receives compensation from some of the companies listed on this page. Advertising Disclosure


How to Create a Customer Referral Program That Works

Thomas Griffin
at OptinMonster
Updated Jun 28, 2022

Here's how to leverage the No. 1 most trusted form of advertising.

Gaining the trust of your customers is one of the most important things you can do for your business. Why? First, you’re creating positive customer experiences, which leads to customers coming back to your website.

There is another important reason why you should care. When your customers have faith in your products and services, they are more likely to refer you to a friend.

Nielsen reports that customer referrals are the No. 1 most trusted form of advertising. What does this mean for you and your business? It means that if you want to make the most of your company, you need a referral program that works.

Below I explain how you can develop a solid referral program and get more conversions for your business, as well as improve the public’s opinion of your company.

What is a referral program?

In a nutshell, a referral program is a system set up through your business that offers rewards to customers for sharing the good word about your business. The reward can be anything from a discount to exclusive content, and anything in between.

There are a number of ways you can incentivize customers to spread the word about your company. The most important thing to remember is you have to start with a killer customer experience every single time.

Make it easy.

The first and most important rule is you have to make it easy. If customers have to jump through a million hoops just to get a coupon, they are going to give up and leave. Considering that referrals can boost conversions by up to 70 percent, you can’t afford to lose potential conversions because of a complicated process.

So, you know you have to make it easy to complete. Now you have to pinpoint your referral program rewards and figure out how to get your plan out there.

Figure out your reward system.

There are multiple ways you can reward your customers for referring their friends to your business. You have to figure out how much you make on each order and determine how much you can give the customers and still make a profit.

For example, if giving a 30 percent discount causes you to break even, you may want to drop down to a 15 or 20 percent discount. Regardless of the numbers, your customers will be appreciative that they are getting a discount on their order, especially if you follow the first tip and make it easy for them to refer their friends.

Most businesses do a standard percentage off discount. You can also offer points if your business has a points system that translates into money off an order. If the customer is only 100 points away from a free purchase, and you offer 500, you better believe they are going to refer their friend.

Another common way to reward your customer is with a free gift. If they refer a customer, they get a free gift with your next order. A free gift for the customer and their friend could convert them and cause them to make the referral.

How to implement your program.

Once you’ve decided to start a referral program, you have to determine how you’re going to send out your referral proposition. The most common way to is to send emails to returning customers. You can do this by using an email marketing program to build a lead list of former customers.

Editor’s note: Looking for an email marketing service for your business? Fill out the below questionnaire to be connected with vendors that can help.

When designing your email, you have to build a custom referral proposition that catches the attention of your customers. First, start with a catchy heading.

Once you’ve decided on a subject line, it’s time to move to the body text. You should make it short and sweet. For example:

Hi, there! It’s [Name] here from [Name of company]. We noticed that you recently made a purchase from us. Did you love your experience? Now is your chance to save 30 percent on your next order! Simply refer one of your friends today and you both get a coupon code for 30 percent off your next order.

It only takes a few minutes, and we want to make sure you don’t miss out on this limited time offer. Simply follow the directions below for your referral code.



It’s that simple.


Now that you know what customers expect from a referral plan, you’re ready to start your own program.

You’ll want to carefully monitor your analytics and make sure that your email marketing is working. You may have to make some minor tweaks to your referral program over time. You can build a perfect system based on your business model with practice and patience.

Just remember to make your system easy for customers, clearly define your rewards and target your lead list. You’ll soon have an explosion of customer referrals for your business.

Image Credit:

ESB Professional/Shutterstock

Thomas Griffin
I'm president and CTO of OptinMonster, a powerful lead generation tool that's installed in over 700,000 websites.