Referral Marketing JUST Got EASY

well good afternoon and welcome to the ecommerce podcast live stream or live
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we will endeavor to try and answer those questions if we can if it's appropriate if we can fit it in we will definitely
try and get to those today we've got a great guest we're going to talk about referrals we're getting into that whole
thing on referral marketing referral marketing made easy and uh got a great guest all the way from i say all the way
he's not actually all he's not that far he's in spain uh raul is going to be joining us uh and uh we're going to get
into this really great guy actually spoken to him already a lot about this super excited about this conversation
it's going to be fun so all of that said uh keep watching uh keep engaged and
like i said say hi uh write your questions in the comments um if you're regular you know what to do
i'll be back in a second we are gonna get ready now to record our show the ecommerce podcast so get ready here we
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welcome to the ecommerce podcast with matt edmondson a show that brings you regular interviews tips and tools for
building your business online
[Music] well hello and welcome to the ecommerce
podcast with me your host matt edmondson great to be with you on yet another
fantastic day uh just enjoying the weather and apparently today is the
first day of autumn as we're recording this uh as my guest has told me earlier so uh if that's true happy autumn
wherever you are uh this show is for all of you guys who are involved in e-commerce i know so many of you are
startup entrepreneurs i know so many of you are already in e-commerce whether you're running your own business a
marketing agency or an e-commerce manager or even uh you know just wanting
to find out more about ecommerce because it's part of your business whatever your reason for being here it
is great to have you uh with us on the show i just love the whole topic of
e-commerce i really do it's just a phenomenal thing and uh it's where i do
business uh all week it's it's isn't it e-commerce so
it's great to be a part of that great to be part of the buzz and the community of it and so we do this podcast every week uh
to help i like to say it's to help you grow your ecommerce business the reality of it is
it probably helps me the most because every week i get to talk to the most extraordinary people uh
they're just fantastic from the world of e-commerce i get to ask them all kinds of amazing questions
and you know i kind of have those conversations uh that you would get to have with them if you sat down with them
and just had a cup of coffee in a coffee shop and got to pick their brains for half an hour that's in effect all i'm
doing and it's uh it's a beautiful thing because that's my role that's my job i get to do this show and talk to amazing
people about e-commerce dig into their stories pick out you know the principles that can really help us start and grow
and adapt our own online business it's just great fun so i appreciate you feel really sorry for me now
and the role that i have so let me tell you what's coming up on this week's ecommerce podcast we are going to take a
deep dive into this whole area of referral marketing one of the most
difficult parts about running a business is finding new customers i am sure we can all attest and agree to that simple
statement can't we uh finding new customers is like it's like the thing that we all strive
for how do we get better and more cost customers it can be hard to know where
and how to invest your time and money everybody's telling you to do everything
what do you do right but what if i told you that you could attract more customers without spending any extra
cash on doing so i mean that's like that's like the silver bullet isn't it
that's the thing that's the golden chalice and all that sort of stuff that we're aiming for well here's the thing you don't actually
need to spend tons of cash on advertising or hiring expensive marketing firms when referral marketing
can do the heavy lifting for you with minimal investment required from
your end and so today's podcast referral marketing just got easy uh is is i'm
psyched to get into this let me tell you looking forward to this one uh and to help us navigate this whole thing this
whole area is raoul galera now he is the
chief advocate of referral candy which is an app that allows e-commerce brands
to set up and run great customer referral programs in other words
he's a cool guy to talk to on this topic yes he is so without further ado i'm going to push this button on my pad and
i'm going to bring raoul onto the show rao great to see you great that you're here with us thanks for joining us
yeah thanks for having me oh no worries can you can you hear us all right that's the question is the
internet stood up to my introduction so so far so good yeah
that's always a good one now you're joining us from the southern part of sunny spain uh and which is great you
know i i a few years a few years ago i would have been able to say we have a fellow european on the show uh since brexit i
don't know if i can say that but welcome to a fellow european on the show it's great to have you
now how how have you have you got involved with
uh this referral candy thing from southern spain is this something that you've done is it is it your baby is it something
you've got involved with uh what's the story there yeah um it's actually yeah kind of a
funny story i guess i um so i was actually not living in spain that was like six five six years ago i
was um living in chile and i was working for a startup company there i was doing sales
and uh back then the company was working for we were basically selling uh recruitment
services to startups so i was not oh sorry then
oh so yeah i was not involved in the tech tech world or e-commerce or anything
like that um but i wanted to get involved in that um and so i started looking for companies that
were i mean looking for somebody to work in sales uh from kind of like the tech space
e-commerce actually commerce was uh one particular sector that was uh interested in learning more about
um and uh i was actually looking for companies that were okay with uh having me potentially working remotely um and
so i came across an angel list i came across for fall candy they were looking for uh kind of like a sales executive um
and it said remote friendly so i was like oh yeah that sounds like a sounds like a good opportunity like a winner yeah yeah yeah and then i so i went on
referral kennedy's uh website and i remember reading some of the key studies and one thing that i particularly liked
about the product me as a as a former salesperson um when i look at companies
the first thing i think about it's how easy would it be to sell this product um yeah and i i figured well our fraudkin is
probably very easy to sell because it's when you're literally turning your customers into your sales people it's like it's kind of it's kind of a
no-brainer at some point um and so i figured that it was a very very interesting product uh kind of like a
very honest way of doing marketing so i actually like that a lot um and so yeah i wanted to get involved so i instead of
applying through angel list i i managed to find the email address of the ceo um
of dinesh and i've sent them an email and say hey i would love to work with you guys i saw that you guys are looking for sales
positions i would love to see how we can work together and he replied and yeah i guess
there is this history wow it's really interesting because um
i say it's interesting because what the the few things that i'm going to pick out from your story there well which i
think are really uh whether we'll get into one i don't know one remote working was important to
you and this was obviously you said it was five or six years ago this was before obviously the pandemic hitting
everybody's remote working i'm at home you're at home we're recording this whole thing um
so have you been remote working for the last five or six years yeah exactly uh and even more to that
actually my my first kind of like work experience uh was uh so i was also
living abroad i was studying actually in in poland for for like a yeah for half a year actually doing my erasmus
scholarship um and uh which for those of you who are not european uh the the the raspberry
scholarship is uh it's a grant that's given by the european government and allows you to travel and and study
abroad in another european country for either six months or a year so i was doing that and i came across this
company that was looking for interns and i figured well it would be kind of like a nice you know add-on to my you know
education abroad so i started working with this like very small consulting firm and literally the first thing they
told me at the job interview which was in was that you don't have to come to the
office like you can work from you know your your room i mean wherever you're staying here in poland uh from starbucks
i mean you can come to the office if you want but you know you're not required you wouldn't have any any you know schedules or anything like that and for
somebody like me that i mean it was i was literally like that was my first you know job experience uh wow it felt
really weird i was like i don't think this is how you know the real the real world looks like so you
know that's something i was like they're trying to like scam me or something i don't know it felt kind of weird but um but i got used to it i
actually liked it and the reason why i moved to uh to chile after that two years later
uh was because i i mean i wanted to continue living abroad um but also i
wanted to experience what office life was like yeah and so i managed like i wanted to get a job that i had to go to
an office every day and interact with people and all that and it was great but then i realized that i actually preferred to work remotely so yeah i
made that decision in and uh yeah i've been doing it ever since that's fascinating because i mean one of
the things that's come out of and we're not going to talk about remote working too much longer we're going to get into the referral thing um but i'm i'm
intrigued by this because we have a team right that does remote working and one of the things that comes out of or this
come out of the pandemic is the amount of people now who are going to work at home and so as business owners we're thinking
about what do we do as we're coming out of the pandemic do we have everyone back in the office do we do remote working do
we do some kind of hybrid type thing and i think everyone's now understood
that remote working can actually work and be good for your organization so what what's the main lesson that
you've learned from doing remote working for five or six years that would help someone like me to make sure it's
successful in my company i would say that um
i mean for me the realization was that uh i mean i again i come from sales uh
now i'm doing uh partner management which is i guess a mix between sales and marketing
at least in my field there's not much that i need to do in person
or i guess in other in other words working remotely it's not a blogger for pretty much any of my tasks or my
responsibilities so my realization was that i was i was doing i was doing things uh you know when i was working
from my from an office uh five years ago uh i realized that literally everything every single thing that i did throughout
the day i could do it from home or or not from home from from anywhere i could be in a different country and i could still you know produce the same uh
output so that was my main realization so if and i feel like a lot of companies have realized i mean the fact that we
went not only were forced to to work from home we were forced to work from home in the middle
of a pandemic which like the whole stress that come you know that comes with it and all that all the uncertainty
and everything um and we still met a lot and lots of companies managed to you know get even
stronger um after the pandemics so the reality is that working from home was definitely it was
never a blogger and a lot of companies are realizing that now that they can have people working from home and i would say the
main thing that business owners need to in my opinion think about it um how many of these tasks
that their their employees are performing are can be done asynchronously um is this
something they can do on their own time can they do it in like their own schedule do they need to be face to face
uh you know talking to other people it's it's a zoom call enough in all cases it is
um so yeah and again i'm talking about the kind of like the the business development marketing areas i'm sure that maybe in
design development it probably makes a little bit more sense to have some sort of in-person meetings for um you know
troubleshooting whatever it is but um at least in in the field that i work their work at
pretty much of the tasks you can do from home and it you'll have exactly the same output as if you were in an office
yeah no fair enough very useful very very fascinating and the same well the second thing you said
in your story apart from the fact you've done remote work in so long was i i liked how
when the job advert was placed on um what site was it angel yeah angels
uh so the job was put on angel listing but you didn't apply through that you managed to find the email of the ceo and
contact him directly yeah and i think actually if you're uh
if you're in the job market if you're hustling and looking for a new job what you said there i thought was quite was quite powerful because so many people
just do the default and what you did was do something different you hustled a little bit you managed to find who you needed to
contact contacted them directly and let you say the rest is history and just that little snippet i just didn't want
to let go because actually uh as a fellow uh entrepreneur and hustler i i admire things like that i
think that's um that's pretty cool so well done right great all of that said let's get into referral
marketing so the first question let's kick start off with the most obvious question of them all what is a referral
program so a referral program is a
marketing action that you establish in order to get your customers to uh
refer their friends to your store now this can be actually a set store because we're talking about e-commerce but there
has been referral programs from pretty much any industry out there and if we think about the most famous referral
programs in history we you know we typically think of dropbox paypal um i think airbnb had another one too and
uber right those are kind of like and none of them are ecommerce really um and so but but obviously you know
because we're talking about ecommerce and because referral candies uh specialized in e-commerce um
that's why i said brands but i also think that e-commerce brands are probably one of the
most referral marketing friendly industries out there just because of the nature of those interactions um so again
so referral marketing uh referral programs are are a type of marketing uh but it builds on top of something that
it already exists on on your store and which is word of mouth um if you have and i always repeat this
you know if you have a good product if you have a good uh purchase experience if you're if you are able to achieve
customer satisfaction your customers are talking about your brand already because you're selling something that it's
likely that they're showing it to to their friends and family or maybe they're posting a picture on social media and talking about that particular
product or at least showcasing it in some shape or form and it's likely that those products are going to strike
conversations and they're going to talk even if it's just casually they're going to talk to their friends and family about it and they're probably going to
recommend it there's several reasons why i think we we as humans part of a human nature it's
to recommend so again if you have all those items in place and your customers are already
referring you organically a referral program is something you build on top of that to make sure that
they continue to do so and they have even more incentives too okay so what you're doing is you're taking
something that's already there the word of mouth and you're being much more intentional about it
and actually my experience is the word of mouth marketing um
because customers don't just tell their friends when something goes well they tell the whole world when something goes
wrong right yep and so you you see it in in both good and bad
and we've all done it we've all got hacked off with a company and gone to social media and gone these guys are all
gets jeremy and we're just like we don't like these people anymore um
but actually what you're talking about is the the customers that are out there that are fans um like i will often talk about certain
products that i use all the time like you saw earlier my drinks kept from yeti i like the brand they don't pay me to
say things like that you know they've not given me that cup to put on the podcast although if they wanted to sponsor it you know do get in
touch uh but i i just i like the brand and i talk about it so what what you're
talking about is taking something like that where people are talking about your products already because you've already got a good company your values are
already set your products already good um so let's be intentional about helping
customers spread the good news of who we are they used to that the buzz term years ago i say years
ago was only a few years ago was you turned your customers into evangelist didn't you and you just that's what you
did um so what's the difference then because um i i hear what you're saying and i hear a
lot of buzz terms around the world of e-commerce and you see them on websites so um you said uh that you want your
customers to refer their friends right so it's a referrer friend
type thing or what we call here in the uk the raf the raf not the royal air force the referrer friend scheme um
what's the difference between that and an affiliate scheme because that's the
other word i hear and i do they get confused do they mean different things i mean they're pretty related um but i
think uh and they kind of fall under the same umbrella um and we actually have
customers using referral candy to run affiliate programs so there's there's a little bit of a little bit of a
difference there and the main difference is uh the nature of the individuals that are joining the
referral program and their relationship with the people that are they're going to refer so on a refer a friend program
uh you have a customer that is going to either go on social media where
their friends hang out they're they're like regular people on social media with you know maybe a couple hundred
followers on on instagram uh not necessarily influencers and if they share something it's mostly their
friends and family the ones that are gonna see it or if they talk about your brand um
to again to to kind of like the closest audience is going to be friends and family co-workers etc uh so that those
are the types of interactions that you get on on a referral program an affiliate program is a little bit different our affiliate program you are
getting people to talk to others about your brand um but those others are not
necessarily friends or and family they're probably somebody that has maybe a blog and
they're talking about your product and their blog and then you know the audience that reads that blog doesn't
have a personal connection with the writer but you are promoting a product to that audience uh you might have a youtube channel or you might have you
might be an influencer and you are promoting one particular product on your uh instagram channel uh sorry uh um
accounts so uh so the nature of the people that are going
out and going out and referring other people to your brand is a little bit different and then also again their their connection
and obviously the type of rewards um are also a little bit different um on an affiliate program
you're likely just going to uh i guess reward the person that's making
the recommendation so the person that has a blog or the pencil that has a youtube channel and you're not necessarily going to give an incentive
to the friend um that that's making the purchase for for the first time but on a referral program you're probably going
to either match the the rewards so that the both the the advocate and the friend
are getting the same type of reward and in some cases it's even more important to give a higher reward to the friend
because the recommendation's gonna happen anyway the recommendation there's no uh almost no financial incentive for
the customer to make the recommendation they're going to recommend something to their friend because it's useful
because they believe that it's going to be valuable for their friends so that recommendation is probably going to happen in any way i mean it's nice that
they're getting some sort of uh incentive out of it but it's sometimes even more important for the friend to
get the incentive uh rather than the advocate so yeah that's that's kind of like the main difference between the two
yeah no that's brilliant that's brilliant and i i i mean we've run referral friend programs and
affiliate programs and i've never really thought before about the fact that the friend the person that's being referred
should maybe get the higher reward because the person doing the referring maybe doesn't even care whether they're getting
something out of it or not because they already like you they're already a fan and they're telling their friends
because they want their friends to benefit from your product or service because they they think it will help them
uh they're not doing it to get financial reward they're doing it maybe to be a bit more altruistic and i've never
really i'd never really made that connection so that's that's um that's in my notes uh
lots of notes as we go along um so that's so the
i'm just thinking back over the years you know we've run ecommerce businesses we've had people um
who i remember one time we were looking at our analytics and some and we were like there's a lot of traffic to our
website coming from a particular country i won't say the country and i won't say the website so
anyway there's there's a lot of traffic coming on this particular website we were like oh my goodness that seemed with this
customer base in this country is growing and we didn't know why we'd not you know we dig deeper into the analytics and we
found out that there was a blogger in that country that was a fan of ours they bought
products and they just literally went on and wrote a blog post about it and so
and we looked at how much traffic that generated that blog post and so we contacted the the author of the blog and
said listen one thanks for writing this blog but two do you want us to give you some kind of
affiliate link we don't do that ordinarily but you're generating quite a bit of traffic and therefore sales to
our website and they were like no no it's fine we're just i like you guys appreciate what you're doing you know and and they
they were they were doing that but let me tell you had they have said yes right
we would have been paying them around five to six thousand pounds a month right in commission i mean
that's a lot of love she was showing the organization let me tell you it was um it was it was lovely to see for that
season for that point in time so yeah i get what you're saying so the referral the referrer friend so
i'm referring a friend my friend needs a big reward i like that but why do these
why do these programs work so well because i'm hearing you this and i'm going okay well i
understand a few things and we'll get into some more of the specifics on what you need to do but i'm thinking right here at the start
i'm thinking this is going to be a pain in the bum to maybe set up jeremy we're going to have to do this this isn't this
we'll get into all of that um so i need a compelling why why should i
set up a referral program why do they work so well well first of all kind of going back to
what i mentioned earlier about um the difference between word of mouth uh kind of that organic uh word of mouth and
referral marketing um when it comes to organic word of mouth uh you might be getting referrals but
there's really no way for you to track where that what that traffic is coming from it's kind of like a similar story
uh to what you were mentioning about that blogger that wrote i mean that blogger at least wrote about you guys and you guys were able to track that url
but when when i tell my friend over whatsapp that they should buy you know this pair of sneakers um and my friend
go to the website and buy it the store doesn't really know what it's coming from so first of all
just to be able to track what kind of uh word-of-mouth traffic are you getting
already as it is as a brand to me that's at least one piece of information that you didn't have before
and the other reason why um i think that i mean brands should definitely start
looking into this maybe and maybe that's something we'll discuss later but maybe not
all brands maybe brands that are at a certain level in terms of kind of maturity as a company or you know orders
per month or something like that there's there's like certain levels that's gonna make it um
easier for you to start seeing results uh in the short term uh if you're obviously if you're more established
brands and you have um you know thousands of orders per month you're going to be able to to see results much
quicker than if you're a startup that only has you know maybe a couple hundred orders per month so those
those are kind of like things to keep in mind but uh but if you're at a position in which you you can already tell you have those kind
of like early signs that you have customers talking uh to their friends and family about your brand then it's a
really good way of kind of tracking how much of that is coming from from word of mouth yeah and again and it's
oh i was gonna say it's just a channel that you already have um you're investing in
a channel that requires the little uh upfront investment um and uh and it's
it's it's net near revenue uh these are customers that have not bought from you before at all they probably have never
heard of your brand before and those are customers that you're acquiring now and that statistically they're more likely
to spend more and stay longer because of the nature of the the the source that
they came from which is a personal recommendation so basically what you're saying raul is
this thing hits every single marker on their head doesn't it one you can track it uh two there's not a whole great deal of
investment and three it is very very effective in terms of
it's gonna send customers to your website that are willing to buy um and the people that come are going to be
good customers they're going to buy more on average and they're going to stay with you longer so this really is the elixir isn't it
it's kind of like the the thing that we're all striving towards at least that's what it sounds
like um are there any downsides to running a referral program
or is it all upside no i so as i mentioned earlier
not necessarily a downside um in terms of uh
you know kind of like having some sort of negative um aspect on your business but
your business needs needs to be um in a place that it's going to
make the referral program successful so referral programs cannot fix problems uh so if you don't have a good product
if if you're you know the the whole experience that your customers are going through when they buy from you it's not you know up
to their standards and they're not overall happy with what they uh what they saw and what they did
they're not going to refer and it's as simple as that a referral program a monetary incentive is not going to um
incentivize them to go and recommend a bad product to their friends you know
that's that's never going to happen um so so that's so again it's it's not i mean it's necessarily the downside but
it's it's definitely a position in which you don't want to launch a referral program now when it comes to uh we we've seen
that some brands that are uh maybe kind of like in the high-end kind of luxury industry
um they're a little bit more careful about how they frame their referral programs uh because they have this kind
of like aversion for discounts overall and so referral programs tend to you know work well if you offer
some sort of incentive um which is typically discounts so they're typically a little bit wary they they kind of they
choose their rewards very carefully uh maybe they don't offer discounts or coupons but maybe they
offer free products or maybe can like access to you know particular deals etc
but not necessarily um you know they don't go uh really hard on the discount
route uh if that makes sense um so that's something that could be a downside for someone for some companies
that are in that particular uh industry um and then again what i mentioned earlier um not necessarily a downside
but if you're at the end of the day referral programs work well when you have a good number of customers uh that
you are adding to the program on a regular basis so if you don't have that steady flow of new customers coming
in or or even if it's recurring customers coming to your store on a regular basis you don't have that much uh fuel to feed
your referral program with so you need to have that existing base of
orders coming in in order to be able to see results in the in the short term and is that
is that base as simple as me saying to you what's a what's the number do i need a
thousand orders a month ten thousand orders a month a hundred thousand what what sort of ballpark am i looking at
here ideally um to get started i would say a thousand um if you're between and a
thousand a month it's it's you're in a pretty decent place to start if it's a thousand then i should definitely
consider it um adding referral programs to your mix if it's less than orders per month it might not be it again it's
not going to do any harm it's just that you're not going to be able to see uh results as as quicker as you would like
especially when you're at that level and you're trying to grow very rapidly so what what um
if i've got say a thousand orders a month then and i don't have a referral program what would you expect to sort of take up
rate to be on a referral program i appreciate that might be you know a crazy question
because i dare say it depends industry to industry and country to country in some respects
as well but um typically if i've got a thousand orders a month
would could i could i expect maybe that five percent of my customers are gonna
use whatever offer i've got and and promote that out to their friends is are there some industry metrics that
we can think about yeah so uh we we always uh give this kind of
like baseline benchmark uh to our brand so they can kind of have some number in
mind when before they launch the program um and we and again this is more this is more of a
baseline of you know what you should be able to expect at least right away um and it's like you said it's gonna depend
on industry and it's going to depend on kind of the type of promotion that you do for the program um but we typically
see at least a two percent um increase in in in sales and that two percent once
again it's it's net new revenue so it's it's revenue coming from brand new customers that didn't know
about your brand before and that are going to stay with you hopefully if you can retain them um and they're continue
they're going to continue to spend more so it's it's basically adding a percent of new customers every single
month at least now again that's a baseline but we've seen customers uh they have been able to add let me grow
that number to over actually it's it's not a crazy number to achieve and that's of new customers joining the
program on a monthly basis again those are more more mature programs that have been around for a while they've been able to
kind of like optimize the reports and optimize the the cadence in which they're inviting their their customers to the program and all of that
but again is an increasing number i've seen up to uh um again some some uh you know number
just a number of cases but like i said it's it's not something
extremely difficult to achieve um for for some brands down the line wow okay
so so i'm just listening to this thinking well this almost sounds like it's a bit of a
no-brainer right so for very little investment i can add between two and ten percent to my bottom line of pretty good
customers i i need to investigate it so how would i go about setting up uh a referral
program what sort of things should i think about what what sort of steps should i think about taking
yeah so the uh you have to think about um first of all the the type of rewards
that you want to give um and also kind of look at your own margins so one of the really good things
about referral marketing is that it's it's a performance based uh program uh
sorry a marketing channel uh in the sense that you're only paying or you're only
in this case giving out discounts when somebody actually makes a purchase or somebody actually makes a referral so
you have there's a lot under your control uh that you can you know you can set up
to make sure that you're running a referral program that's profitable for you so the first thing you need to look at is your margins you know what are you
willing to or what can you afford to give obviously the more attractive you make
the discounts the better um make sure that those discounts that you're given uh that you're giving out are not
already available through other channels you know they can't they can't get another kind of a better discount if
they come from facebook ads or or if they you know sign up to the newsletter make it special so they actually want to
use that promotion um and yeah and then so that's i mean that's really it i mean in terms of
integration uh and i'm gonna talk about referral candy specifically uh we we work with a number of e-commerce
platforms uh shopify big commerce woocommerce uh etc and then even even
stores that have their own custom setup you can still integrate with with their fall candy so integration
in terms of technical integration it varies a little bit if you're if you're on one of the top platforms so shopify
becomes woocommerce it happens automatically there's no development work needed on on your end
if you have your own custom setup then there's your developers might need to spend a couple hours setting it up
but besides that it's it's integration it's reward setting which is what we just talked
about and also the marketing assets that you're going to use on your referral program so that's
emails that are going to set up to um to let your customers know about the
referral program maybe different pages that you're going to create on your website again the good thing about referral candy is that it automates that for you
as well create all these different assets so if you don't want to create your own you can use the ones
that we give you by default and you can have a referral program up and running in a matter of you know less
than minutes really oh wow well let's get into the the discounts because this obviously
seems like a it's a big part of the whole referral program so i'm going to refer my friends
they're going to come to the website they're going to use i imagine a code to get a discount um
and they're going to enjoy a special you i mean it was key what you said earlier about a unique discount as in they can't
just get it from facebook ads and all that sort of stuff as well it has to be unique for your customers to make their friends
feel special which i totally get i guess one of the questions in my head is does it have to
be discount certainly wrong you talked about the high value brand saying offering a gift with purchase
um does a gift with purchase also work or does or should we really think about the discount route because that
definitely works better unless you are a real high-end brand
i mean i've seen some really creative ways of running referral programs that the the free gift actually works
really well um so maybe for both sides actually so for the advocate not necessarily giving them
a discount on a future purchase or cash but instead giving them like a free product
they already like your product they're already your customers they're going to be happy getting a product for free that works really well um
also works really well for the friend so if your friend makes a purchase over a
hundred dollars we're also going to give them you know x product and we're gonna add it to the car for free and they're gonna get something uh extra so that
typically works really well um we've actually seen some examples of we actually want we have one really good
example of a company that they have a very kind of pretty limited catalog um they
they offer i think it's like five different options of this uh toy sleeping toy for for uh toddlers and uh
the way they're running the referral program is that they they're giving i think free shipping to the friend um and
then the customer that made the referral if they refer five friends they get one of these five uh toys for free and
every single time they refer five friends they get another one of the toys so it's kind of like collect all five of
them right by by referring friends um and that worked really well uh because
especially their demographics they realize that um these customers might not be interested in buying another
another product but they they're gonna be happy to get one for free um and they also realize that you know because again
because of the demographics uh they were mostly selling to to uh parents they might not be really interested in
getting you know cash uh for you know for they're actually probably just going to refer the product because it actually
makes their baby sleep so all their parents are going to be happy to buy it as well so um again it's it's all about
uh understanding what motivates your customer base um another example that i really love
um it's a and an ins and subscriptions uh subscription boxes there are actually
some really cool examples there uh i've seen uh subscription boxes that give off to
the friend and and a free renewal to the customer that made the referral so they're
willing to go that far and and they're giving a product gonna have for free uh in order to be able to acquire a
customer and that still makes sense for them because they they're so sure that their product's good and that the
friend's gonna like it that they're happy giving out one and a half for free so um
so i've seen some really cool ideas there um again adding free products um or maybe even doubling the order so
uh for every friend that you refer you'll get double amount in your next subscription you know that's that also works really well wow that's really
clever i think the um some a phrase you said earlier on um
you need to uh you know the guys that have been running their referral campaigns for a while you
use this phrase how they've optimized their rewards right and so
i mean you've come out with a whole bunch of ideas there i'm guessing that the odds are if i type
back to what you said earlier you're not going to hit a home run on on the first on the first standout are you you're not
going to come up and nail it straight away you're going to have to test and develop and try different things and see
what works for your audience um is that what you mean by optimized rewards it's like play around with
things and figure out what works yeah exactly uh i mean the good thing about i mean again i'm going to talk
about referral candy now you can always change uh your rewards at any time um and that doesn't affect past rewards so
if somebody already got a discount it's not going to get taken away from them um but if you want to switch from a
discount to or you know maybe bring it down to whatever it is or change to cash or change to um free product you
can always do it anytime and and that that testing it's going to allow you to down the line
see which type of rewards is the one that makes more sense there's there's a rule of thumb that we
typically give uh brands that you know when they want to some sort of guidance uh before they they set up the rewards
and is that if you're and i might have said this before but if you're selling a product that your customers are likely
to buy again from you um in the future give them give them a discount uh for for every friend that
they refer that way you are not only acquiring a new customer you're retaining that existing one because now
they have an additional incentive to come back to your store and buy from you again on the other side if you're selling a product that
it's not likely that they're gonna come back could come back and buy from you uh again anytime soon um i always give the
same extemple mattresses we have several mattress companies uh using referral candy they give cash um because they
know that their customers are not gonna buy a brand new bed or or a mattress uh anytime soon so they give cash or they
give a free gift right so it's all about again first of all understanding what motivates your customer base but if
you're unsure and you want to try different options uh you can always change that yeah yeah no great so for us
but a subscription-based business uh where you've got people coming back time and time again you're going to give the
referring person a discount rather than cash or some free product or something just to say you're referring to
appreciate it yeah yeah free renewal that's that's great one of the things that we've done in the past and i don't know what you uh you can tell me if i'm
crazy or you can tell me if other people do this right either way i don't mind you're not gonna offend me um
in the past what we've done is we've looked at it and gone you know what on this particular business let's say it
costs me bucks in paid advertising to create a new customer right so that's
the cost of acquisition is and that customer comes over and
their lifetime value is bucks right so you don't mind spending the bucks to get the bucks because it's you
know it makes an awful lot of sense when it comes to referral marketing in the past what we've done sometimes is
we've looked and gone well why why should i pay that bucks to facebook right if i pay that bucks to
the people you know my customer and the friend that they're referring and give them really high value
referral bonuses i'm i'm creating much better goodwill amongst those two customers than i
probably am off the cusp over the customer that i'm just going to get through facebook and like you say these customers tend to come and stay longer
and buy more so their average you know their lifetime value is greater um do people do that or is that just my weird
brain at work if any of my co-workers is listening to this right now they're thinking raul's
about to talk about boron fig and that's exactly right that's exactly what i'm going to do um baron fig they're a
company that they've been with us for many years and they have one of the
best referral program set up i guess or kind of ways of explaining why they're running a
referral program that i've ever seen and i always use it as an example because it's so good um they have a
they have a call to action on their website i think it's in the top navigation bar if you click it says get ten dollars if you click there they take
you to a landing page with the referral program information if you scroll down they have a note from the team where
they say exactly that they say um we rather instead of spending this money on
advertising would rather give this money to you and i i mean the first time i saw i thought it was genius i mean the
referral program is it it's working extremely well um and
i wouldn't be surprised if that copy uh made it successful uh the fact that they
were saying look you know why would we give money to facebook when or google when we
can give it to you instead right yeah um and so that they also mentioned the fact
that um something along the lines of uh you know every referral that you make uh it it
generates an impact on our small companies so they also have that sense of transparency of like look we're a small company you know any help that we
can get uh will appreciate it uh so yeah uh you know i was i was actually surprised
because it's it's literally the same case as baron fig and and they're one of my favorite examples to to talk about
because they were able to frame it in a very personal way now we'll definitely check those out and link to them barrow
and fig baron yes okay so uh you'll have to send me the website
role and we'll put a link to that in the show notes so if people want to check that out they can do and sign up to their referral program
because it sounds really good by the sounds of things um that's really cool so i mean we can
think about the rewards then and we can optimize rewards and we can get excited and we can understand what's going to help our customers and therefore help
our business and be transparent with that in terms of longevity right so i can be
excited today um you're gonna have ups and downs with this thing as you go along um
how do i how do i do this for the long term how do i how do i think long term success with my referral program
yeah so two different ways i would say so um always have i mean
make sure that new customers are being enrolled into the program on a daily basis so every single customer that goes
through a checkout gets an invite to join your program whether it's uh through email or through
a pop-up or whatever it is but they are they are being automatically invited to join the program um which is because
this is a cycle right like say if i refer you and you go through the checkout then you get invited now you become an advocate and you can refer
your friends so it's it's it's it's continuing that that whole cycle uh so that's one and then the other one is uh
when it comes to each individual advocate right um
when you set up the rewards think about how can you make these rewards uh
exciting even after they prefer a number of friends um and so
sometimes it's just as simple as offering um offering a discount on a product they
can you know they can redeem in in the future again that's that's that's typically enough because if you have a customer
that's um happy buying from you they're going to continue to do so and you know having that discount it's just enough
for them um but maybe you want to think about cash or even you want to maybe go even a step further and do what a lot of
brands are currently doing with with us which is that they have a referral program
right but then they also have another referral candy account uh for a vip referral program with a different set of
rewards and so okay and that's kind of a vip program in which that's it's invitation only so
they so no customers can join after purchase or there's no sign up page on their website but they manually invite
these customers to join a particular referral program with a different set of rewards it might be a free product it might be cash in most cases is cash to
be honest uh because we're talking about uh people that are referring large volumes of friends or or maybe
they were talking about influencers so it's you know it get we talked about influencer marketing and affiliate marketing before that's this is what
everything kind of blends together um but yeah having that separate program for those top performers
typically works really really well that's really uh so don't just have one
program think of think multiple programs maybe uh to separate people out
like that like that i'm aware actually raul i'm just sitting here thinking listening to myself while listening to you talking we've not actually explained
if i'm i'm just thinking if if i'm just new to the whole e-commerce thing
how does the referral program actually what are the mechanics how do you track
the fact that i've referred my friend to buy
a mattress that you referred off earlier how do you what's the mechanics of it
yeah so uh what we do is that we give customers a unique referral link that
they can share with their friends um so this is a referral link that at the end typically says your name um and so it
you know you know it's it's unique to you um so once you get this referral link you can share with your friends so
whether it's on on a group chat or or on social media or email whatever it is
you share this referral link your friend clicks on the link and then they're taken to a landing page with the offer
and the coupon code so the landing page says something like uh your friend just gave you off here's your coupon code
and so they're able to copy the coupon code from there and then they are redirected to the store so they can
complete the purchase um in some of our integrations the coupon code actually just goes directly to the checkout so
you don't actually have to you know worry about copying and pasting or anything like that um it's waiting for them by the time they they're gonna pay
um but yeah that's typically how the how the process works and then they go through checkout they make their first purchase the the they apply the
coupon code that was given to them by their friends and then they get invited to join the program as advocates now and
so they get their unique referral link they share with their friends and the cycle starts all over again
so you have some way of tying together that coupon code and the person referring it so if
i guess i i i can understand if if i use that coupon code i'm going to get my discount
how do you how do you track that back to the friend if you're giving the friend you know the referring friend reward
so depend depending on the platform we have different ways of of tracking uh typically with the referral link it's enough uh to to make sure that the
friend but we also uh for some for some of our integrations the coupon code it's unique to the advocate um so just a
coupon code alone it's uh it's enough for us to know that this particular
customer new customer came from uh this friend because they use that code that's actually new to the application yeah
yeah that's really clever really interesting and do you we've had it in the past where you've
had particular problems where you've given coupon codes to say some of you know your your your customers to go
share with their friends and what they do is they'll take that coupon code
and they'll paste it into one of these sort of free coupon sites and before you know it you've got a
whole bunch of people hitting your site you know using this coupon code and it looks like this guy's referred
people actually they've just been really clever and put it on a free coupon site um
part of me thinks i don't really care because i'm getting all these customers but i know that the customers i'm gonna
get aren't actually gonna be as good because they just they're discount glory hunters um yep have you got any
experience with that oh for sure um so we actually have both sides of the customers we have customers
that are okay with that they say look if there isn't a coupon code it's because they're spending x amount to be able to
apply it you know that's fine with me but we also have a good amount of customers for which this is a real
concern and we actually uh so kind of like some backgrounds for referral candy we actually have
several systems in place to prevent fraudulent activity so another example of fraud could be that i
refer myself i use my touch my microphone i don't know um that i
i try to refer myself to get to to get both of the discounts right i can use well we have systems in place to to
automatically disqualify those those referrals um in the first place but on top of that we've built uh we actually
built it uh between last year and this year uh a fraud center which is a center in which you can see throttling activity
um that pass all filters but it's still suspicious um and one of the ways that
or one of the the the kind of like the sources that we use to identify throttling activity is coupon sites so
if we see that a coupon has been shared on a coupon site we immediately flag it on the account and we let the merchant
know hey this particular user posted on a coupon site and that's why they prefer
people in two days right um so and then they can take action they can ban
the advocate or you know they can let it happen it's up to them really but we give them the option of doing so uh sometimes not
just the fact that we found the coupon code on a coupon site it's enough for us to flag it maybe it's just the fact that
they have gone from referring uh one friend a month to again to a thousand or a month right that's
suspicious so we we raise that up to the to the merchant we let them decide what they want to do yeah that's good to know so i think
that's just worth pointing out isn't it that actually referral programs um there is now the technology to start
tracking these things and be a lot smarter with it especially if you're giving high level discounts at the start
um you know which we would call them lost leaders where you maybe are not making a profit on the
first one but you know you would on the second and third one you're going to want to guard those and you can now with
the technology involved which is that's fantastic actually that's that's what we're all looking for in some respects
um what are some of the
i know you've maybe mentioned one or two already but what are some of the pitfalls that i need to think about
uh what are some of the things that are going to trip me up with running my referral program
i mean we've mentioned the coupon site that would be one yeah the coupon sites one um i mean
maybe just not having the right incentives um it's it's not gonna make it as successful as you would like um
sometimes uh actually not sometimes most of the times lack of promotion uh it's
one of the major mistakes uh when it comes to uh you know preventing a referral program from being successful you want
to make sure that uh your customers are being notified about the program uh in as many channels as
possible so lack of promotion can really make a referral program not us because if if people are not aware of it that
there's really really no way for them to to remember it when it comes to you know to sharing from in a conversation or
social media or whatever the channel is right um and then uh when it comes to coupon
codes i i um the fact and we we talked about this earlier making the promotions unique
right um we we came across this this by sometimes i talk about this particular
example because i think it's it's really pretty self-explanatory so we had a merchant last year um for which their
referral sales will drop every weekend um and it was it was weird because they will have like a normal week and then
saturday sunday they were just like less than half of this referral sales that we're getting monday through friday
um and i remember talking to talking to them and kind of like trying to figure out what happened and you know my first
my first um thought was well maybe maybe they just don't sell as much over
the weekends for whatever reason uh their customers prefer to buy monday through friday and they say no no quite
the opposite actually saturday and sunday are you know top selling days um and we realized that they were
selling that they were offering and this us took several days for for all of us to realize um they were offering a
weekend sale a recurring weekend sale that was uh with a discount that was higher than the the friend discount and so
obviously friends that had been referr now had the option of whether they wanted to use their coupon code that
they got from their friend or using the weekend sale so obviously they were going with weekend sale if it was versus it's a no-brainer um so that's
that's one of those that this like hidden um you know pitfalls that we never really thought about until it
happened um but yeah make sure that uh when we talk about make sure that you're that your um
rewards are optimized uh also make sure that you're comparing it with whatever else you might have it running on your
store pretty much of the stores they have a um
discount if you sign up for the newsletter right well don't offer maybe don't offer as well on the referral program make it a little
bit more attractive so so you know both both advocates and
friends are more incentivized by those rewards than the ones that are more easily accessible fantastic fantastic well i feel like i
say this to every guest every week that i feel like we're just starting to scratch the surface i mean we could go on about this and i'm aware of your time
i want to be respectful of your time and uh and yeah i think
it's so so helpful and such a simple concept isn't it and just taking
advantages are on word but you you're using the humanity of your customers their desire to go out and share and
tell good stories and give making it easy and being intentional in them doing that growing your business and growing your
customer loyalty at the same time why would you not do it so really appreciate you sharing your
insights with israel if people want to reach out to you if they want to connect with you how do they do that
um so my email is the best way to to reach me so uh it's my first name and the first initial of
my last name so raul g so r-a-u-l-g referralcandy.com and i'm always happy
to answer any questions there we will put a link of course to rao's uh
email in the show notes as well but raul g at referralcandy.com is the email is that
did i re reproduce that correctly yeah good okay brilliant listen well again thank you so
much for being super generous with your time thanks for being helpful with the strategies um and you know what it's one of those
things at the end of the show i kind of sit there and think actually there's been such real practical advice people are going to go away put this into
practice and everyone's going to do better as a result you know the customers are going to be happier the business is going to grow money is going
to be made i've no idea how i would ever find out but i would love to know
the value that this podcast has had jeremy in terms of if i could add up all the money that people
have generated just as a result of this conversation that would be quite an amazing thing to know
so if you are listening to the show and you have some success stories based on the advice that rau's giving you why
don't you let him know and also let me know we'd love to hear what's going on uh but ralph thank you so much really
appreciate you being with us bud uh and taking the time it's been fantastic
my pleasure thanks for having me ah my pleasure thanks but appreciate it wasn't uh rao fantastic there i mean
excited about that conversation let me tell you again i i i you'll if you're a regular to the show you will know that i
often say i have copious amounts of notes uh i will be having conversations with the team and figuring out how we
implement some of the stuff and some of the takeaways for me there about how the friends should probably get more the the
friend being referred should get more than the friend doing the referring that was cool so we're going to check things
like that out um i want to check out our promotions as well and make sure we're promoting this
as well as we can and so on and so forth just a whole bunch of clever things that rail said so i've got some good takeaways there uh and if you want
obviously to get the transcript of today's show so you can read it through make your own notes uh or if you want
any of the links to either referral candy or rails email address you can get those in the show notes which are
available on our website if you're watching the video you'll see the little things scrolling across the
bottom with the web url it is basically ecommercepodcast.net forward slash
because this is episode number so if you go to ecommercepodcast.net forward slash you will be able to get
all of the notes the links and the transcripts from today's show my thanks again to rao such a legend
such a legend really really enjoyed the conversation i hope you got some value out of it too and some real practical
actions that you can take to grow your own e-commerce business on line if you did
like i said i'd love to hear your success stories so do drop us a note and let us know what's going on always love
to hear from people and see and hear how the show's impacting them helping them grow their own online business so if you
haven't done so already get in touch introduce yourself and let me know what's going on would love to hear from
you thanks so much for being part of the show thanks for listening thanks for being part of the e-commerce podcast
family it's great that it's grown it's great that we're getting more more feedback and i hope you come back again because
every week we have shows with guests like raul who just share such extreme
value thanks again bye for now i'll see you next week
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