Why a Customer Referral Scheme Should Be a Key Part of Your Marketing Strategy

Here at Mention Me we are passionate about all things referral, but we appreciate not everyone has yet seen the light. Maybe we can persuade you with the insights we have gleaned by running refer-a-friend programmes for over 100 retail clients.

Key Benefits of Referral Schemes

According to Nielsen, 92% of consumers believe recommendations from friends and family over all forms of advertising. If that's the case, then what’s stopping you? Could it be one of these misconceptions:

1. My brand is well known, so I’ll get referrals naturally

We have worked with many well known brands, who you might consider would naturally receive referrals.  However once implementing a refer-a-friend scheme, they typically have seen new customer acquisition increase by between 10-30%!

Having a brand everyone loves is wonderful, but that doesn't necessarily translate into word of mouth. You need to give customers a reason and the tools to share.

The reason doesn’t have to be money off (more detail on that one in  point 2 below); making it easy to refer is also key.  We offer 14 ways to share a referral offer and find different tools work better for different brands; the key is to become a natural part of the conversation. One game changer is our unique “mention by name” capability which means friends can just say “enter my name at the checkout”, so referrals can simply take place in normal conversation.

These case studies of referral schemes at FarFetch and Emma Bridgewater are excellent examples of great brands using referrals well.

2. I don’t want to give away discounts unnecessarily

Firstly, referrals doesn't need to be about discounting. Although this can be highly successful in certain markets, other offers such as vouchers, free delivery or gifts can also work well. We have undertaken over 700 AB tests with our clients, to identify which offers and sharing options work best.

This guide should give you some useful tips on developing a refer-a-friend test plan.

If you do decide to discount, this needn’t impact your bottom line. Our clients have found that referred customers generally spend more on their first purchase to the tune of 10-25% more than than the 'normal' AOV. This completely counterbalances the discount right from the first order.

The discount can in turn be a powerful motivator for the existing customer too: in fact customers who earn a reward for introducing a friend are 54% more likely to shop with you again.

3. We already run an affiliate scheme so we don’t need a referral scheme

An affiliate scheme and a referral programme are very different things. Affiliate schemes can be a great tool for customer acquisition, but customers referring your product are likely to have a deeper connection to the brand.

An affiliate is likely to be driven by monetary motivations (usually), whereas a referrer has tried your product or service and is engaged enough to share it with their friends and family. This interesting post from Ritchie Mehta shows why winning ‘earned’ before ‘bought’ loyalty results in stickier relationships.

You are likely to find that customers acquired via referrals turn out to be more valuable to your business. We have found that there is a virality to referral programmes, with referred customers in turn likely to refer 3x more frequently. They also tend to spend more and have a lifetime value 2x that of non-referred customer.

4. We don’t have the development resource to implement a referral programme

You don’t have to have a large development team to launch refer-a-friend. In fact the Mention Me platform works with just two javascript tags and can plug into ecommerce platforms and tag containers. It also Integrates easily with many popular shopping carts such as Magento and Shopify. This means your scheme can be up and running and you can see the benefits really quickly; typically within a few weeks.

Once your referral programme is launched you are going to need to optimise it to see the true benefits. Without testing, referrals will only account for up to 5% of customer acquisition; AB testing can increase this to up to 30%.

The Mention Me testing platform enables the marketing teams to make any changes they want without any development involvement. Crucial when internal resources are limited.

5. I can’t afford the time or marketing budget for another marketing channel

Ironically many modern digital marketing initiatives are trying to mimic the goodness that comes built-in with referral. Friends make the ultimate tailored and personalised recommendations.

They are more trustworthy so conversion is higher; they are influencers on a deeply personal level and they naturally work across multiple channels. With the superior metrics that referrals can deliver, you'll soon find that they outperform all your other marketing channels.

The question should be - Can you afford not to have referrals as a channel?

Best Practices for Implementing a Customer Referral Scheme

By now, you’ve hopefully seen why so many brands are embracing referral. But how do you make sure you’re getting it right?

Here are some tried-and-true best practices we’ve learned from launching referral programmes for 500+ brands:

1. Make it effortless to share
Your customers are more likely to refer their friends if you make it simple. Include multiple sharing methods (email, WhatsApp, SMS, and social) so everyone can share in the way that suits them best. And with our unique "Mention by Name" functionality, they don’t even need to send a link—just ask a friend to enter their name at checkout. Easy.

2. Serve up the right incentive
Not every customer is motivated by a discount. Some love free delivery, others prefer a gift or charitable donation. The key is testing. We’ve run over 700 A/B tests to determine what works best for different brands, audiences, and product categories.

3. Maintain brand alignment
A referral programme should feel like a seamless extension of your brand—not an add-on. From copy and imagery to tone of voice, make sure your referral messaging fits your look and feel. Done right, this builds trust and increases conversion.

4. Build a test-and-learn culture
Referral isn’t a "set and forget" channel. Use A/B testing to identify your highest-performing combinations of messaging, incentives, placement and design. Our platform empowers marketers to make changes without needing dev support—so you can move fast and stay in control.

5. Assign ownership
Like any channel, referral performs best when someone’s owning the programme. This doesn't mean full-time resources—we’ve seen fantastic success from programmes managed in just a few hours a week—but having a dedicated owner will help you consistently optimise and grow.

6. Promote it—everywhere
Referral doesn’t stop at the thank-you page. Promote it on your homepage, within your account area, in lifecycle emails, on social, and in customer service chats. The more people see it, the more they’ll use it. Make it a core part of your customer journey.

Our experience proves that brands who follow these steps can scale referral from a side experiment to a consistent acquisition engine—and even their #1 performing channel.

Conclusion

Referral marketing shouldn’t be relegated to the “maybe later” list.

When done right, it can outperform paid ads, deliver higher-value customers, and build long-term brand loyalty—all with lower acquisition cost and higher trust. It works because your happiest customers are your greatest advocates. All they need is a little nudge and the right tools to start shouting about you.

With Mention Me, launching and scaling referral is easier than ever. Whether you're a fast-growing startup or an established name, there's never been a better time to turn word of mouth into your secret weapon.

So the question isn't “should we do referrals?”

It’s: “how soon can we start?”

FAQ

Here are some common questions we get from brands considering a referral programme:

Is referral right for my brand?
Probably—especially if your product generates great customer experiences. From fashion and beauty to food, fitness, and fintech, referral works across almost every consumer vertical. If your customers love you, they’ll talk about you. We just help you harness that.

Do referrals work for new brands?
Absolutely. In fact, newer DTC brands often see the fastest ROI because they typically have loyal, early customers who are keen to spread the word. It also helps you build trust quickly in competitive markets—since recommendations from friends feel more credible than ads.

What kind of incentive works best?
There's no one-size-fits-all answer. That’s why we always recommend testing. Some audiences convert better with straightforward discounts, while others prefer gifts, store credit, or exclusive access. You might be surprised what resonates most with your customers.

Will it cannibalise my other channels?
Not at all. Referral usually complements and amplifies your other marketing efforts. In fact, referred customers often behave better—they convert faster, spend more, and return more often. Many even go on to refer others, creating a flywheel effect.

How quickly can I launch?
With Mention Me, most brands go live within a few weeks. Our platform plugs into popular ecommerce platforms with just two lightweight JavaScript tags, and we're fully integrated with names like Shopify, Bloomreach, and Klaviyo—so you won’t need weeks of dev time.

Can I make changes once we go live?
Yes! Our self-serve platform allows marketing teams to tweak messaging, offers, and creative without needing developers. A/B testing is built in, too—so you can constantly optimise and iterate.

What kind of results can I expect?
Every brand is different, but clients typically see a 10–30% boost in new customer acquisition when launching a referral programme. Referred customers often spend 10–25% more on their first purchase and have up to 2x the lifetime value of non-referred customers.