How to Create a Conversion-Boosting Referral Program for Your D2C Brand

By Jenn Choo

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As the D2C space rapidly expands, heating up the competition, many brands are leaning on the power of customer referrals to generate awareness and drive sales. Learn how your business can leverage the enthusiasm of your customers to grow a community of ambassadors who promote your growth by sharing about your D2C brand with their friends, family, colleagues, and social media networks.

Why Should Your D2C Brand Invest in a Referral Program?

  • 92 percent of customers trust referrals from people they know
  • Referred customers have a 37 percent higher retention rate
  • 65 percent of new business opportunities come from referrals
  • 83 percent of customers will refer your brand after a great experience
  • 91 percent of US consumers will share good deals and special offers with friends and family

5 Steps to Creating a Successful Referral Program

When done right (and "right" can take on a variety of forms), a referral program can grow to become a major driver of new business. While there are many ways to structure your program, these essential steps serve as a promising foundation for one that motivates customers, streamlines operational tasks, creates awareness, and supports continuous optimization.

1. Determine Your Referral Rewards Structure

Cash Perks: Get Paid When Your Referral Makes a Purchase

Because their products are built to last, D2C mattress company Leesa relies on new customer acquisitions to keep their business growing. That's why they offer customers a hefty $75 bonus when they refer friends who decide to buy.

Give and Get Perks: Something for You, Something for Them

Sustainable athleisure brand Girlfriend Collective gives customers a 30 percent discount to pass on to their friends who spend $95 or more on their website. When their pal makes a purchase, the referring customer scores a free pair of luxe leggings on the house.

Give a discount, get a discount

Do-gooder D2C brand Bombas socks invites customers to share a 25 percent discount with their friends. If their friends buy, the referring customer receives $25 to spend on their website.

Give a product, get a product

Equal parts cheeky and woodsy, D2C men's soap company Dr. Squatch tested a number of referral offers and found that "Give a Bar, Get a Bar" motivated referrers more than discounts. In this model, referring customers can share a link to their friends that offers them a free bar of soap with their purchase. If they buy, the referring customer gets a free bar, too.

2. Set Up Your Referral Mechanism

The easiest way to equip customers to refer your brand is to use a referral link unique to that customer. The customer then shares the link with a friend, and when that friend purchases via that link, you can easily trace the purchase using referral software to the new customer and back to the current customer who referred them.

These days, many referral software solutions can automate referral rewards to send to referring customers for you. Check out this list of referral software solutions for your program and determine which one is right for your business.

3. Get the Word Out Through a Dedicated Referral Campaign

Create an omnichannel campaign that spreads the word about your referral program to ensure your customers won't miss the message. Your campaign should segment messaging to current customers in a campaign that includes:

  • An email detailing referral program rewards, along with their referral link
  • An SMS text that links to a landing page about your referral program
  • A postcard with your referral program offers and their link

To cast a wider net, you can share about your referral program on social media and on your website. There's no need to limit participation to current customers, as your referral offer may entice prospects to share about your brand so they can receive perks like discounts or free products with their first purchase, too.

4. Leverage Your Referral Program Data to Uncover Powerful Influencers

D2C companies benefit from a wealth of data, which can be especially useful in pinpointing customers who've moved from one-time referrers to enthusiastic brand ambassadors.

Track engagement to identify customers who've made five or more successful referrals (ones that resulted in sales) within the past six months. These are the VIPs of your referral program.

If you choose to create a tiered rewards structure, you may feel content allowing them to continue to rack up rewards. However, if you begin with flat rewards structures, you may want to consider adding an extra layer to your referral program designed to bolster the VIP experience.

A VIP tier can follow the above structure that boosts dollars earned based on hitting set referral milestones. You can also gain inspiration from your loyalty program by:

  • Curating a VIP marketplace with gifts and products referrers can earn
  • Sending VIPs special gifts on their birthdays, customer anniversaries, and other milestones
  • Offering exclusive discounts that are impactful enough to feel like a gift
  • Providing VIP access to coveted sales and special items

The winning formula for your VIPs may not be evident at first, so the key is to try, test, and tweak until your data tells you what's working and what's not.

5. Inspire Continued Growth Through Quarterly Reviews of Referral Program Data

From pinpointing the top influencers you'll want to keep engaged and happy to identifying the referral program messaging that motivates satisfied customers, your referral program data reveals the moves you should make next.

Keep tabs on your referral program's promotional assets and continue to test new ways to tout it. When you determine which channels and base messaging are most successful, layer on a new element in your messaging and test again. For example, upcoming holidays, big sales, and new product lines offer great opportunities to tailor your referral program promotions to the new and now.

The same goes for the inner workings of your referral program itself. Ask yourself:

  • Is your rewards structure generating the level of engagement you expected?
  • If not, follow the lead of Dr. Squatch and A/B test your current model with a new one to see which one performs better.

At what stage in the customer journey do most customers become referrers?

Let's say you see a lot of prospects referring your brand. You may want to consider investing in paid social to promote your program. Or, if one-time customers make up a large portion of referrers, you'll likely want to add a dedicated referral program email to your new customer welcome series that hits right after they enjoy their first unboxing experience with your brand.

Which types of VIP rewards generate an uptick in VIP referrals?

Look for spikes in VIP influencer engagement. Did several VIPs share referral links after you sent a just-because gift or when they received an exclusive discount? If so, these are the perks you'll want to promote in future pushes.

No matter what your referral program data reveals, taking an agile approach to your program's growth can help you quickly respond to your customers' ever-changing needs and goals. By starting with a solid foundation and letting data tell you how to layer on new and exciting additions, you're sure to learn the winning formula that best serves your customer and, ultimately, your business.


The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.


Jenn Choo is the marketing director at Theorem.