What is a referral program?

A referral program rewards a store's existing customers for recommending it to people they know, usually with a discount or store credit when a referred friend buys. An affiliate program works the same way but is built for people who promote the store to a wider audience, such as creators and business partners, and it usually pays commission. For many stores, the best affiliates are people who already know the store: its customers, creators, and partners.

What you will learn

• What a customer referral program is and how it works
• How a referral program compares with an affiliate program
• Why customers, creators, and partners make good affiliates

How a customer referral program works

In a customer referral program, each customer gets a personal way to refer friends, such as a referral link (a web address that identifies the customer) or a code. When a friend uses it to buy, the store rewards the customer who referred them. Many programs are two-sided: the friend also gets a reward, such as a welcome discount, so both people have a reason to act.

For example, a store might give the friend 10% off their first order and give the referring customer $10 in store credit, a balance they can spend at the store, once that order is placed.

Referral programs compared with affiliate programs

Both programs use the same idea: a trusted person recommends a store, and the store rewards them when a sale follows. They differ in who takes part, how rewards work, and how much structure the program has.

Who takes part

A referral program is for existing customers sharing with friends and family. An affiliate program is for anyone who promotes the store to an audience, including customers, content creators, and business partners.

How rewards work

Referral rewards are usually discounts or store credit, often for both people. Affiliate rewards are usually commission: a share of each referred sale, or a fixed amount per order, that the affiliate can earn again with every new referral.

How much structure the program has

Both track sales with personal links or codes. An affiliate program usually adds more structure: written program terms, commission rules, groups of affiliates with different rewards, and a dashboard, a page where each affiliate sees their referrals and earnings.

The line between the two is thin. A customer who refers a few friends and a creator who reaches thousands of followers can both be affiliates in the same program, each in a group with rewards that fit them.

Why customers, creators, and partners make good affiliates

The people already around your store know your products, and their audiences trust them. That makes their recommendations more believable than an ad.

• Customers: they have used your products and can recommend them from experience to people like themselves.
• Creators: people who publish videos, posts, or newsletters reach a larger audience that already follows their recommendations.
• Partners: businesses that serve the same customers as you, such as a yoga studio and a store that sells yoga mats, can refer buyers who are ready to purchase.

Because these people are already in your orbit, you may not need an affiliate network, a third-party company with its own pool of affiliates, to find them.

Making it easy for customers to become affiliates

Customers are more likely to join when signing up takes little effort. With Simple Affiliate, a customer becomes an affiliate with the same customer account they already use on your store, so there is no separate affiliate login or password. Depending on your store's customer-account setup, their affiliate dashboard appears inside Shopify's customer-account area or on a branded page of your store's theme.

To see the steps a customer follows to join your program, read How does my customer create an affiliate account? in the help center.