Run a Shopify Referral Program That Actually Crushes! (And Why Loyal Points Almost Never Work)

26:33What are the stores that are just crushing it with referrals? What are they doing that's different than the rest? I feel like they have a referable product. I don't know if that's a word, but they have a product that's easy to refer either because it's on subscription. And again, it's part of your routine. And so your customer's naturally going to talk about it or because you have a niche product and therefore there are communities of customers where your customers are already hanging out. And so it's easy for them to casually talk about your product and then fit in those referrals in a way that doesn't feel promotional.

27:09And then that's from a product or brand perspective. They've been able to build that community. Have a community of customers. I feel like everything is easier, but definitely referrals get a lot easier because you have them engaged already. Yeah. I think I have a theory on this. Okay. I think when I think about the products that I refer, it's products that have a strong opinion on something. Stance. I don't, I think about anything like it could be, I don't know, batteries. Let's just say a battery is a battery. A nine volt battery is a nine volt battery. But if this one nine volt battery was, I don't know, this probably isn't true for a nine volt battery that's safe to throw in the garbage or something like that.

27:52That probably doesn't exist. But it's something, it's like the most environmentally friendly nine volt battery because you're not supposed to throw batteries in the garbage, but they sometimes end up there. But at least this battery, if it is in the garbage, it won't, yes, it doesn't get recycled, but it won't poison the ground. I don't know. That's just an example or it has an opinion and then people absorb those opinions and if the brand does a good job like it starts from the top down I always say like when you buy a product your job as a brand is to educate the customer about that product tell them about it it's like a bottle of wine if you just go and buy a bottle of wine off the shelf you're not going to recommend it to anyone because you don't know anything about it but if a sommelier comes and tells you about this wine and where the grapes are grown and the vineyard it's from and everything about it, you're educated on it.

28:43Then you're, you're, you have the ammunition to now go and tell people about it. Now referral candy puts the fuel on the fire because now I've got the knowledge. This product has an opinion. It's like wine for people that hate wine or whatever. It has some opinion and I'm armed with knowledge. Like I've, they did a good email onboarding series, educating me about the product. And now I get hit with, boom, refer five people and you get a case of wine or something like that. That to me, I feel would be the ultimate. It's the niche. Yeah. I'm just, again, you're not selling wine, you're selling wine for, or you're not selling batteries, you're selling batteries because I get excited when I talk, when I have to show up to a demo and I look at the website and I see one of those, I get excited.

29:35You can tell this brand's going to do. Because they have a strong positioning. Exactly. They have a strong positioning. They're unique. And I think that's also something that a lot of Shopify entrepreneurs, I don't know if they get misled or they get wrong initially, is that I'm going to start a jewelry company. I'm going to start a clothing brand. They don't really think about, okay, jewelry for what? Or clothing for what and for who? And who are those people? why are they different? Jewelry for locations? Is it for younger people? For older people? What are the reasons that are taking you to build that brand?

30:10And so I get excited. I'm really honest with them. I tell them, look, regardless of the, I know you're talking to multiple apps. I hope that we're the app that you end up choosing. I'm going to do my, everything in my power for you to choose Referral Candy, but you should run a referral program. Whatever you choose, at least run one. Yes, it's going to work. Sometimes I can just tell because I've seen so many over the years. I can just tell that it's going to be. One of my favorite examples, it's a company called Branch Basics. They've been with us for, they were with us a real long time. And it's almost the example that you mentioned earlier about the sommelier that tells you about wine, right?

30:45So we were able to educate their customers about their product and why their product is different to the point that their customers were experts on the subject. So for context, what this brand sells, actually, I'm sure they have a wider product catalog now. I haven't looked at them in a while. They essentially, what they do is that they sell non-toxic cleaning products for your house. And so that already, when you get into the everything is toxic, everything is killing me, you know, that that's a really easy way to get into it as a customer. And then you're probably educated about it. And then once you start working with brands or as a consumer, you start buying from brands like that, then you get even more, become even more of an expert in the topic.

31:26But at the same time, they do the thing that they tell customers is most of the, most of what you actually buy at the supermarket, if you buy detergent, for example, in a bottle, most of what you're buying is water and plastic. Water that you can get in your kitchen and plastic that you're probably not even going to recycle or it's not going to end up getting recycled. With us, we'll send you reusable bottles in your first subscription, and then we're just going to send you a concentrate that you can dilute in water and then you can use it. Plus, it's safe for your family and you can clean your dishes and you can clean your house in a way that's not toxic.

31:58They're not selling cleaning supplies. They're selling something different. And so for them, it was a referral program that worked extremely well because their customers, they almost liked selling their product to their friends and family. Isn't it amazing the trickle effect of having a good story and a good why behind your product? It's like it affects everything. It's like it will affect your subscription retention. If your customers understand your story, it'll affect your referral. It'll affect your ability to upsell. It'll affect everything. It's like the nucleus of who you are. It's like someone might say, why isn't my referral program working?

32:41Why are my customers turning off my subscriptions after three months? It's not the subscription program or it's not the referral program. It's the story. It's the why. And that spreads out. That's such a big unlock when brands understand that. And also when brands and even taking it one step further into the actual referral program itself, I've seen brands do really good copywriting and really good communication with their customers about the referral program itself. So you can also tell when a brand is being lazy about the referral program and offering the same incentive that you can get regardless.

33:17So I'll give you an example. Most brands now they offer 10 % off if you subscribe to a newsletter. Well, if your referral program also offers a 10%, it's not unique. Totally. There's nothing special about it. Or if you're, this actually happened to a customer of ours a couple of years ago. The referral programs were really good throughout the week. but then on the weekends, they will tank. And then on Monday, we'll go back up again. And that was because we had a call with them. We tried to scratch on our head, like what's going on here? We ended up figuring out that they had a weekend sale that they hadn't even thought about, that the offer was much higher than what they were offering for the referrals, which was actually hurting them because their customers were like, I'm referring my friends.

34:00I know they bought. Why I'm not getting my rewards was because the friend used a different code. is I've seen brands being really smart about it, not only in terms of incentives that people actually feel incentivized to share, but also the way they were presenting them. We have a customer, I hope they still have this on the referral page, but they were saying something like, I still remember it, instead of spending money on Meta, we'd rather give it to you. Yeah, I've seen a brand do that exact same thing too and I thought it's actually smart and it was a clothing brand. And they said, I think they actually went like, our exact customer acquisition cost on our Instagram ads is$81 per customer if we pay Instagram to get a customer.

34:46We're discounting, it was like a men's high-end clothing. We're discounting it$81. That was the exact messaging. I thought that's kind of genius. And also, it doesn't even have to be a bribe or a commission. In a lot of cases, we've seen referral programs work when they know that their customers are going to talk to their friends and family about it. They know that their own customers are going to be happier about the discount they can give to their friends and family rather that way they can get themselves. Like they're going to be excited to share just because it's, hey, Jay, I can get you a 35 % discount on your first purchase.

35:25I might get a 10%. Who cares? But you need to try this. there's a 35 % coupon that I can get you. Brands sometimes, they overlook that part of the sharing and I'm doing this because I feel good doing something good for people I care about. Just out of curiosity, is there a way to limit the number of times someone can refer something? Or if you create the offer, like the customer can refer someone and get 25 % off, is it just a link they share? Or can you give them a set number that they're allowed to refer. Yeah, you can limit the number of rewards they can earn. So if once they join, there's a few things you can do, but once they join the referral program, they get a referral link with a coupon code and then they can share that coupon code for as long as the coupon code is active because you can set an expiration date.

36:15But then you can set it in a way that, okay, you as a customer can only get three or four or five rewards and that's it. And then after that, it doesn't matter how many more friends you refer, you're not going to get any more rewards. You can also do the opposite, which is create like a tier system. So the more friends you refer, the kind of like the more rewards, like the better rewards you can earn or like you can give them. We're going to give you 15 % off or 20 % off for every friend you refer up to five. But then you're going to have to wait until you refer 10 to get like a big discount or something like that or like a big gift.

36:48So yeah, there's a few things you can do about limiting that. At the top of the show I mentioned, OmniSend can now talk to ChatGPT and Claude. And I want to tell you why that's even bigger than it sounds. So if you missed it, quick catch up. OmniSend is what I use for email and SMS on every Shopify store I work with, plus for this show as well. And you can now connect your AI, Claude, ChatGPT, straight to your OmniSend account. Your data, your campaigns, your flows, everything. You open a chat and you ask, what should I focus on this week to make more money? And it will come back with real answers about your store, which flow is underperforming, which automation needs improvement, which customers are going quiet, what's missing, everything.

37:32My favorite part though is AI segments. I used to build these by hand clicking through filters forever. Now I just type something like customers who bought twice but ignored my last campaign and it just builds it. and anything it writes already sounds exactly like your brand because it pulls from all your previous emails, from your website, your logo, your color, your voice, everything. I've been doing this for 15 years and this is the closest I've ever felt to having a full-time marketer sitting right beside me. I have a link for you in the show notes that will give you 30 % off for your first three months or you can just use code J30 when you sign up, J-A-Y-3-0.

38:08If you're ready to migrate from Klaviyo to Omnisend like thousands of others, they will do everything for you. You just show up and all your campaigns and automations from Klaviyo will be set up and running in OmniSend, ready to go. And usually at 35 % less what you were paying Klaviyo. I'd really be tempted to try to create a program that had super valuable offers for the people that they were giving it to. So say I actually did a talk on this at SubSummit a few years ago and it was specifically related to subscriptions, but I think this would work for anything. but the idea is like a lot of stores, they have a program where like you subscribe and there's some link somewhere you can give 10, get 10 or whatever.

38:51It's good, but it was like, it didn't move the needle too much. But then the idea was, well, what if you had, when you say I sell skincare, you subscribe to my skincare and now you get three shares. That's it, just three, but you could give someone three months free, not 10 % off, but you only get three and that's it. So now rather than you potentially sharing with everyone, you're going to actually start to think, well, who, who could actually use this? I only have three. You might reach out to your aunt who maybe has a skin, dry skin or something. And you might say, Hey, I know you mentioned, do you have dry skin?

39:29I'm trying this new lotion. I have three passes that I can give you three months completely free, but let me know if you'll use it. Cause I only have three. And then what you're doing is you're you're finding the icp the ideal customer for that brand rather than so yes it's very valuable but then you got to remember how much are you paying to acquire a subscriber through ads so maybe it's not too expensive but then now that customer is also has three they're very likely to stay on as a subscriber because they have a skin problem and then they're so So I would be very tempted to try something like that.

40:07Do you have any brands doing something like that? I'll have to look, but I think it's a really smart idea, especially for smaller brands that are still trying to figure out exactly who their ICP is. Right. Customers are doing it for you. Let your customers do it for you. Exactly. They'd be like, okay, who do I know? Oh, yes, this person. I know that they need it. And then you can create a segment of customers that came from referrals and know, okay, something about these people is unique and then you can start building on top of that. Yeah. Remember, did you join Clubhouse during the pandemic?

40:43Yes, I did. So you remember they had, when you joined, you got five invites? Yes. And it was limited. You could only invite five people and it didn't even work on Android. It only worked on iOS, but it was still one of the most, the fastest viral growing platforms ever in history. And then Twitter launched Spaces and everything else. but at the time and I remember I saw someone post on Twitter that they were I don't know doing that what did you call it like a talk or whatever a spate I forget the name but yeah there was a name for it where you would host like a whatever so I reached out to him and I was like hey can you hook me up with an invite because I don't have access yet and they said yeah yeah here you go I gave me an invite so then I got access and I posted and then someone else messaged me and said hey can you give me an invite and i said to him i said yeah but are you actually going to use it because i only have five so i like qualified this customer for the company and i was like hey if you're not going to use this i'm not giving it to you so like i'm sifting through and i'm gonna and then so not only did i find a good customer but that guy also feels a little bit indebted to me because i gave him my code he's got to use it right so it's like this amazing effect it has when it's limited high value so there's scarcity urgency and recommended by a very close person like it's a it's someone giving it to a person yeah and you feel like you owe that person to show up and use it for Clubhouse specifically I remember during the pandemic like some of the best conversations I've had about e-commerce or listen were Clubhouse and I still remember a few of them and I think it's because people took it seriously because it's not It's not just something that there's some people talking, let me just say, no, that they're there for a reason and that they have a purpose.

42:32Yeah, I think, I don't know, actually, I don't know what happened to Clubhouse, but it looked really well. Well, Twitter launched Spaces, which was an identical copy of it. I see. And a lot of people who were hosting their talks on Clubhouse just moved it to Twitter because there was millions or hundreds of millions of people. Right. And it killed it. Yeah. So, yeah, that was really it. I think other than that, if Twitter hadn't done that, might still be around. But they had approved the growth model anyway. So yeah, for sure. I want to talk a little bit about, you have a new product that came out called Moments.

43:06I know a little bit about it because I skim the website. It sounds really exciting. I love the concept, but tell me what it is. We're calling it internally. It's a way of bringing back like old school relationship building and engagement. I'll explain this. So we feel like right now customers are not necessarily being appreciated by brands, at least in a meaningful way. Yeah. Or in a way that feels trustworthy and it feels unique. So one of the things, one of the concepts around it is that we're emphasizing understanding customers as people. So positioning brands as a way to understand the customer beyond transactional data, like he's a VIP spender.

43:50or he's part of a Cladius segment or whatnot. So it's brands that want to understand their customers in a deeper way, and then they want to surprise and delight those customers. I'll give an example of some of the brands that we've started to work with. So when your customers are, and this is what the name moments comes from, your customers are behaving in a way that they might create like moments that are worth appreciating from a brand perspective. And an example of that could be, I have a customer that they make a purchase and then they come back six months later when you thought that was it, they were never coming back.

44:30You can reach out to them. You can create, turn that into a moment in which you can appreciate that person coming back to your store and buying from you again. And so you could send them a thank you note without them expecting it, or you can send them a free product in their package without them expecting it. So it's turning that customer appreciation into something that's unique, unexpected, and not necessarily transactional. So, yeah, and I feel like that there's a lot of information that we get on Shopify stores about customers' interactions with brands that are worth appreciating in a way that traditional loyalty, and we were talking about points earlier, you're telling your customers to do X because I'm going to give you this amount of points.

45:13If you do this, I'm going to give you these points, or if you subscribe to a newsletter, I want to give you this many points. And if you give us our birthday, we're going to give you this many points. So when you as a brand give the points to the customer, it's going to feel transactional. The customer is expecting those points. I did it. So now give them to me. But in this case, you're surprising. It's surprising the lights. You're surprising the customers for returning or for subscribing or for whatever it is, whatever interaction that our engine might flag to the merchant. Use them as an opportunity to truly surprise the customer, it goes a long way.

45:48Customers, they really appreciate that because it's something that very few brands are doing right now. So we're trying to figure out a way to get more brands to do it. I love it because about a year ago, I had someone on the podcast and it's so funny. I'm glad you built this because on the podcast, we were talking about loyalty points and why they don't work. And then we started talking about this concept and we were just joking, like, we should build this because it needs to exist. And the example I often think about is when you buy the coffee stores where you buy 10 punch cards and then you get your 10th coffee is free or whatever.

46:23When you get your 10th coffee, you don't jump around with excitement. You just get your 10th coffee, right? Yeah. Now, imagine you walked into Starbucks tomorrow and you order a coffee and the barista says, this one's on us. You would say, yes. What? No, it's on us. Enjoy it. Enjoy it today. You'd be like, okay. You'd probably post it on social. You'd be like, thank you. I'm coming here forever. But if that Starbucks had a punch card where you had to buy 10 and get that one free, you wouldn't feel that same way. So we were like, well, what if there was a way that you just didn't tell the customers what the milestones are, but you have milestones and you reward them still the same.

47:08So rather than if a thousand points is worth a hundred dollars, hypothetically, whatever, in your point system, you don't show customers points. But in your admin, you can see that I can see, okay, Raul has ordered, sorry, has a thousand points. Now I send you an email, Raul, I'd like to give you a$100 credit with our store. You would be like, what? No strings attached. Here's your$100 credit. you would be blown away if you earned it. And then I don't feel, when I redeem my Airmile points on my credit card, I don't feel grateful to the company. I earned these points. Yep. So I love this idea. I didn't even know it existed until you were coming on and I was doing a little bit of research and I was like, oh my gosh, we were talking about this like a year ago and like joking, hey, we should build this because this needs to happen.

48:00So it's so cool to see it finally live. Glad that you came up with the example of the coffee shop because that's one of the things that we talk about internally is like literally that example. The barista knows you by your name and, oh, either the coffee's on us or here's, oh, have you tried our cookies? Here, have one for free. Or, oh, we have a cheesecake. I'll give you a piece now so you can. It's, wow, thank you. Okay, wow, I wasn't expecting that. And it doesn't even have to be like purchased. Like one of the brands that we're working with right now is they have customers that are making purchases and then one day they make a purchase with a different shipping address.

48:36the brand, the engine flagged that and the merchant reached out to the customer and said, hey, is this a gift? Yeah, we got you. And you make sure that the gift that you're sending to that other person will blow their minds. Amazing, yes. And then you'll have two people really happy about it. And the customer that made the purchase for the gift and the person that's receiving the gift. There's a lot of data about customers that just gets completely ignored that are great opportunities for customer relationship building. What's another one you can do? I saw a brand, I can't remember who it was that did this.

49:12They randomly call customers and refund them. And they do it and they post it on social too. So they're on like speakerphone and they got their iPhone there and they just, they scroll through their Shopify orders and then they pick one and then they call this person and then they're on speakerphone and hey Raul, I saw you placed an order the other week. This is, I'm the owner of jayskincare.com and we're going to refund you. and it might have been a$400 order or a$200 order, it doesn't matter. And they post them on social, and sometimes the people are crying. They're like, oh my gosh, you don't know how much that means.

49:45Thank you. And times are hard, and this means the world. Not just with that customer, did you earn a customer for life? But when I watched this guy refunding random people, I'm like, this is a good guy. This is a good brand. He's earning. Now, he could just have loyalty points, and he could just give them stuff and there's no earned credit there from your customers at all. Zero. Like to me, loyalty points, I'm sorry for anyone who has a loyalty. I think they're one of the dumbest things you can do. All they do is reward people for behavior they're already taking. And it's just, maybe there's some ways it can be done.

50:23I don't want to say there, take that back, but it just, it doesn't really do. There's so much better that you could do. So that would be a cool thing. I don't know if you like, so do customers, Do merchants pick what their reward is or can they just make up anything that is going to be the surprise and delight action? Yeah, they need to. We're still very early stages. So kind of like sky's the limit right now for the product. What we're focusing on right now, it's understanding what are the situations that we can bring at the moment that we can bring up to the merchant. And then the merchants can decide how they want to highlight those or how they want to thank the customers for whatever the moment is that they pick.

51:02So like I said, sometimes even something small as a handwritten thank you note could be really, I've seen people post that on Twitter. Look at what it got. It's from, and it's literally a handwritten note. I think that there's a lot of opportunities right now for merchants to get their customers to feel appreciated. huge and in a time where customers feel more disconnected from brands than ever yes like it's such a huge opportunity right now and if you just it doesn't even take a lot to stand out from the crowd which is the big opportunity right so raul this has been awesome i mean we're over time already i think i only got through about half of the questions i had on my list but that's okay i'll have to have you back on at some point where can so if someone wants to try Referral Candy or get started?

51:48Do you have any type of introductory offer or where do you want to send them or where's the best place for someone to go? Well, if they're on Shopify, they can learn more about us on our Shopify App Store page. So just search for Referral Candy on the Shopify App Store or ReferralCandy.com. You'll probably see my face there on a video explaining what Referral Candy does. And if you book a demo, you might also end up talking to me as well. So I don't know if that's good or bad, but it's definitely an option. But yeah, that's where they can learn more about us. We have a free trial, so it's easy to at least get started, see what a referral or affiliate program will look like and see if it's something that they could, they want to implement on their brand.

52:25Amazing. And last question, is there any social platforms that you're active on? If someone says, I want to follow this Raul guy, where are you active? Actually, we post a lot of videos on YouTube and Instagram lately. So Referral Candy on YouTube or Instagram. Yeah, we're pretty active there. So yeah, go check us out there. Awesome. Thank you so much. This has been a ton of fun. I learned a lot. And I know our listeners guarantee they did as well, too. So thank you. Yeah, thank you for having me.