Foundation · 2 min
What you need to know
What is an ecommerce referral program?
A referral program rewards or recognizes customers who introduce eligible new customers that complete a defined action.
Referral program vs loyalty program: what’s the difference?
Referral programs focus on acquiring new customers through advocates; loyalty programs focus on ongoing behavior by existing customers.
Should ecommerce stores offer referral rewards?
Offer referral rewards when genuine referred customers are valuable enough to fund the benefit, and the store can verify qualification. A program is not suitable if attribution or abuse controls are too weak.
Should both the referrer and new customer receive rewards?
Both may receive a reward when the two benefits serve different purposes: the new customer gets a reason to try, and the referrer gets recognition. The combined cost must still fit the expected contribution from a genuinely new buyer.
What should referral rewards be?
Use a reward customers value that the business can afford, such as store credit, a defined benefit or an appropriate discount. Avoid rewards so large that self-referral becomes more attractive than genuine advocacy.
When should referral rewards be issued?
Issue the reward only after the referred customer and qualifying order pass the program’s verification, cancellation and return-risk rules. Show the referrer whether the reward is pending, approved, or reversed.
What happens if the referred order is refunded?
Reverse or cancel rewards tied to the refunded qualifying value under the published rules. Partial refunds need a defined threshold, so staff and customers know whether qualification remains.
How do merchants prevent referral abuse?
Verify new-customer eligibility, account and payment relationships, order status and suspicious repetition without relying on one signal alone. Hold rewards for review when evidence conflicts instead of automatically accusing a customer.
A quick store check
Test self-referral, duplicate account, cancelled order, refund and repeated-device scenarios before launch.
Foundation · 2 min
Frequently asked questions
Should employees participate in a referral program?
Only under a separate, clearly disclosed rule if permitted; their referrals should not be mixed invisibly with customer advocacy.
Can one household make a valid referral?
Possibly, but eligibility must be defined consistently and reviewed with other identity and order signals rather than address alone.