How to start a successful referrals program – Complete guide for e-commerce marketers

People talk in detail about their latest purchase, the experience they had at the new fitness club, the food they tasted in the newly opened restaurant and the service they received from the staff.

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And that talk influences our shopping choices big time.

How often do you go to check out a new restaurant once a friend tells you about their mouth-drooling food?

Or hurry to buy that new pair of jeans once a friend tells you the store offers free shipping and an awesome discount?

Why is referral marketing effective?
1. Decreases your customer-acquisition costs
Digital advertising costs have been on the steady rise for several years now causing businesses to spend a small fortune and not get a proper return on their investment. While digital advertising is far better than traditional advertising regarding return, there’s still the fact that only 33% of consumers trust online ads, whereas a whooping 93% of consumers trust referrals from people they know.

Referral marketing is performance-based, and as such leaves no room for guessing; your true cost happens only when you gain a new customer.

2. Increases sales
People are 4x more likely to buy something when referred by a friend and will likely spend 2x more when being referred to a business.
A carefully crafted referral strategy not only brings in new customers, but also increases the average order value.
3. Creates brand advocates
When people like a product, they will tell their friends and family. When they’re incentivized to do so, they will advocate about your business even more. They eventually become your salesforce; a win-win scenario!
4. Builds brand awareness
People like to share a positive experience, a product they love and use religiously. This is a form of social currency; we share with others what makes us look good and unique. When you have an awesome product and an interesting story behind it, you can easily build a community of like-minded people,

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