How do you set up a referral program?

To set up a referral program, decide who can refer, choose a reward for the person who refers and for the friend who buys, and choose how each referral is tracked: a referral link, a referral code, or both. Then write short rules, make joining easy, and tell your customers about the program where they already see your store. Start small, check the results after a few weeks, and change one thing at a time.

What you will learn

• The steps to set up a referral program, in order
• How to choose rewards that are worth sharing and still make sense for your store
• What a referral code is, with examples of good and bad codes
• The common mistakes that stop a referral program from working

How to set up a referral program, step by step

A referral program rewards people for recommending your store to people they know. If you are not sure how it differs from an affiliate program, read What is a referral program? first. The steps below work for both kinds of program.

1. Choose your goal. Decide what you want more of: first orders from new customers, or more orders from the customers you have. The goal decides the reward and the rules. For example, if you want new customers, reward only a friend's first order.
2. Choose who can refer. Most stores start with their customers, because they already know your products. You can also invite creators and business partners. Decide whether anyone can join, or whether you approve each person first.
3. Choose the rewards. Decide what the person who refers gets, and what the friend gets. The next section explains the options.
4. Choose how referrals are tracked. Tracking is how the store knows who sent each order. A referral link is a web address that identifies the person who shared it. A referral code is a short code that the friend types at checkout. Many programs offer both, because a link is easy to share in a message and a code is easy to say out loud. Read Referral links vs discount codes to compare them.
5. Write short rules. Say who can take part, what counts as a referral, when the reward is given, and what happens when an order is canceled or returned. Also say whether people can use their own link or code for their own orders. For the clauses to include, read What goes in an affiliate agreement?
6. Make joining easy. Every extra step loses people. The best signup asks for little: ideally the customer account that the person already has on your store.
7. Tell people about it. Put the program where customers already look: the order confirmation, the customer account page, a short card in the package, and a link in your store menu. Ask at a good moment, for example after a customer leaves a good review.
8. Check the results and adjust. After a few weeks, look at how many people joined, how many shared, and how many referred orders came in. Change one thing at a time, such as the reward or the message, so you can see what made the difference.

How to choose referral rewards

A reward must be big enough to make people share, and small enough that a referred order still makes money for your store. Most programs use one of these rewards for the person who refers:

• Store credit: a balance that the person can spend at your store. It brings them back to buy again.
• A discount: a percentage or an amount off their next order.
• A commission: a share of each referred sale, paid as money. Commission fits people who refer often, such as creators.
• Free product: a gift, often when a person reaches a number of referrals.

A two-sided program also gives the friend a reward, usually a discount on the first order. This gives the friend a reason to act now, and it makes the person who shares feel that they give something, not only ask for something.

For example, a store with an average order of $60 might give the friend 10% off the first order, and give the person who referred them $10 in store credit when that order is paid. The store gives $6 off and $10 of credit to win a new customer. Compare that cost with what you spend today to get one new customer, for example with ads.

Give the reward after the order is final, not when it is placed. If your return window is 30 days, wait until it ends. Then a canceled or returned order does not cost you a reward.

What is a referral code?

A referral code is a short code that identifies the person who referred a customer. The friend types the code at checkout, the store sees who referred the order, and the friend often gets a discount at the same time. In many programs, the referral code is also a discount code, a code that lowers the price at checkout.

Referral code examples

A good referral code is short, easy to say, and easy to type. These formats work well:

• A name and an amount: MAYA10 or SAM15. The friend knows who sent them and what they get.
• A name and the store: JORDANLOVESTEA. It is easy to remember, but long codes are harder to type.
• A creator handle: COOKWITHLEO. It matches the name that the audience already knows.
• A short word: FRIEND20. It is easy to share, but it does not identify one person, so use it only for a general offer.

Avoid these problems when you create codes:

• Letters and numbers that look the same, such as O and 0, or I and 1.
• Personal details, such as a full name with a birth year, or an email address.
• Codes that are very long, or that mean something unwanted in another language.

When codes leak

A reusable code can end up on coupon sites, where people who never heard of the person who shared it use it anyway. The store then gives a discount and a reward for an order that the referral did not bring. To limit this, some programs give each referred friend a unique code that works only once.

Common referral program mistakes

• A reward that is too small: people do not share an offer that they would be embarrassed to send.
• A hidden program: customers cannot join a program that they never see.
• A hard signup: a separate account and password stops many customers before they start.
• Unclear rules: people get angry when a reward is refused for a reason that they did not know about.
• Rewards before the order is final: canceled and returned orders then cost you money.
• Too many changes at once: you cannot tell which change helped.

Running a referral program on a Shopify store

Simple Affiliate runs affiliate, influencer, and referral programs inside your Shopify store. Customers join with the customer account that they already use on your store, so there is no separate login. Each person gets a referral link on every plan, and on the Pro plan and above they can also get discount codes, when you allow them. On the Pro plan and above, single-use discount codes give each referred customer a unique code that works once, so a code that leaks does not keep working. You can reward people with store credit, or pay a commission with Autopay (Simple Affiliate's automatic payout option) or PayPal.

You turn on referral codes for each group of affiliates. To set the discount that each code gives, read How to enable discount codes and set discount rules in the help center.

To learn how single-use codes stop leaks to coupon sites, read What are single-use discount codes?