Referral marketing rewards customers for encouraging their friends and family to buy from you. But as your shop grows, your referral process needs to scale, too. Referral automation software automates tasks such as generating referral codes and delivering rewards to customers—and it can also provide valuable insights into your customer base.
For example, when grocery delivery service Odd Bunch started using referral automation, it gained visibility into key referral data, like customer lifetime value, as it grew into a platform with more than 50,000 customers across Canada, founder Divy Ojha says on Shopify Masters.
This guide explains what referral marketing automation is, how it works for ecommerce retailers, and how tools can help optimize your referral processes.
What is referral automation?
Referral automation is the process of using technology to acquire, track, and manage a referral program. Referral automation software handles processes such as generating unique referral links and codes for customers to share with their networks, delivering rewards to customers after a successful referral, and tracking insights like top referrers and conversion rates.
Some referral automation software is dedicated solely to referral marketing, while others work in conjunction with other tools. For example, you could use workflow automation software and an email marketing tool to send post-purchase emails inviting customers to participate in your referral program.
How referral automation works
Referral automation lets you avoid manual tasks like filling out spreadsheets and emailing customers with codes and rewards. Here’s how referral automation works.
Invitations
Referral automation makes it easier to ask current customers to send new shoppers your way. Some referral automation tools plug into email marketing platforms, so you can automatically invite customers to make a referral after they leave a positive review or spend a certain amount at your store.
For example, children’s bookstore and book fair provider MiJa Books uses the automation platform Zapier and the email marketing software Mailchimp to send marketing emails that guide customers through the sales funnel. When a customer enters a giveaway, MiJa Books sends them an automated message asking them to forward the email to other customers who might be interested.
This saves time and ensures that MiJa Books contacts customers while their brand is still top of mind. “That was a challenge because I’m also wearing all the other hats in the business,” says MiJa Books cofounder Stephanie Reed on Shopify Masters. “We soon realized, ’Wait a minute, we need to hit people right away. Once a lead comes through, this needs to be automatic.’”
Code and link generation
Some referral automation tools generate referral codes and links that are unique to each customer. When a new customer purchases with that link or code, you can then attribute the referral to the original customer. These tools also let you set redemption parameters like minimum spend and expiration date.
Referral verification
Referral automation software can also guard against fraudulent activities. For example, referral tools can make sure referring customers and new customers don’t have the same mailing address and that customers haven’t tried to redeem multiple different referral codes.
They can also spot potentially fraudulent activity like creating a large number of new customer accounts using the same referral code. Some flag suspicious activity, too, such as generating a high volume of referrals in a short amount of time.
Bonus delivery
If connected to your email marketing platform, referral software can send automated messages to customers to give them their reward or discount, eliminating the need to manually send messages.
Automation tools that specialize in points-based referral programs can automatically add reward points to customer accounts. You determine the referral program’s parameters (the reward amount, the criteria to receive it, and the expiration), and the software handles the incentive delivery.
Performance data
Referral automation platforms give you real-time visibility into the performance of your referral program. Analytics dashboards show you metrics like average order value, customer lifetime value, and purchase frequency, without you having to crunch the numbers manually.
4 referral automation tools for ecommerce
Here are four referral automation platforms to consider.
Shopify Flow
Shopify Flow is an ecommerce automation tool native to Shopify. It lets you build and manage workflows without writing code. You establish events (sometimes called triggers), conditions, and actions. Then you design automations to occur after a customer completes an event.
For example, you could create an event for when a new customer redeems a referral discount code and does not cancel the order (a condition). You could then automatically send the customer who referred them an email with their reward.
Shopify Flow integrates with the email platform Shopify Messaging as well as with several referral apps. You can learn more about which events and actions you can create for each integration in the Shopify Help Center.
Pricing: Shopify Flow is free to install with all Shopify plans, which start at $29 per month.
Conjured Referrals
Conjured Referrals is a referral platform that autonomously generates referral links, allows you to build and display post-purchase pop-ups that invite referrals, and verifies referrals by making sure the original customer isn’t trying to claim a new customer incentive.
Conjured Referrals connects with apps like Shopify Flow to automate referral actions and with email marketing tools such as Klaviyo and Mailchimp to automatically send referral offers and deliver incentives.
Pricing: Conjured Referrals’ Starter plan costs $19 per month and has a referral revenue limit of $200 before the platform starts taking an 8% commission.
LoyaltyLion
LoyaltyLion is a platform that specializes in points-based loyalty rewards programs. With LoyaltyLion, you can spur referrals through the Refer a Friend module on the customer rewards page. LoyaltyLion also generates referral links for customers to share via email, social media, or SMS.
The app’s fraud prevention capabilities include pending points, which allow you to set a waiting period after purchase (such as 14 days) for rewards points to be deposited into a customer’s account. It also includes IP detection to flag accounts trying to game the system for more rewards points or incentives.
On the paid plan, you can create VIP tiers, then give customers exclusive perks depending on what tier they’re in. Set up automations by connecting LoyaltyLion to your Shopify store through Shopify Flow. You can take action after seven different triggers, including when a customer moves up or down a tier and when a customer has enough points for a reward.
Pricing: LoyaltyLion’s free plan is for businesses conducting 400 or fewer sales per month. Paid plans start at $199 per month.
Yotpo Loyalty & Rewards
Yotpo Loyalty & Rewards is a loyalty platform that lets you build your own referral rewards program or choose from more than 20 pre-built campaigns. You can then create a points-based or cash-value-based referral program on your website.
By connecting Yotpo to email platforms like Klaviyo, you can automatically send referral offers to customers and deliver rewards. Yotpo uses AI to detect fraudulent actions, such as a customer using multiple accounts to gain rewards.
Connect Yotpo to Shopify Flow for referral automation and automatically add reward points to a customer’s account when they make successful referrals.
Pricing: Yotpo’s free plan is for stores with fewer than 100 monthly orders. Paid plans start at $199 per month.
Referral automation FAQ
What is the best referral software?
The best referral software depends on your type of business, referral program, and goals, but Shopify Flow is a top option for Shopify businesses. It lets store owners design their own triggers and actions, and it connects to dedicated referral and loyalty platforms such as Conjured Referrals, LoyaltyLion, and Yotpo.
How do you build a referral system?
You can build a referral system with tools including Conjured Rewards, LoyaltyLion, and Yotpo. These tools include features such as fraud detection, pre-built templates, and analytics about your referral program.
What makes a successful referral program?
Successful referral programs offer incentives that motivate current customers to refer people in their network and encourage new customers to make a first purchase. Successful referral programs also offer a streamlined process for referring new customers and redeeming incentives.
