5 Steps to a Successful Retail Referral Program

5 Steps to a Successful Retail Referral Program

Whether you own a retail store or an e-commerce website, getting referrals from your existing customers is one of the most effective marketing weapons in your arsenal. Are you doing everything you can to harness the power of retail referrals? Here are five steps to help you get started.

Starting a Retail Referral Program

Step 1: Be Referral-Worthy

Of course, you can’t hope to get referrals unless you start by delivering exceptional products and customer service — with an emphasis on the latter. You may sell the same products as your competitors, but memorable customer service can make the difference in where shoppers decide to buy.

Think about the last time a retailer went out of their way to help you during the purchasing process. What did they do that made you remember, talk about, and share the experience? That’s the type of customer service experience you want to deliver.

Step 2: Find your Best Customers

The customers who are most loyal to your retail store or e-commerce website are your best bets for generating referrals. Use your customer loyalty program, purchase records or other customer data to identify these people so you can reach out to them. You may already know who some of your best customers are simply from seeing them in the store over and over. And if you have customers who always have good things to say about your business, either in person or online, put them on the potential referral list as well.

Step 3: Decide on your Retail Referral Incentives

What types of referral incentives should you offer? What you sell and your target customer base will help determine the referral incentives that are most effective.

For example, if you sell lower-priced products, a smaller incentive (such as $10 off the next purchase) could be all it takes to earn a referral. On the other hand, if you sell luxury items or products that require a significant investment, you will need to offer a proportionately bigger referral incentive. Otherwise, your customers may not feel it’s worth their while to make a recommendation for your expensive product.

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Another decision is whether to offer percentage-off incentives or dollar-off incentives. Cash incentives tend to work better with larger purchases or infrequently purchased products, such as major appliances or furniture. Percentage-off incentives work better with lower-priced products and with “commodities” that customers buy over and over, like clothing or bath towels. Offering 20% off a $5 product sounds like a more meaningful savings than the $1 off it actually adds up to.

Step 4: Train your Employees in your Referral Program

If your employees don’t know how your referral program operates (or even that you have one), customers will be frustrated — the exact opposite of the result you want. Make sure your sales clerks understand how the program works so they can smoothly process transactions involving referral rewards. They should also be encouraged to promote the referral program to customers they interact with.

Step 5: Market your Retail Referral Program

Get the ball rolling by sending a referral incentive offer to those best customers that you’ve identified. You can do this via email or even direct mail if that’s what your customers prefer. Include a promotional code that customers can share with their friends so you can track whether the referrals actually work. You can also promote your referral program with signage in your store or banners on your website.

Your best customers will tend to be your best sources of referrals, but that doesn’t mean you can’t reach out to other customers, too. For instance, one particularly effective time to send a referral incentive is right after a customer has made their first purchase. As they’ve just discovered your store, they may be especially receptive to making more purchases in the future, and a referral incentive can tip the scales. In-store, you can hand out referral cards or print a referral code on the customer’s receipt. Online, you can include a referral offer and code as part of the follow-up email you send once the product is delivered.

By following these five simple steps to a retail referral program, you can create a snowball effect that will really heat up your sales.

Photo via Shutterstock


Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.

3 Reactions
  1. I have seen some shops implement something like this. It allows them to get more customers. It also works somehow in the same way as a loyalty program.

  2. Referral programs work because they use the power of trust to encourage other people to buy from a business.

  3. I have always thought that referral programs are only online. I guess you can also use the same concept offline especially in retail businesses.