Run a Shopify Referral Program That Actually Crushes! (And Why Loyal Points Almost Never Work)

Jay Myers (00:00)
I read a report recently that McKinsey said that roughly up to 50 % of the reason people buy from your store is because they are influenced by word of mouth. And I read another study from Nielsen.

that said 88 % of consumers highly trust recommendations from people they know more than any other channel, more than chat GPT, more than Google, Meta, Instagram, TikTok, you name it. They trust their people that they hear it from. So what we're gonna talk about today is the world of referrals. And this is not just a nice to have or maybe I'll have a referral program one day.

It might be one of the biggest growth levers you can have for your store. And I think it's also one of the most, I would say underused growth levers. And I think my guests sitting here and chomping at the bit would probably agree with me. So I'm very excited to have Raul. Am I going to say this right? Galera. Yeah, it's just like, just like it, just like it says, it's awesome. ⁓ He's from referral candy, which is one of the leading referral platforms for Shopify. So Raul thank you so much for.

Raúl Galera (01:02)
Yep, perfect. Just like that.

Jay Myers (01:12)
joining us today.

Raúl Galera (01:14)
Yeah, thanks for having me.

Jay Myers (01:16)
So let's jump right into it. You, I know joined, I was reading you joined Referral Candy and I had my notes here, 2016, I wanna say by emailing the, cold emailed the CEO, you applied as a sales person and they said, or he said, no, you should be on partnerships and you joined and the rest is obviously history. But what did you see in them back then that Shopify brands are still missing today about word of mouth?

Raúl Galera (01:25)
Yep. Yep.

Yeah, I actually remember reading one specific case study that we had on the website back in the day about, I think it was a mattress company. I can't remember the name, but, and I thought it was really interesting that you could turn word of mouth into like a channel. I mean, I didn't come from e-commerce back then, so everything was a little bit new to me.

Jay Myers (02:03)
Mm-hmm.

Raúl Galera (02:06)
But I thought that that was a really interesting marketing channel for a company and for e-commerce. You just use your customers to talk to their friends and family about your brand and build a channel, like a professional marketing channel around it. So I thought that was really interesting, that one of the reasons that caught my attention and I decided to reach out.

Jay Myers (02:31)
Did you, were you in the e-commerce space before that or was this your entry into the e-commerce world?

Raúl Galera (02:37)
Yeah, that was my entry into e-commerce, into software. Yeah, I was working, I mean, I was pretty young, because right after college, I worked for a bioconsulting firm for a couple of years. did financial analysis, which is definitely not my thing. And then I did sales for a recruitment company that was working with startups and tech companies. I was exposed to technology a little bit, but just from

from kind of like the sales side. So yeah, referral candy was my first time into an actual tech company and then into e-commerce.

Jay Myers (03:14)
So tell me about referral candy. We're going to get into it. All the details of referrals and strategies right away. But what, what is referral candy? What do you do? What's the product? Give me the set the stage here a little bit.

Raúl Galera (03:25)
Yeah, so referral can be, I mean, as the name, as I said, we've been for over 10 years, I think we're actually close to 15 years now, one of the oldest Shopify partners in the referral marketing space. ⁓

Jay Myers (03:38)
Well, we launched our first

app in 2012. And I think I remember referral candy being there at the time. Yeah.

Raúl Galera (03:43)
Yep, yep.

was called Anafort back then in 2000. So the company was founded in 2009, and I think the app was launched in 2010. Actually, I think it was last year. I found a screenshot of the Shopify App Store in 2010 or 2011. There was like 30 apps in it. It's hard to believe now, right?

Jay Myers (04:03)
Yeah, oh yeah, yeah. Well,

I was I was a merchant in 2009 and that was kind of my entry into Shopify, but I remember there was around 20 apps and I think when we launched our first one there was probably 45 the apps were sitting on kind of this wood shelf display in the app store. Yeah, yeah.

Raúl Galera (04:21)
Yes, yes, yes, yes, yep.

So that was one of them. And then I joined the company probably like six years later. And so yeah, we've been, for a really long time, we've been known for a referral marketing app. So we help merchants run customer referral programs. So we turn their customers into their salespeople. And we provide you with incentives that

Jay Myers (04:27)
Yeah.

Mm-hmm.

Raúl Galera (04:49)
allows you to motivate your customers to go and refer your brand to friends and family. The reason why I say traditionally we've known for that is because we evolved a little bit into more like a kind of word of mouth.

operations for brands. So now we offer referral marketing as we always have, that's our bread and butter, but we've also started in the past two years, we've been also developing a lot of tools for affiliate and influencer marketing, which is the mechanics are basically the same. You're having somebody...

refer your product and your brand to a group of people that trust them. And I feel like that's the common denominator across customer referrals and influencer referrals is that you're trusting the person that's recommending that product and that brand to you. And so we've expanded into that, into more kind of word of mouth in general with referral marketing, affiliate marketing, influencer marketing, everything into one platform.

Jay Myers (05:26)
Mm-hmm.

Can you define what the difference is between referral marketing and affiliate marketing and I guess influencer marketing too?

Raúl Galera (05:51)
Yes.

Yeah. So I would say the two main differences are, or I guess three main differences is who's referring, who's the audience, and what are the incentives. So who's referring? On a referral program, it's typically your customers. So somebody that makes a purchase. And then a few days later, you as a brand reach out to that customer and says, I hope you like the product.

Jay Myers (06:04)
Hmm.

Raúl Galera (06:16)
liked it, why don't you tell your friends and family about it, and you can get a discount on your next purchase, or you can get store credits, or you can get a free gift, a free product, something like that. On an affiliate program, the person that's referring is usually, well, it's an affiliate, somebody that in a way they make a living.

by referring products to, so whether they have a YouTube channel or a blog or they're influencers. It's influencer marketing. It's basically a way of affiliate marketing. And so in this case, the person that's referring, it's not necessarily a customer. It's somebody that you're getting in touch with to.

build a partnership. So that's for the referral side. the audience, well, your customers are probably going to refer you to friends, family, people they know at the gym, people in their close circle, coworkers. Affiliates, influencers have a much wider audience, depending on, again, their blog or their YouTube channel, their TikTok channel, whatever it is.

Jay Myers (07:07)
Mm-hmm.

Raúl Galera (07:11)
And then the incentives are also different. When you're running a referral program, typically don't want to, in some cases you do, you typically don't want to pay a commission to your customers. The idea is to keep them incentivized to come back to your store. If they like your products, why not incentivize them to come back and buy again? On an affiliate or influencer program, you want to reward those people with a commission. You want to kind of make them feel part of the revenue that you're generating.

Jay Myers (07:22)
Mm-hmm.

Mm-hmm.

Raúl Galera (07:40)
those three aspects I feel like are what makes referrals and then affiliate influencers different from each other.

Jay Myers (07:47)
Gotcha. now referral candy was always the referral side of the coin, but now it fully supports affiliate as well too. So.

Raúl Galera (07:56)
Yeah, yeah, so we've

improved our capabilities when it comes to rewards, when it comes to tracking. So yeah, so now you can accommodate both and have them running separately.

Jay Myers (08:08)
Gotcha. Okay, so let's break this into two different streams then. Let's talk about the referral side. So people listening right now who are not running a referral program, what does a good referral program look like?

Raúl Galera (08:23)
Well, there's a few things that will make your referral program successful based on what I've seen the merchants that work with us. First of all is that a referral program should incentivize something that's already happening. And this might seem obvious, but you really need to have your basics and check before you launch a referral program, meaning that you need to have

Jay Myers (08:36)
Mm-hmm.

Mm-hmm.

Raúl Galera (08:46)
product market fit. You need to have ⁓ happy customers. You need to have good reviews or any sort of idea that your customers are liking your product. And then build on top of that. Then.

Jay Myers (08:47)
Mm-hmm.

That was one

of the things I was going to ask is there, there any type of like a checklist for being ready that like, obviously when you maybe just launch your store and you haven't had customers yet, maybe that's not the point, but is there certain things that you check that, okay, now's the time?

Raúl Galera (09:11)
Yes, actually about what you mentioned, this might be a side note, but a few years ago, I was curious to see who were the most successful referral programs that we've ever had at Referral Candy, historically. I don't know, just side project, I wanted to look into that.

And then when I identified those programs, I went to look, like, what are things that those programs have in common? one of the things that I don't remember if it was like 50%, but it was a decent percentage of the most successful programs that we've ever had. They came from crowdfunding. So.

Jay Myers (09:46)
Mm-hmm.

Raúl Galera (09:46)
That made sense because it means that those were companies that were literally built on word of mouth. Like crowdfunding, if you're running something on Kickstarter or whatever, you need to have that initial... ⁓

customer base, customer slash promoter base of people that are going to support you from day one and they want the project to actually happen. So they might refer all their people like, if we all contribute to this, we'll actually end up getting the product. So there were a lot of companies that started off as crowdfunding. Then once they move into Shopify, they immediately launch a referral program because they already had that.

extremely engaged customer base and then from there on. But obviously that's not the case for a lot of brands. But when it comes to a checklist, yeah, I would say product market fit. you need to kind of have that certified that your customers are buying your product, they like it, it's a sustainable business. ⁓

Jay Myers (10:40)
Yeah, you're not just pumping

money at ads, getting one time customers who are not really happy with your product, like that unhealthy, just pure paid sales. Like you actually have a product that customers like that they probably would recommend already, cause they're, yeah, yeah, makes sense.

Raúl Galera (10:58)
Yep. Yeah.

And also because, and I see this a lot, my role at referral can be, among other things, I get to talk to merchants on a weekly basis, which is something I love. And sometimes I see merchants that are trying to solve a problem, like a foundation problem with a referral program. And sometimes that's not really the solution. A referral program is going to amplify. Like if you...

Jay Myers (11:19)
Mm.

Raúl Galera (11:21)
if you're getting bad reviews or if your customers are not happy, a referral program might make things worse in a way. So you want to capitalize on positive word of mouth that's happening organically. But yeah, that's definitely one of the reasons why merchants come to us is because they are either too dependent on ads. And so they

At the same time, they have happy customers, but they are too dependent on keeping their ads machine up and running. And so they want to have a marketing channel they can own, which I feel like that's the most positive thing about referrals is that.

You can use referral candy, but you can switch anytime. You still own that audience. And you can take it somewhere else, or you can do it in-house, or you can whatever it is. But you own the audience that's promoting your product. And I feel like that's the most valuable thing for brands.

Jay Myers (12:12)
It's huge. What's the best way to get people into that referral group of people? you know, obvious ones that come to mind are the thank you page share, but customer hasn't got your product yet. So I don't know, maybe that's not the most effective. What is the best way to get people to actually refer?

Raúl Galera (12:34)
Post purchase, yeah, for sure. That's one of the most important ones. I agree that doing it immediately after purchase, might not have gotten the product yet, so they don't necessarily know if they like the product. But also, there's a level of excitement when you buy something ⁓ that it's like, ⁓ cool. Yeah, let me.

Jay Myers (12:53)
True. Yeah.

People buy something and then they

go post it on social.

Raúl Galera (12:59)
Yeah,

or they might tell their friends in the group chat, like, ⁓ I just bought this. So exactly, exactly. Yeah, especially now that we feel like customers do a lot of research before they actually buy something. So yeah, OK, cool, like that.

Jay Myers (13:04)
Pulled the trigger, finally did it. Yeah. Yeah.

And they'll ask, they'll,

they'll ask on social media, what's every, what's the best coffee maker everyone's using these days? And then they'll actually go and buy it. And so then they'll post that they bought it and it, okay. So So the, so for sure having something on that moment on the thank you page, right when they buy. Yeah. Okay.

Raúl Galera (13:21)
Yes.

Yep. Yep.

Yeah,

for sure that. And then post purchase, if you have an email flow that gets sent to customers after the purchase, you should for sure include mentions to referrals there. well, mean, you've got their attention. also, another way that, so something that merchants tell us about it.

is that, and this is something I get particularly from retention managers. They tell me, every month I have to come up with a list of topics to write emails about to make money. And so they need to come up with, they can't just keep sending the same emails over and over. They can't keep sending.

visit our collection again, or weekend sale, or whatnot. When you have to send so many emails in a month, you might end up running out of ideas. And it can also teach your customers to see your email come through. And then it's like, they're getting me a discount, or they want me to buy XOR. So it can end up looking a little bit like noise. So one thing that retention managers tell us is that your app helps me be

because I can send an email that's not promotional. I'm actually giving something to my customers, and it's something that can get them interested to say, OK, let me see. Especially if the rewards are attractive, that can really go a long way.

Jay Myers (14:45)
Yeah.

That's so true. Everything, anything and everything that you can send your customer that isn't just about a promotion will also amplify the value of your promotions. I just had recently, actually the episodes not out yet, but we just recorded it with founders of an app called Hopin, which is basically a color wheel that you can shop by color. And it's really kind of a fun experience. Like you pick your color and it's sourced by that.

But they said one of the things that brands like the most about it is it's a new thing to email their customers about. And they can email their customers and say, we now have click on the color wheel and you can sort our whole website by color. Come try it. It's fun. What's your favorite color? You know, just like it's another reason to, to contact them. It makes so much sense. So what, what works the best? Is it credit? Is it a gift?

a reward, a refund? it like, what's the best incentive you can give customers to encourage them to refer?

Raúl Galera (15:56)
It depends. We always tell merchants that there's not really a blueprint of this is what you need to be doing because every merchant is different. What works for some merchants might not work for others, and this is a really easy example. If you're a company that is selling either very high ticket items, products that customers are going to buy,

maybe once in their lifetime, maybe once every many years. If you reward them with a coupon code or store credit, unless you're selling accessories or something like that, it's really worthless. Even the customer might even feel a little insulted because they just spent a lot of money and now all you want me to do is spend even more. You could have given me this discount earlier. So what works really well for those merchants is...

Jay Myers (16:20)
Hmm.

Hmm.

Raúl Galera (16:42)
some sort of incentive that's not a discount, doesn't require them to come back to the store and buy again. So it could be a cash reward. could be gift cards. We actually recently integrated with Tremendous, which is a gift card catalog. So you can send them any sort of gift card, including like Visa prepaid cards to your customers. And so it's like a really easy way of getting your customers rewarded with something that doesn't necessarily require them to come back.

and buy again. But for merchants that are the opposite, so if you're in subscriptions, for example, subscriptions are, in my opinion, the best candidates for referrals because you have the most engaged, I mean, you know this better than anybody, you have customers that are so engaged, your product is basically part of their daily lives. Things that they know that happen every single month is that they get a product from your brand.

Jay Myers (17:30)
Yeah.

Raúl Galera (17:38)
And so it becomes part of their routine. They're more likely to talk about it. And so subscription brands work really well. In those cases, what you need to do is keep those customers retained. So giving them an incentive on their next subscription keeps them around for another month. You can also tier it in a way that

Jay Myers (17:49)
Mm-hmm.

Raúl Galera (17:55)
the more friends you refer, the better the rewards that you earn or the better the discounts that you get. And so you can, again, make sure that you're keeping them for longer, maybe longer than the average, while at the same time you're acquiring new customers. So it really depends. And then there's also companies that might have higher margins and lower margins. So I always say, it has to make sense for you. Whatever it is that you're offering has to make sense for you financially.

Jay Myers (18:19)
So what does this look like as a customer? I, do I have a, oh, I guess it would all be in the customer accounts. So if I earn a reward, like a gift, let's say, how, what's the logistics of how that's managed? Like if I refer a certain amount of people, I could earn a shirt or something, let's just say. Like, is that a good example?

Raúl Galera (18:46)
Yeah, that could be, yeah, that or store credits or a discount. ⁓

Jay Myers (18:51)
does it automatically

create an order for a free shirt that gets fulfilled? Or does the, I'm the merchant, do I have to do something then to get them their free shirt? Or what does that process look like?

Raúl Galera (19:04)
It depends. For that particular example, what we typically recommend is to... We have a type of reward that's a buyX getY coupon. And so you're given something for free with the condition that they buy something else. you can earn... What you earn as a reward for the referral is a coupon code that you, again, you get, I don't know, a free t-shirt when you buy X product.

Jay Myers (19:14)
Mm.

Raúl Galera (19:28)
So that works. mean, yeah, the customer's creating the order themselves. Either that or store credits, which also work really well because they just sit on the payments on the checkout. So that also obviously increases the chances of the customer actually completing the order because they just see it as like, I know that what I'm going to say sounds stupid, it.

Jay Myers (19:28)
Gotcha.

Raúl Galera (19:47)
It's literally free money. It feels better than a discount because you actually see a balance of money that you can spend. I feel like psychologically, it really helps to increase conversions. But if you want to give a free gift, like the one that you mentioned, then we have, from a technical perspective, we have a few different ways that we can help the merchant trigger a notification on their end to fulfill that order.

Jay Myers (19:55)
Mm-hmm.

Raúl Galera (20:13)
⁓ But it's through something that we call custom reward. And so it really depends how the merchant wants to set it up.

Jay Myers (20:18)
I have a theory, I fully believe that credit converts better than a discount because we see this with, we have a memberships app and that as a member, you can get different benefits and one of the benefits is store credit and it has a huge driver of repeat orders because if you have credit, like if you see $20 balance,

It feels like real money that if you don't use it, it feels like you're losing it versus if I have a coupon for 20 % off and if I don't use my coupon, I don't feel like I lost money. I just feel like I didn't use my coupon, but if I see the money sitting there, which it's kind of the same thing to the brand, like if they don't use the credit, it just doesn't exist, but it has a, it's a very different effect on the brain of the psychology.

Raúl Galera (20:52)
Yep.

Exactly.

Mm-hmm.

Yes.

Jay Myers (21:15)
⁓ buying of a customer. So yeah, I really believe that that would be the route I would want to go anyway, the credit route.

Raúl Galera (21:17)
Totally. Totally.

Yeah,

yeah. I personally love it also because we've had, and I've talked to these merchants personally that came to Referral Candy because they were running a loyalty program outside with a different app and typically was based on points. Probably one of the things that I've heard the most last year was our customers didn't know what a point was.

Jay Myers (21:43)
Yeah.

yeah.

Raúl Galera (21:50)
Like what's a point equal to? And so

when they come over to referral candy for whatever the reason is, either because the referrals in the loyalty program work well, so now they want to focus 100 % on referrals. But.

The good thing about store credits is it's dollars or euros or whatever or pounds. so your customer knows exactly how much they have to spend and how much they have available to them in their wallet. But 100 points, it changes from one store to another.

Jay Myers (22:24)
And this is why every credit card I earn points with all the credit cards I have. And if I get an email saying you now have a hundred thousand points or whatever, again, means nothing to me. But so this is why every credit card company, they don't say that they don't send an email telling you how many points they send an email with. This is what you can get a new Dyson vacuum or a trip to Mexico or whatever like it's and they segmented out by for $50,000 more points.

Raúl Galera (22:36)
Okay.

Mm-hmm.

Jay Myers (22:54)
Here's three things you can get for 20,000 points. Here's things. So like I see the flat screen TV. I see the laptop and that makes the points feel real. But otherwise points are just a, what are they? Like they're, yeah. So what else on referrals here? Like is there things that the best brands on Shopify are doing different than the average store? Like what are the stores that are just

Raúl Galera (22:58)
Yep. Yep.

Jay Myers (23:20)
crushing it with referrals. What are they doing that's different than the rest?

Raúl Galera (23:25)
I mean, I feel like they have a referrable product. I don't know if that's a word, but they have a product that's easy to refer, either because it's on subscription, and again, it's part of your routine, and so your customer's naturally going to talk about it, or because you have a niche product, and therefore, there are communities of customers where...

Jay Myers (23:32)
Yeah.

Raúl Galera (23:45)
your customers are already hanging out. And so it's easy for them to casually talk about your product and then fit in those referrals in a way that doesn't feel promotional. then, kind of that's from like a product or brand perspective, they've been able to build that community. If you have a community of customers, I feel like everything is easier, but definitely referrals get a lot easier because you have them engaged already.

Jay Myers (23:55)
Mm-hmm.

Mm-hmm. Mm-hmm.

Yeah, I think I have a theory on this. I think when I think about the products that I refer, it's products that have a strong opinion on something. So or a stance. So like, don't, I think about anything like it could be, I don't know, batteries. Let's just say a battery is a battery. A nine volt battery is a nine volt battery. But if this one nine volt battery was, I don't know, this probably isn't true for it.

Raúl Galera (24:15)
Okay.

Mm-hmm.

Yep.

Jay Myers (24:39)
a nine volt battery that's safe to throw in the garbage or something like that. I, that probably doesn't exist, but it's something it's like the most environmentally friendly nine volt battery because you're not supposed to throw batteries in the garbage, but they sometimes end up there. But at least this battery, if it isn't the garbage, it won't. Yes, it doesn't get recycled, but it won't poison the ground. I don't know. That's just an example, or, it has an opinion and, and then people absorb those opinions.

And if the brand does a good job, like it starts from the top down. I always say like when, you buy a product, your job as a brand is to educate the customer about that product, tell them about it. It's like a bottle of wine. If you just go and buy a bottle of wine off the shelf, you're not going to recommend it to anyone because you don't know anything about it. But if a Somalia comes and tells you about this wine and where the grapes are grown and the vineyard it's from and everything about it, you're educated on it. Then you're

Raúl Galera (25:17)
Mm-hmm.

Jay Myers (25:35)
you have the ammunition to now go and tell people about it. Now referral candy puts the fuel on the fire because now I've got the knowledge. This product has an opinion. It's like wine for people that hate wine or I don't know, whatever. has some, it has some opinion and I'm armed with knowledge. Like they did a good email onboarding series, educating me about the product. And now I get hit with boom, refer five people and you get a case of wine or something like that. Like,

Raúl Galera (25:43)
Mm-hmm.

Mm-hmm. ⁓ yeah.

Jay Myers (26:05)
That to me, feel like would be the ultimate.

Raúl Galera (26:08)
It's the niche. mean, just again, you're not selling wine, you're wine for, or you're not selling batteries or selling batteries because I get excited when I talk, when I have to show up to a demo and I look at the website and I see one of those, I get excited. Yeah. I tell them, yeah. And I tell them like, exactly. They have a strong positioning.

Jay Myers (26:10)
Yeah.

Right.

100%.

Yeah, you can just tell. You can tell this brand's gonna do, yeah, because they have a strong positioning. Mm-hmm.

Raúl Galera (26:36)
They're unique. And I think that's also something that a lot of Shopify entrepreneurs, I don't know if they get misled or they get wrong initially is that I'm going to start a jewelry company. I'm going start ⁓ a clothing brand. But they don't really think about, OK, jewelry for what? Or clothing for what and for who? And who are those people? Why are they different?

Jay Myers (26:50)
Mm-hmm.

Raúl Galera (26:57)
jewelry for occasions? Is it for younger people, for older people? What are the reasons that are taking you to build that brand? And so I get excited. I'm really honest with them. tell them, look, regardless of the... I know you're talking to multiple apps. I hope that the app that you end up choosing, I'm going to do everything in my power for you to choose referral candy, but you should run a referral program. Like pick your app.

Jay Myers (27:22)
Whatever you choose,

at least run one. Yeah. Yeah.

Raúl Galera (27:24)
Yes, it's going to work. Sometimes I

can just tell because I've seen so many over the years. I can just tell that it's going to be. One of my favorite examples, it's a company called Branch Basics. They've been with us for a really long time. And it's almost the example that you mentioned earlier about the sommelier that tells you about why. So they were able to educate their customers about their product and why their product is different.

Jay Myers (27:44)
Mm-hmm.

Raúl Galera (27:49)
to the point that their customers were experts on the subject. ⁓ for context, what this brand sells, actually, I'm sure they have a wider ⁓ product catalog now. I haven't looked at them in a while. essentially, what they do is that they sell non-toxic cleaning products for your house. And so that already, when you get into the...

Jay Myers (27:54)
Hmm.

Raúl Galera (28:10)
everything is toxic, everything is killing me, that's a really easy way to get into it as a customer. And then you're probably educated about it. And then once you start working with brands or as a consumer, you start ⁓ buying from brands like that, then you kind of become even more of an expert in the topic. But at the same time, the other thing that they tell customers is,

Most of what you actually buy at the supermarket, if you buy detergent, for example, in a bottle, most of what you're buying is water and plastic. Water that you can get in your kitchen and plastic that you're probably not even going to recycle. Or it's not going to end up getting recycled. With us.

Jay Myers (28:42)
Mm-hmm.

Raúl Galera (28:49)
We'll send you reusable bottles in your first subscription, and then we're just going to send you a concentrate that you can dilute in water and then you can use it. Plus, it's safe for your family, and you can clean your dishes, and you can clean your house in a way that's not toxic. They're not selling cleaning supplies. They're selling something different.

And so for them, I was a referral program that worked extremely well because their customers, they almost liked selling their product to their friends and family.

Jay Myers (29:17)
Isn't it amazing the trickle effect of having a good story and a good why behind your product? It's like it affects everything. like it will affect your subscription retention. If your customers understand your story, it'll affect your referral. It'll affect your ability to upsell. It'll affect everything. It's like the nucleus of who you are. it's like, someone might say, why isn't my referral program working?

Raúl Galera (29:28)
Yep.

Jay Myers (29:45)
Why are my customers turning off my subscriptions after three months? It's not the subscription program or it's not the referral program. It's the story, it's the why and like that spreads out. That's such a big unlock when brands understand that.

Raúl Galera (29:59)
And also when brands, and even taking it one step further into the actual referral program itself, I've seen brands do really good copywriting and really good communication with their customers about the referral program itself. So you can also tell when a brand is being lazy about the referral program and offering the same...

Jay Myers (30:15)
Mm-hmm.

Raúl Galera (30:22)
incentive that you can get regardless. So I'll give you an example. Most brands now they offer 10 % off ⁓ if you subscribe to a newsletter. Well, if your referral program also offers a 10%, it's not unique. There's nothing special about it. Or if you're, this actually happened to a customer of ours a couple of years ago, the referral programs were really good throughout the week, but then on the weekends, would, they would tank and then on Monday we'll go back up again.

Jay Myers (30:24)
Mm.

Totally.

Raúl Galera (30:49)
And that was because we had a call with them. We tried to scratch our heads, like, what's going on here? We ended up figuring out that they had a weekend sale that they hadn't even thought about, that the offer was much higher than what they were offering for the referrals, which was actually hurting them because their customers were like, I'm referring my friends. I know they bought. Why I'm not getting my rewards was because the friend used a different code.

Jay Myers (31:12)
Yeah.

Raúl Galera (31:13)
I've seen brands being really smart about it, not only in terms of incentives that people actually feel incentivized to share, but also the way they were presenting them. We have a customer, I hope they still have this on the referral page, but they were saying something like, I still remember it, instead of spending money on meta, we'd rather give it to you.

Jay Myers (31:35)
Yeah, I've seen that. I've seen a brand do that exact same thing too. And I thought it's actually smart and it was, um, it was a clothing brand and they said, I think they actually went like our exact customer acquisition cost on our Instagram ads is $81 per customer. If we pay Instagram to get a customer. So we're discounting. It was like a men's high end clothing. We're discounting it. 81, $81. Um, that was the exact messaging. I thought that's.

Raúl Galera (31:55)
Yep.

Jay Myers (32:05)
Kinda, kinda genius.

Raúl Galera (32:07)
And also, it doesn't even have to be a bribe or a commission. In a lot of cases, we've seen referral programs work when they know that their customers are going to talk to their friends and family about it. They know that their own customers are going to be happier about the discount they can give to their friends and family rather than where they can get themselves. They're going to be excited to share.

Jay Myers (32:21)
Mm-hmm.

Hmm.

Raúl Galera (32:32)
just because it's, hey, Jay, I can get you a 35 % discount on your first purchase. I might get a 10%. Who cares? But you need to try this. There's a 35 % coupon that I can get you. So brands sometimes, they overlook that part of the sharing and the, I'm doing this because I feel good doing something good for people I care about.

Jay Myers (32:55)
Just out of curiosity, is there a way to limit the number of times someone can refer something or if you create the offer, like the customer can refer someone and get 25 % off, is it just a link they share or can you give them a set number that they're allowed to refer?

Raúl Galera (33:13)
Yeah, you can limit the number of rewards they can earn. So once they join, there's a few things you can do, once they join the referral program, they get a referral link with a coupon code. And then they can share that coupon code for as long as the coupon code is active, because you can set an expiration date.

⁓ But then you can set it in a way that, okay, you as a customer can only get three or four or five rewards and that's it. And then after that, it doesn't matter how many more friends you refer, you're not going to get any more rewards. But you can also do the opposite, which is create like a tier system. So the more friends you refer, the...

kind of like the more rewards or like the better rewards you can earn or like you can give them like, we're going to give you 15 % off or 20 % off for every friend you refer up to five, but then you're going to have to wait until you refer 10 to get like a big discount or something like that or like a big gift. So yeah, there's a few things you can do about like limiting that.

Jay Myers (34:12)
I would really be tempted to try to create a program that had super valuable offers for the people that they were giving it to. like say I actually did a talk on this at SubSummit a few years ago and it was specifically related to subscriptions, but I think this would work for anything. But the idea is like a lot of...

A lot of stores, have a program where like you subscribe and there's like some link somewhere you can like give 10, get 10 or whatever. Like it's good, but it was like, it didn't move the needle too much. But then the idea was, what if you had, when you say I sell skincare, you subscribe to my skincare and now you get three shares. That's it, just three, but you could give someone three months free, not 10 % off.

Raúl Galera (34:43)
Mm-hmm.

wow.

Jay Myers (35:00)
but you only get three and that's it. So now rather than you potentially sharing with everyone, you're going to actually start to think, well, who, who could actually use this? I only have three. You might reach out to your aunt who maybe has a skin, dry skin or something. And you might say, Hey, I know you mentioned, you have dry skin? I'm trying this new lotion. have three passes that I can give you three months completely free, but let me know if you'll use it. Cause I only have three.

Raúl Galera (35:28)
Hmm

Jay Myers (35:29)
And then what you're doing is you're, you're finding the ICP, the ideal customer for that brand rather than, so yes, it's very valuable, but then you got to remember how much are you paying to acquire a subscriber through ads? So maybe it's not too, too, too expensive, but then now that customer is, uh, also has three, they're very likely to stay on as a subscriber because they have a skin problem. And then they're, you know, so

Raúl Galera (35:33)
Yep.

Jay Myers (35:58)
I would be very tempted to try something like that. Do you have any brands doing something like that?

Raúl Galera (36:03)
I'll have to look, but I think it's a really smart idea, especially for smaller brands that are still trying to figure out exactly who their ICP is. Your customers are doing it for you. Yep. They'll be like, OK, who do I know? Oh, yes, this person. I know that they need it. I know they'll. And then you can create a.

Jay Myers (36:12)
Right, let your customers do it for you. Exactly, exactly, yeah.

Right.

Raúl Galera (36:26)
a segment of customers that came from referrals and know, okay, like something about these people is unique and then you can start building on top of that. Yeah, for sure.

Jay Myers (36:36)
Do you remember,

did you join clubhouse during the pandemic? Yeah. So you remember they had, ⁓ when you joined, got five invites and it was limited. could only invite five people and it didn't even work on Android. It only worked on iOS, but it was still one of like the most, the fastest viral growing platforms ever in history. And then Twitter launched spaces and everything else. But at the time, and I remember, I, I saw someone post on

Raúl Galera (36:39)
Yes, I did.

Yes.

Mm-hmm.

Yep.

Jay Myers (37:04)
Twitter that they were doing at what did you call it? Like a talk or whatever. A spate. There was a name for it where you would host like a whatever. So I reached out to him and I was like, Hey, can you hook me up with an invite? Cause I don't have access yet. And they said, yeah, yeah, here you go. I gave me an invite. So then I got access and I posted and then someone else messaged me and said, Hey, can you, can you give me an invite? And you know I said to him? I said, yeah, but are you actually going to use it? Cause I only have five. So

Raúl Galera (37:09)
Yeah. I forget the name, but yeah. Yeah.

Yeah. Yeah.

Jay Myers (37:34)
I like qualified this customer for the company and I was like, hey, if you're not gonna use this, I'm not giving it to you. So like, I'm sifting through and I'm gonna, and then so not only did I find a good customer, but that guy also feels a little bit indebted to me because I gave him my code. So he's gotta use it, right? So it's like this amazing effect it has when it's limited, high value, and so there's scarcity.

Raúl Galera (37:38)
Yep.

Mm-hmm.

Yes.

Yes.

Jay Myers (38:03)
urgency and recommended by a very close person like it's a it's someone giving it to a person so

Raúl Galera (38:08)
Yeah. Yeah. And

you feel like you owe that person to show up and use it. For Clubhouse specifically, I remember during the pandemic, some of the best conversations I've had about e-commerce or listen were on Clubhouse. And I still remember a few of them. And I think it's because people took it seriously because it's not...

It's not just something that, ⁓ there's some people talking, let me just see. No, you know that they're there for a reason and that they have a purpose. Yeah, I think, don't know, actually, I don't know what happened to Clubhouse, but it looked really well.

Jay Myers (38:37)
Yeah.

Well, Twitter launched Twitter

launched spaces, which was an identical copy of it. And a lot of people who are hosting their talks on clubhouse just moved it to Twitter because there was millions or hundreds of millions of people and it, kind of killed it. Like, so yeah, that was really it. I think other than that, if Twitter hadn't done that might still be around, but, but they had, I mean, proved the growth model anyway. So yeah.

Raúl Galera (38:47)
I see.

right.

Yeah.

Mm-hmm. Yeah. For sure.

Jay Myers (39:12)
I want to talk a little bit about you have a new product that came out called moments. I know a little bit about it because I give them the website. It sounds really exciting. I love the concept, but tell me what it is.

Raúl Galera (39:17)
Mm-hmm.

We're calling it internally, it's a way of bringing back old school relationship building and engagement. I'll explain this. We feel like right now, customers are not necessarily being appreciated by brands, at least in a meaningful way.

Jay Myers (39:42)
Mm-hmm. Mm-hmm.

Yeah.

Raúl Galera (39:45)
⁓

or in a way that feels trustworthy and it feels unique. so one of the concepts around it is that we're emphasizing understanding customers as people. So positioning brands as a way to understand the customer beyond...

Jay Myers (39:57)
Mmm.

Raúl Galera (40:05)
transactional data, like, he's a VIP spender, or he's part of a Clavio segment, or whatnot. yeah, so it's brands that want to understand their customers in a deeper way, and then they want to surprise and delight those customers. I'll give an example of some of the brands that we've started to work with. your customers are, and this is what the name Moments comes from.

your customers are behaving in a way that they might create moments that are worth appreciating from a brand perspective. An example of that could be, I have a customer that they make a purchase and then they come back six months later when you thought that was it, they were never coming back. You can...

Jay Myers (40:40)
Okay.

Raúl Galera (40:54)
reach out to them, can create, turn that into a moment in which you can appreciate that person coming back to your store and buying from you again. So you could send them a thank you note without them expecting it, or you can send them a free product in their package without them expecting it. So it's turning that customer appreciation into something that's unique, unexpected, and not necessarily transactional. ⁓ So...

Jay Myers (41:02)
Mmm.

Raúl Galera (41:17)
Yeah, and I feel like there's a lot of information that we get on Shopify stores about customers' interactions with brands that are worth appreciating in a way that in traditional loyalty, and we were talking about points earlier, you're telling your customers to do X because I'm going to give you this amount of points. If you...

I'm going to give you these points. Or if you subscribe to a newsletter, I'm going to give you these many points. And if you give us our birthday, we're going to give you these many points. So when you as a brand give the points to the customer, it's going to feel transactional. The customer is expecting those points. I did it. So now give them to me. But in this case, you're surprising. It's surprising delight. So you're surprising the customers for.

Jay Myers (41:51)
Mm-hmm.

Mm-hmm.

Raúl Galera (42:04)
returning or for subscribing or for ⁓ whatever it is, whatever interaction that our engine might flag to the merchant, use them as an opportunity to truly surprise the customer. it goes a long way. Customers, they really appreciate that because it's something that very, very, very few brands are doing right now. So we're trying to figure out a way to get more brands to do it.

Jay Myers (42:07)
Mm-hmm.

Mm-hmm.

I love it because, ⁓ about a year ago, I had someone on the podcast and it's so funny. We were talking, I'm, I'm glad you built this because on the podcast, we were talking about loyalty points and why they don't work. And then we started talking about this concept and we were just joking. We're like, we should build this because it needs to exist. And the example I often think about is,

When you buy, you know, the coffee stores where you buy 10 punch cards and then you get your 10th coffee is free or whatever. When you get your 10, when you get your 10th coffee, you don't jump around with excitement. You just get your 10th coffee, right? Now imagine you walked into Starbucks tomorrow and you order a coffee and the barista says, this one's on us. You would say, what? No, it's on us. Enjoy it. Enjoy it today. You'd be like, okay. You'd probably.

Raúl Galera (42:52)
Mm-hmm. Mm-hmm.

Yeah.

Yes. Yep.

Jay Myers (43:16)
posted on social, you'd be like, well, thank you. I'm coming here forever. But if that Starbucks had a punch card where you had to buy 10 and get that one free, you wouldn't feel that same way. So we were like, well, what if there was a way that you just didn't tell the customers what the milestones are, but you have milestones and you reward them still the same. So rather than if...

Raúl Galera (43:18)
Mm-hmm.

Jay Myers (43:43)
If a thousand points is worth a hundred dollars, hypothetically, whatever, in your point system, you don't show customers points, in your admin, you can see that, can see, okay, Raul has ordered, sorry, has a thousand points. Now I send you an email, Raul, I'd like to give you a $100 credit with our store. You would be like, what? Yeah, just on us. No strings attached.

Raúl Galera (44:07)
I'm never leaving.

Jay Myers (44:11)
Here's your $100 credit. You would be blown away versus if you earned it, earned it, earned it. then like, don't feel when I redeem my air mile points on my credit card, I don't feel grateful to the company. I'm like, I earned these points, right? So I love, I love this idea. I didn't even know it existed until you were coming on and I was doing a little bit of research and I was like, my gosh, we mean, we were talking about this like a year ago and like kind of joking like.

Raúl Galera (44:22)
Mm-hmm. Yep. Yep. Yep. Yep.

Jay Myers (44:36)
Hey, we should build this because this needs to happen. So it's so cool to see it finally live.

Raúl Galera (44:41)
I'm glad

that you came up with the example of the coffee shop because, yeah, I that's one of the things that we talk about internally is like literally that example that Barista knows you by your name and, either the coffee is on us or like here's, have you tried our cookies? Here.

Jay Myers (44:52)
Yeah.

Raúl Galera (45:00)
You have one for free. Or like, oh, we have a cheesecake. I'll give you a piece now so you can. it's, wow, thank you. OK, wow, I wasn't expecting that. And it doesn't even have to be purchased. One of the brands that we're working with right now is they have customers who are making purchases. And then one day, they make a purchase with a different shipping address. the engine flagged that. And the merchant reached out to the customer and said, hey, is this a gift?

Like, yeah, we got you. And you make sure that the gift that you're sending to that other person is, it will blow their mind. And then you'll have two people really happy about it. And the customer that made the purchase for the gift and the person that's receiving the gift, there's a lot of data about customers that just gets completely ignored that are great opportunities for...

Jay Myers (45:36)
Amazing. Yes.

Yeah.

Raúl Galera (45:52)
customer relationship building.

Jay Myers (45:54)
You know what's another one you can do? saw a brand. I can't remember who it was that did this. They randomly call customers and refund them and they and they and they do it and they posted on social too. Like so they're on like speaker phone and they got their iPhone there and they just like they scroll through their Shopify orders and then they pick one and then they call this person and then they're on speaker phone and like like hey Raul I saw you place an order the other week. This is I'm the owner of Jays skin care.com or whatever.

Raúl Galera (46:02)
Mmm.

Mm-hmm.

Jay Myers (46:23)
And, ⁓ we're going to refund you and you're, and, it might've been a $400 order or a $200 order. doesn't matter. And they post them on social and like, sometimes the people are crying, like, they're like, my gosh, you don't know how much that means. Thank you. And, and times are hard and this, this means the world, like not just with that customer. Did you earn a customer for life? But when I watched the, this guy refunding random people, I'm like, this is a good guy. Like, this is a good brand. Like he's earning.

Raúl Galera (46:34)
Yep.

Yes.

Jay Myers (46:52)
Now he could just have loyalty points and he could just give them stuff and there's no, earned credit there from your customers at all. Zero. Like to me, loyalty points. I'm sorry for anyone who has a loyalty. I think they're one of the dumbest things you can do. Like all they do is reward people for behavior they're already taking. And it's just, I mean, maybe there's some ways it can be done. I don't want to say they're

Raúl Galera (47:02)
Yep.

Jay Myers (47:17)
take that back, but like it just, doesn't really do, there's so much better that you could do, you know? So that would be a cool thing. don't know if you like, so do merchants pick what their reward is or can they just kind of make up anything that is going to be the surprise and delight action?

Raúl Galera (47:33)
Yeah, they need to. We're still very early stages, so kind of like sky's the limit right now for the product. ⁓ What we're focusing on right now is understanding what are the...

the situations that we can bring at the moment that we can bring up to the merchant. And then the merchants can decide how they want to highlight those or how they want to thank the customers for whatever the moment is that they pick. So like I said, sometimes even something small as a handwritten thank you note could be really, I've seen people post that on Twitter. Like, look at what I got. And it's literally a handwritten note.

I think that there's a lot of opportunities right now for merchants to get their customers to feel appreciated.

Jay Myers (48:14)
Yeah.

huge and in a, in a time where customers feel more disconnected from brands than ever, like it's such a huge opportunity right now. And if you just, it doesn't, it doesn't even take a lot to stand out from the crowd, which is the big opportunity. Right. So, right. Well, this has been awesome. I, I, I mean, we're, we're over time already. I think I only got through about half of the questions I had on my list, but that's okay. I'll have to have you back on at some point. Um,

Raúl Galera (48:24)
Yes.

Hahaha

Jay Myers (48:47)
Where can, so if someone wants to try referral candy or get started, do you have any type of introductory offer or where do you want to send them or where's the best place for someone to go?

Raúl Galera (48:59)
⁓ well if they're on Shopify they can learn more about us on on our

Shopify App Store based, just search for referral candy on the Shopify App Store or referralcandy.com. You'll probably see my face there on a video explaining what referral candy does. And if you book a demo, you might also end up talking to me as well. So I don't know if that's good or bad, but it's definitely an option. But yeah, that's where they can learn more about us. ⁓ have a free trial, so it's easy to at least get started, see what a referral or affiliate program will look like, and see if it's something that they could

that they want to implement on their brand.

Jay Myers (49:34)
Amazing. And last question, is there any social platforms that you're active on? If someone says, I want to follow this Raul guy, where are you active?

Raúl Galera (49:41)
⁓

Actually, we post a lot of videos on YouTube and Instagram lately. So referral candy on YouTube or Instagram. Yeah, we're pretty active there. So yeah, go check us out there.

Jay Myers (49:56)
Awesome. Thank you so much. This has been a ton of fun. learned a lot and I know our listeners, I guarantee they did as well too. So thank you.

Raúl Galera (50:03)
Yeah, thank you for having me.