Best Practices for Running a Referral & Rewards Program in Shopify

Why Referrals & Rewards Matter in 2025

Here’s what we’ve observed in recent years:

• Customer acquisition cost (CAC) keeps rising.
• Competition is global.
• Repeat customers spend more over time.
• Word-of-mouth has higher trust than ads.

A referral or loyalty program doesn’t replace marketing. It complements it. Once your store is stable, a referral system can amplify growth without linear ad spend. It builds brand advocates who carry your message forward.

In 2025, customers expect more than discounts, they expect loyalty, recognition, and perks. If your brand doesn’t offer something in return, they’ll go somewhere that will.

1. Set Clear Goals & Metrics

Before launching anything, you need to know what success looks like. Without goals, you’re flying blind.

Key metrics to track:

• Referral rate: % of customers who refer someone.
• Conversion of referred customers: What % of referred people buy?
• Redemption rate: How many rewards get redeemed?
• Average order value (AOV) of customers who used rewards vs. those who didn’t.
• Retention/repeat purchase rate among rewards members.
• Net cost vs. benefit: You’ll want to understand how much the program costs you vs. what extra revenue it brings.

Set realistic targets, e.g., “10% of customers refer someone in 6 months,” or “20% of rewards get redeemed within 3 months.” Use those as your benchmarks, then adjust.

2. Design a Simple & Attractive Offer

The offer is the heart of your program. No complicated terms, no confusing math. Clarity wins.

• “Give $10, get $10”
• “5% cashback for every purchase, plus $5 credit for each friend you refer”
• “Refer a friend, get 50 points; redeem 500 points for $5 off”

Tips for your offer:

• Make it meaningful (worth the effort).
• Avoid giving rewards that erode profit too much.
• Use expiration dates or caps carefully, bonus for “valid for 90 days,” but don’t make it so tight it looks stingy.
• For referrals, you can reward both parties (referrer and referred) to boost motivation.

With Loyalty Wallet by Webplanex, you can flexibly set rules like referral credits, percentage-based rewards, point systems, expiry, and more—so your offer can evolve as your business grows.

3. Make Joining Easy

If a customer has to jump through hoops, many will drop off. The friction kills momentum.

Good practices:

• One-click signup or auto-enroll with purchase.
• Use an embedded referral link or code in the customer’s account page.
• Display the referral program clearly in the navigation or the footer.
• Promote it at checkout or after purchase (“You earned X credits, invite a friend to earn more”).
• You want customers to think: “Oh, this is simple, I can do this.”

4. Track Referrals Accurately

Referrals must be tracked reliably. If you miscredit someone, or if a referred sale isn’t counted, trust is destroyed.

How to do this:

• Use unique links or codes per referrer.
• Use cookies or session-based tracking for first-time visits.
• Tie the referral credit to actual orders (not just link clicks).
• Handle edge cases (customer clears cookies, uses incognito mode, etc.).

A rewards system like Loyalty Wallet helps by automating link generation and tracking performance so you don’t have to build your own system or worry about fraud manually.

5. Seamless Reward Fulfillment

Once someone earns a reward, they should be able to use it easily. Redemption should feel good, not painful.

Best practices:

• Let them redeem rewards during checkout.
• Show real-time balance: “You have 120 credits”
• Show potential earnings on product pages (“You’ll earn 20 points for this item”)
• Email confirmation when credits are added or used.
• Automatically remove expired rewards, but notify users first.

If rewards are a hassle to redeem (require emailing, codes, and manual approvals), many people won’t bother.

6. Set Rewards Into UX

The referral or rewards program should feel native to your store, not like a second thought.

Ideas:

• Display referral invites in the user dashboard
• Show earned points or cashback on product pages.
• Remind users about the referral program through banners, pop-ups, or email
• Use small prompts: “Earn 50 points by sharing with a friend.”

When rewards are visible thoroughly, users are more likely to use them and refer it to others.

7. Use Social Proof

People are influenced by what others are doing. And urgency turns indecision into decisions.

Use these tactics:

• “X users have referred someone this month.”
• “Top referrer earned $200!”
• Show countdowns: “Offer valid for next 3 days”
• Limited reward tiers or seasonal boosters (e.g., double points on Black Friday)

8. Segment & Personalisation

Not all customers are the same. Rewards and referrals resonate differently with new customers vs. loyal repeat buyers.

Segment ideas:

New customers: Use referral as a welcome perk.

High spenders: Offer premium rewards tiers.

Inactives: Offer bonus points to re-engage them.

Referrers: Show leaderboard or recognition.

Personalization: calling someone by name, referencing their balance, or past referrals makes the program feel more friendly and less “systematic.”

9. Monitor & Iterate

Launching a program isn’t a set-it-and-forget-it task. You need to monitor, test, and refine.

What to watch:

• Referral uptake rates
• Which reward offers convert best
• Redemption patterns
• Churn among rewards members
• Cost vs. revenue from referrals

Use A/B testing: try two offers or two messaging styles. See what works, then roll out winners.

Also, ask for feedback. Ask customers: “Was it easy to refer or redeem?” Use their pain points to improve.

10. Avoid Common Mistakes

Here are mistakes we’ve seen make good programs flop:

• Too complex rules – Many conditions kill participation.
• Delay in rewards – If credits take days to appear, users forget.
• Overly low incentives – If the prize is too small, effort doesn’t feel worth it.
• Neglecting mobile users – If the referral UI is clunky on mobile, you lose a huge percentage of participants.
• No promotion – Don’t assume people will find the program. You must highlight it.

Avoiding these common traps sets your program up for success from the start.

Conclusion

A referral and rewards program is one of the few marketing strategies that pays you repeatedly. It turns customers into advocates, strengthens loyalty, and scales with your growth. But running one successfully requires more than just installing an app, you need clear offers, seamless UX, accurate tracking, ongoing promotion, and continuous optimization.

With tools like Loyalty Wallet by Webplanex, you get a solid foundation, prebuilt referral links, automated rewards, tracking, a dashboard, and a redemption flow. But the magic comes when you layer it with thoughtful design, testing, and user-centric implementation.

Referrals and rewards aren’t magic, they’re about psychology, trust, incentive, and frictionless experience. Nail those, and over time, you’ll see your store grow more sustainably and cost-effectively than through ads alone.