If you’re running an online store, you’re probably using some traditional e-commerce marketing methods such as paid ads on search engines and social media.

Some campaigns might be more successful than others, but it seems that the tried and trusted ways of advertising might not be the most surefire approach when expanding your business.

According to Nielsen’s latest report on global trust in advertising, 48% of consumers trust search engine and social media ads – that’s way less than outdoor advertising, radio spots, or newspaper articles.

So what’s the #1 source of information when it comes to choosing one product over another?

You’re right if you guessed that it’s recommendations from acquaintances. According to the Nielsen report, as many as 84% of consumers trust the opinions of people they know when deciding whether a product is worth purchasing.

In case of your Shopify store, that’s exactly where a referral system comes in.

How does it work?

Most referral platforms work through email, as it’s the most personal and the most convenient medium to share information about a business.

After purchase, a customer is prompted to refer the store to other people and receive a reward for the favor – usually a discount or free shipping on their next purchase. In most systems, the customer won’t receive anything until the person they recommended the store to orders something as well. This is done to ensure that the customer’s referrals are as honest as possible.

Sometimes, rewards are also offered to the recipient to increase the likelihood of them purchasing something from the store (although a personal recommendation is already imposing).

Reasons to implement referrals

So it all looks rather simple. But is it worth your while to implement a referral system in your store?

Well, in addition to the obvious outcome of increased sales, referrals can provide you with:

  • Repeat purchases. Since the sender of the recommendation receives a reward, they’re much more likely to purchase from you once again in the future (sooner rather than later if the incentive has an expiry date).
  • Clear return on investment. You’re always spending only the amount that the reward is worth, so you can easily calculate the cost of a new customer – that’s rarely the case with pay-per-click ads and other online marketing methods.
  • Community building. If two people who know each other buy from your store, it’s very likely that they’ll end up talking about your products later on and recommend them to other people using the same referral system, effectively building your brand awareness in their circles.

Tips for building your own referral system

Finding what works best for your Shopify store will surely take some testing, but here are a few tips which should help you out in the process:

  • Find the right moment. Choosing the right time to ask the customer to refer your store to their friends is essential. Generally, the moments after completing a purchase or receiving an order work best, but you can also try out other times when the customer is feeling happy, such as after leaving a positive review.
  • Make the procedure simple. The recommendation process has to be as hassle-free as possible, since most customers will quit halfway through if they have to fill out a few different forms or write the email letter on their own.
  • Offer a worthy incentive. A $1 discount will just not cut it – you have to make it worth the customer’s while to refer your store to others. It’s even better if you reward the recipient as well, as the customer will look at it as a favor to their friend, making them even more likely to recommend your business.

So, have you decided to set your Shopify store up with a referral system?

If you’re looking for a reliable option, we’d recommend trying out the Referrify app readily available at the Shopify AppStore. It’s really easy to implement and comes with a wide range of customization options, allowing you to send personalized emails to people referred by your existing customers.

Referrals are certainly an excellent way of expanding your clientele and increasing your sales – you can take a peek at how everything works and see how a great referral system can influence your store’s performance with the 7-day Referrify free trial.