize.
Let's walk through each step.
Define Your Offer
Start by deciding what your offer will be.
A typical example is giving the referrer a discount coupon when the friend they referred makes their first purchase. Many referral programs also reward the referred friend with a discount.
Below is the referral program from Away, the suitcase brand — both the referrer and the referred friend each receive $20 off.
BONOBOS's referral program gives both the referrer and the referred friend a 25% off coupon.
Beyond monetary offers, gifting a product sample is also a valid option. This lets you promote the product at the same time.
Choose a Referral Program App
Once you've defined your offer, install a Shopify app.
There are many Shopify apps that can power a referral program, including:
Referral program apps can get expensive due to integrations with other apps and commission fees, so decide on your use case first, then choose the app with the best cost-effectiveness for your business.
Using a Shopify app gives you all the features you need for a referral program — such as participant management and referral link generation — built right into your Shopify store.
Referral Candy
Referral Candy is one of the most well-known referral program apps. Let's take a detailed look at how to use it.
Setting Up Rewards
Start by creating rewards for both the referrer and the referred friend.
Rewards for the referrer come in three types: coupon, cash, and custom. The custom option is useful when you want to offer physical gifts or novelty items. Rewards for the referred friend are limited to coupons only. You can also choose not to offer a reward to the referred friend at all. Coupon rewards are configured just like regular Shopify discount coupons — you can set the discount amount or percentage, expiration date, and more.
In Rewards Settings, you configure the payout currency, minimum purchase amount, validation period, required number of referrals, and qualifying purchases.
- If a minimum purchase amount is set, orders below that amount will not qualify for the referral reward.
- Within the validation period, you can reject a referral if needed.
- If the required number of referrals has not been met, the referrer will not receive their reward.
- By configuring qualifying purchases, you can specify which purchases count toward a referral — for example, only the first purchase after referral, every purchase, or the first two purchases.
Email and Page Settings
Under Email & Pages, you set up the emails and pages used in your referral program. For a quick setup, select the Autopilot Theme and simply swap out the logo and images.
If you want to customize the content, use the Simple Theme.
The Simple Theme can be edited by clicking Edit. You can customize four types of emails and pages: Post-purchase Email, Join Page, Reminder Email, and Share Page.
The Post-purchase Email is an invitation to the referral program that is automatically sent after a purchase. This email can be disabled depending on your settings (described later).
The Join Page is the sign-up form page for the referral program. Make sure to clearly explain how the program works.
The Reminder Email is automatically sent to participants who have signed up for the referral program but haven't generated any referrals yet. Keep the tone motivating without being intrusive.
The Share Page is where participants receive their unique referral link URL after signing up.
Social Media Share Messages
In Social Media Settings, you can configure the default message that referrers use when sharing on social media. This is the message that appears when they click the social share links on the Share Page mentioned earlier. Since many people will share the message as-is, make sure it reads well even without modifications.
Other Widget Settings
From the Widgets menu, you can configure several useful widgets.
The Post-Purchase Popup is a popup displayed on the thank-you page after a purchase. Use it to guide customers to join your referral program right after buying.
The Embedded Signup is a referral program sign-up form that you embed directly into a page.
The Referral Widget is a referral program sign-up form that appears as a popup in the bottom right corner of your store.
Cookie Consent is the setting for a cookie consent banner. Under regulations such as GDPR and CCPA (California Consumer Privacy Act), cookies must be collected only after obtaining prior user consent.
Email Settings
Under Settings, you can configure options such as whether to send emails or not. Adjust these settings to suit your needs.
CRM Tool Integration
You can integrate with Mailchimp and Klaviyo. For Klaviyo, simply register your API key and the integration is complete. Once connected, referral program invitation emails are sent through Klaviyo. The data needed to send referral invitation emails is registered in Klaviyo, making it available for your CRM workflows.
Google Analytics Integration
Under Marketing & Analytics, you can integrate with Google Analytics. Simply register your Google Analytics tracking ID to complete the integration. Google Analytics will then be configured on referral program registration pages created by Referral Candy.
Advertising Integration
Under Ads & Retargeting, you can integrate with Google Ads, Facebook Ads, and Adroll. Once integrated, you can leverage these platforms for retargeting campaigns.
Post-Launch Approval Workflow
After launch, use Purchases & Referrals to review the referrer, the referred friend, and the order details, then approve or reject each referral. This is especially important when cash is set as the reward, as fraud can occur — thorough review is essential.
Monitoring
The Dashboard lets you track your daily referral activity. By understanding who is referring whom, you can also map out the social graph of your customers. Once you have a grasp of the social graph, you can put it to use in your social media strategy as well.
Create a Landing Page
A landing page (LP) is effective for driving sign-ups to your referral program. As mentioned above, Referral Candy also lets you create an LP.
While you'll also promote the referral program via email, having an LP in your store helps capture customers who might otherwise be missed.
Promote the Program
Make sure existing customers discover your referral program at the right moments.
Target moments when customers are in a positive state of mind — such as right after a purchase or when their order arrives — and promote the program via email, chat, or social media.
Right After Purchase
The thank-you page immediately after purchase is the ideal moment to promote your referral program.
As mentioned above, Referral Candy has a built-in feature to display a referral program popup on the thank-you page — make the most of it.
Likewise, post-purchase emails and chat messages are also great touchpoints for promoting your referral program.
Shopify apps like Referral Candy, LoyaltyLion, and Smile have a feature to automatically send the referral link via email right after a purchase — make sure to use it.
Advertising
You can also use Google Ads or Facebook Ads remarketing to reach past buyers and present your referral program to them. It's worth considering as one of your remarketing strategies targeting existing customers.
As mentioned earlier, Referral Candy can integrate with Google and Facebook Ads, but even without the integration, you can retarget all buyers — so the integration itself isn't strictly necessary.
When the Order Arrives
You can also promote your referral program after the order arrives, via email, chat, or packaged inserts such as flyers. If customers are satisfied with their purchase, this is a great moment to encourage them to spread the word.
Another approach is to find people who post unboxing photos or videos on social media and reach out to them directly.
Maintaining consistent one-to-one communication with customers — not just for referral programs — is effective for building lasting customer relationships.
Glossier is a great example: even after becoming a unicorn company, they still individually engage with customer posts, which is remarkable.
Analyze and Optimize
Analyzing the customers who are contributing most to your referral program can reveal unexpected insights.
It's also important to analyze whether your referral program is actually generating revenue. Since referral programs only work when repeat purchase rates are high, check the repeat purchase rate of referred customers.
Analyzing Top Contributors
Searching for the referral link URLs of your top contributors on Twitter can reveal how they're promoting your store. The insights you gain can help you improve the default social media share message template.
You can also analyze backlinks to the referral program pages of your top contributors to identify their traffic sources.
Backlinks can be analyzed using tools like Moz or Ahrefs.
As mentioned above, you can set up Google Analytics with Referral Candy, which gives you even deeper insight into how your customers are driving traffic.
Is It Actually Generating Revenue?
The direct revenue from your referral program is tracked in Shopify apps like Referral Candy. However, you also need to understand whether referred customers have a high repeat purchase rate.
If you're attracting bargain hunters, they may not be contributing to long-term revenue.
For a precise view of long-term revenue, calculating the LTV (lifetime value) of customers acquired through the referral program is the most accurate approach. For a quicker check, you can use Mixpanel, as introduced in our article on engagement revenue attribution analysis.
Driving Growth with StoreHero
StoreHero helps Shopify merchants who want to grow their sales by executing growth strategies at scale.
Using the StoreHero growth platform, we support continuous business growth through advertising, store optimization, CRM, and inventory management — enabling fine-grained operations and large-scale campaign execution that would be impossible to achieve manually.
We're currently offering a free store diagnosis. If you have challenges with Shopify and growth strategies, feel free to contact us. Learn more about our free store diagnosis here
Summary
We've walked through how to set up a referral program on Shopify using Referral Candy.
Referral marketing is challenging, but when executed well, it can dramatically accelerate your growth.
If your Shopify store has a strong repeat purchase rate, we highly encourage you to try launching a referral program. If you're already running one, please share your experiences and results in the comments below.
StoreHero can support your referral program efforts as part of our comprehensive Shopify growth services. Feel free to reach out. =>View StoreHero's service overview (free)