How to Integrate Your Referral Programme into a Customer Loyalty Scheme

Research shows the chance of referred customers purchasing for a second time is 47% higher if a customer joins your loyalty programme versus a new customer who doesn’t join, according to Fiona Stevens, Head of Marketing at referral marketing agency Loyalty Lion.

“You can’t tap into the full lifetime value of a customer if you allow them to use a discount code on their first purchase and then walk away. You ideally want to use points to keep customers coming back and referring friends,” she says.

Here, we speak to Stevens, Laura Kennedy, Digital Marketing Manager at retailer Skinny Dip and Caleb Marshall, CEO of nutrition brand Tropeaka, to find out how they track and incentivise their best brand advocates by integrating referral marketing with a loyalty programme.

Why integrate your referral programme with a loyalty scheme?

Rather than relying solely on a customer’s goodwill to want to hand out discounts to friends, linking referral and loyalty schemes allows a business to offer an incentive to those making successful invitations to friends. They can be offered a set amount of loyalty points for each successful referral as they are encouraged to keep on building up their balance until they have enough points for perks, such as free shipping, discounts or invites to VIP events.

For the scheme to work, referral codes need to be sent out and shared as unique URLs, rather than generic discount codes. When the link is shared with a friend and then clicked on to make a purchase, the loyalty scheme can trace the referral back to the person who sent it out and add the agreed number of points to their balance.

From then on, further purchases and referring additional customers can be rewarded with more loyalty points, which could take a customer to a level where, for example, they earn new money-off deals or free shipping.

Customer loyalty programmes, a case study

Clothing and lifestyle brand Skinny Dip’s referral programme offers points to new customers and those who introduce them. Further points can be earned each time subsequent purchases are made.

Referral marketing has allowed Skinny Dip to increase the sales of new product lines through asking customers in each category to recommend friends. The unique codes could be used for any product but the company’s Digital Marketing Manager, Laura Kennedy, reveals customers will often share codes with friends they know are interested in the same item.

“We’ve found referred customers have a 30% better conversion rate and a 12% higher lifetime value because they are acting on a prompt from a friend they trust,” she says.

How to link your referral programme into a loyalty scheme

Build levels into your scheme

Kennedy’s advice to SMEs considering linking referrals and loyalty is to always be clear with customers what points are worth, so they can plot their progress towards future perks. It also helps if there are levels of loyalty membership that customers can aspire to so they have extra encouragement to keep on making additional referrals. For this reason, Skinny Dip has four levels to its loyalty programme. Customers start off with the option of earning a gift voucher before rising to a level where they have access to free shipping days and then, ultimately, at the top tier, they receive invitations to VIP in-store events.

Integrate CRM technology

Integrating the customer relationship management (CRM) and referral marketing technology on an ecommerce platform is the key to a successful strategy, according to Caleb Marshall, CEO and co-founder of health nutrition brand Tropeaka. His site has always offered bonus loyalty points to customers who share their social media accounts and email with the brand. This means the company’s referral marketing campaigns have a wider, multi-channel reach.

“By offering benefits to those that sign up to other marketing channels, including your email list, SMS list, messenger list and social channels, you can then use those channels to drive referrals,” he says.

“Knowing that you can run a referral marketing campaign and send that message across a range of different channels for maximum visibility is key.”

You can maximise the reach of your loyalty programme by targeting your existing customers for promotion. Consider using an American Express® Business Card, which is accepted on marketing platforms such as MailChimp, Facebook and Google. You get up to 54 days to clear your balance¹, meaning you can track the success of the promotion of the loyalty scheme and optimise your campaigns before investing further budget. 

1. The maximum payment period on purchases is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date.