How to Start a Customer Referral Program that Turns Your Customers into Your Ultimate Sales Weapon

Friday, July 6th, 2012
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So, what’s so great about referrals? A study published in the American Marketing Association’s Journal of Marketing in January 2011 reported that, referred customers “tend to be more loyal than other customers”, and this difference persists over time. As a result, referred customers are more valuable in both the short and the long run.”[i] Other data has shown that referral leads tend to be more qualified, less price sensitive, and some companies have found that referred clients tend to spend more[ii]. Wow!  Many of the world’s strongest brands have taken notice, implementing ongoing customer referral programs to increase their customer bases (Chase, PayPal, Netflix, Groupon, etc.).  For example, Dropbox began a referral program with double-sided incentive in 1999 which reportedly increased their signups by 60%. They also reported by early 2010 that 35% of their daily signups were from customer referrals.[iii]  How can you do this too?

Fortunately, companies like ReferralCandy have emerged, and made this process extremely simple and affordable. If you are a Nexternal Client, we are pleased to announce a recently released integration with ReferralCandy.

Here’s an example of how the ReferralCandy program works. After placing an order, your customer receives an email, inviting her to participate in your referral program. She learns that for each new customer she brings to you, she’ll earn a reward (specified by you). When she emails her friends or posts on social media, she uses a custom link containing her personal tracking code. When her friends click on the link, they are taken to your store, where they automatically receive a special discount as well (specified by you).  When the sale is complete, the loop is complete, and your referring customer receives her reward.

At any point, you can log into your company’s ReferralCandy portal, and check on statistics, such as number of invitations sent, invitations read by customers, click-throughs, successful referrals, etc. Your customer who signs up for the program can also log into her own private portal called a “Referral Corner” where she can also check her own referral statistics.

Steps to set up your customer referral program

Step 1: Sign up with ReferralCandy. If you’re a Nexternal client, be sure to select Nexternal as your ecommerce provider for special code designed for Nexternal. There are two pricing options, and a 30-day free trial is also available.

Step 2: Begin walking through the setup wizard. Choose the frequency of email invitations to your customer base. (Invitations designed by you, but automatically sent by ReferralCandy, inviting your customers to join the referral program.)

Step 3: Upload a logo for your emails

Step 4: Create a coupon for your customers to share with their friends. Enter the Description, Code, and (optional) expiration date. You need to also create this coupon code in your Order Management System. We highly recommend setting the Customer Usage parameter to 1 so that new customers won’t get the same discount indefinitely.

Step 5: Create a reward to give your customers for successful referrals. Choose one of the following:

  • Single Use Coupons (Enter a Description for your single-use coupon. Upload the codes. Separate each coupon code with a new line, comma or space. Click ‘Update discounts’ below to save the coupon codes. We highly recommend setting the Total Usage Limit Parameter to 1 when you create these coupons in your Order Management System.  Also, this site is super handy for generating unique string values for single use coupons ). We recommend choosing the Single Use Coupons option.
  • Cash (Flat amount or Percentage. Also select your reward channel – PayPal or Charitable Donation. Cash rewards will be paid by ReferralCandy, and billed to you.)
  • Multiple Use Coupons (Enter a Description for your coupon. Enter the code. Remember to create in your Order Management System!)

Step 6: Customize your three templates

1.  Initial customer invitation email – inviting customers to join the program, and explaining the reward compensatio

2.  Coupon landing page – This is the page that customers’ friends see when they click the referral coupon link that is displayed on the customer’s referral corner.

3.  Email to reward referrals – This email is sent to customers when they’ve made a successful referral.

Step 7: Enter your payment info for ReferralCandy.

Step 8: Add tracking code into your Nexternal system. (In your Order Management System, go to Settings / Policies, Addenda and Disclaimers – Edit / Order/Affiliate Addendum. Click Finish)

Step 9: On the final screen of the setup wizard, a verification email is sent to your primary email. Click on the link in the email to verify your account. Once verified, your campaign will begin.

Other helpful notes: To edit your information after your setup is complete, go to, and login (under the “More” menu). Go to Settings to change your URL info. To upload a new logo, use the Upload New Logo link. Click on Campaign / Campaign Details to edit things like the frequency of invitations to customers, incentives, templates, etc.

To test your program, follow these instructions

If you would like to see this program in action from a consumer perspective, you may place a fake order at our demo site ( Just be sure to use a real email address so that you can see the emails ReferralCandy generates!

ReferralCandy Support Center:



[iii] Slide 32 of presentation given by Drew Houston at the Startup Lessons Learnt Conference on 23 April 2010

Lanette Willis is a Senior Account Manager at Nexternal. Before joining Nexternal she spent nearly a decade working in market research and professional services marketing, before running her own successful eCommerce apparel business. Lanette is passionate about helping people and businesses thrive.