The Loyalty Shift: Why Referral is the Missing Piece in Your Strategy

Want true loyalty? Don't jump straight to points and prizes — start with referral, build brand love, then layer loyalty schemes on top.

If you’re a marketing leader tasked with “driving loyalty,” you’re not alone.

Across boardrooms and C-suite meetings, loyalty is often named the solution to retention, recurring revenue, and sustainable growth. The result? A familiar brief lands on your desk: "We need a loyalty programme."

But here’s the truth: not all loyalty strategies deliver the results you need. True loyalty isn’t built on points. It’s built on long-term customer value, which is where referral marketing quietly outperforms — by identifying and engaging your most valuable customers and turning them into profitable growth drivers.

Below, we’ll explore why referral deserves a leading role in your loyalty strategy, with actionable ideas and examples to show you how.

True Loyalty vs. Loyalty Programmes: Spot the Difference

We've seen it too many times. Brands pour time and budget into loyalty programmes that slowly become discounting machines. Customers learn to wait for offers, margins shrink, and true loyalty fades.

The original intent — to identify and retain your most loyal customers — gets lost under layers of points and transactional rewards.

Referral flips this model, rewarding belief not just behaviour. Loyal customers recommend brands they genuinely admire, and any referral incentive offered is just a thank-you — not the reason they refer.

That’s why referral attracts high-quality customers who spend more, stay longer, and bring others along. It’s a value exchange, not an upfront cost.

And if you’re worried about over-discounting, you’re not alone. Many of the brands we partner with, including luxury and premium retailers, use referral as their only discounting mechanism. Some go even further, using prize draws, charity donations or exclusive gifts to reward VIPs in ways that feel personal, not promotional.

The best referral programmes drive profitable growth by focusing on brand fans, not only discount-hunters. With the right structure (and tools to test and optimise), you can protect margin while growing faster.

Worried about discounting? Your customers will likely resonate with store credit or gift cards 

Referral: The Key Signal of Real Loyalty

“Advocacy is the next level beyond loyalty, where customers actively refer their friends.”

— Tash Reynolds, Global Head of CRM, Huel

When a customer goes out of their way to recommend your brand, that’s more than loyalty. It’s advocating for your business. They’re not just returning or leaving a nice review — they’re actively promoting your brand to like-minded friends and family, which is the foundation of profitable, customer-led growth.

The strongest referral signal doesn’t come from spend, frequency of purchase, or NPS scores alone. It comes from action: customers who put their reputation on the line because they like your product enough to tell someone else to try it.

Referral takes loyalty to a deeper level than most loyalty programmes ever can. If a customer is already loyal, why diminish their value by discounting every purchase? Recognise and activate them, don’t retrain them to expect less from your brand.

The Big Miss: You're Probably Overlooking Your Most Loyal Customers

Most loyalty programmes track spend. But if that’s your only metric, you’re missing a whole segment of high-value customers: people who promote, refer, and talk about you—but might not be spending right now. Maybe they’ve lapsed from purchase, but they’re still actively bringing new customers in through the door.

Referral data gives you a whole new lens on loyalty beyond just what a customer spends, allowing you to see who’s truly engaged with your brand and helping you drive organic growth.

This is especially relevant in performance-driven CRM teams where customer records are trimmed based on recency or value. What if you’re removing a "low-value" customer from your database because they haven’t bought in 12 months, but they’ve referred 10 people? That’s a huge missed opportunity.

The world-leading nutrition brand, Huel, uncovered whole segments of valuable customers that they were overlooking, purely because the brand was previously looking solely at CLTV — and not considering the revenue driven by their referrals.

Don’t Just Retain, but Recognise and Activate Loyal Customers

Whether you’re building a loyalty strategy from scratch or optimising an existing programme, referral should play a central role.

Here's are three ways referral can, and should, shape your loyalty strategies:

1. No Loyalty Programme Yet? Start with Referral.

Looking for a cost-effective, high-impact way to test and build loyalty? Referral is the best first step. It immediately identifies your most loyal customers and shows you what resonates. Plus, every referral drives new, quality customer revenue and unlocks deeper insights—all without discount-heavy tactics.

2. Already Have a Loyalty Programme? Make it Smarter.

Don’t treat referral as just another perk in your loyalty scheme. Use it to pinpoint your most enthusiastic customers then elevate them into top-tier loyalty segments where their brand support fuels even greater impact. This way, you’ll instantly differentiate your loyalty programme from the competition.

How does this look in action? Astrid & Miyu, the luxury jewellery brand, upgrades top referrers into its VIP loyalty tier — nurturing profitable, lasting relationships without sacrificing brand equity. Meanwhile, another Mention Me client recently added high-value referrers to their diamond loyalty scheme level.

3. Want Loyalty to Work Harder? Move from Transactions to Advocacy like Astrid & Miyu

If your loyalty strategy is still mostly points-for-purchase, start building-in behaviours that actually drive growth and engagement—like referring friends, leaving reviews, or creating content. Reward the behaviour that delivers true value. Astrid & Miyu promotes top referrers into its VIP loyalty tier, building profitable relationships without sacrificing brand equity

Astrid & Miyu promotes top referrers into its VIP loyalty tier, building profitable relationships without sacrificing brand equity

Loyalty is Community, not Discounts

• Lowering CAC
• Increasing ROAS
• Winning customers worth keeping

And better yet, referral leads to richer loyalty insights, more personalised CRM actions, and a stronger baseline for retention.

So many marketers chase loyalty with points. But starting with referral unlocks the kind of engagement that’s truly sustainable—and actually drives the profitability boards are asking for. 

Key Takeaway: Rethink What Loyalty Looks Like

If loyalty is becoming a top-level priority within your business, start by asking why?

Is it to increase retention? Maximise LTV? Unlock first-party data? Drive profitable growth?

If so, don't jump straight to points and prizes. Start with referral. Build brand love, then layer loyalty schemes on top.

Some of your most valuable customers aren’t your biggest spenders. They’re your biggest believers. Now’s the time to find them.

Want to see how referral can fuel lasting customer loyalty without sacrificing margin? Let’s talk. Book a no-obligation demo today.