Build and automate a referral program for your business

Marketing Intermediate

Made by Demand Curve

In this recipe, you’ll learn how to identify your highest value users and then automate referrals for your business.
What do you need?
  • Analytics set up that tracks purchase events
  • Segment Personas or another segmentation tool
  • An email marketing tool
Build and automate your referral program with Segment
Collect data once with Segment and send it any tool you use. No more tedious integrations. No more engineering resources wasted.
Start with Segment

On the back of the success of companies like Dropbox and Airbnb, referral programs are increasingly used to fuel a company’s growth engine.

That’s because this type of word of mouth acquisition really works. An incredible 92% of people say that they trust peer recommendations more than traditional advertising.

To get your referral program off the ground, the trick is to solicit referrals from those most likely to refer your product, like your power users and others who’ve benefited most from using your product.

Traditionally, identifying these customers has been a time-consuming hassle.

It involves running manual queries against data to build audience segments, downloading CSVs, formatting them, uploading them to different tools, then repeating this process every month to avoid stale data.

Thankfully there’s a way to automate this.

With Segment Personas’ drag-and-drop interface, you can build custom segments of your customers within seconds. You can segment by criteria such as total purchase value and frequency of engagement.

Simply define your audience once, then Segment will sync it across all your third-party tools like Mailchimp, Customer.io, or Zapier so you can automate your referral outreach.

Let’s run through it step by step.

Step 1: Identify your most valuable customers

This recipe assumes you have Segment installed, and that you’re tracking purchase events. If not, see our documentation here.

Let’s say you wanted to identify all your customers who have spent more than $500 in the past 90 days.

First, we’ll compute the sum of a customer’s total purchases:

  1. Log into Segment

  2. Navigate to Personas > Computed Traits.

  3. Click “Create a Computed Trait “ and choose Aggregation.

  4. Then set up your configuration, as shown below. Here’s what we’re telling Segment: Find all users that have triggered the Order Completed event then tally up the total value of their purchases in the past 90 days.

  5. Click Preview, and then Review & Create.

  6. Choose the destinations you want to send this data to. For example, an email marketing tool, Google Analytics, or anything else in your stack that integrates with Segment. (You can also skip the “Connect Destinations” for now and come back to it later.)

  7. Name the computed trait clearly, like “90-day purchasers – total purchases.”

  8. Check the checkbox that says “Compute without enabled destinations” if you don’t have a destination set up yet. (We’ll do this later in the recipe.)

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  9. Click Create Computed Trait.

Step 2: Build the audience segment

  1. Go back to Personas and click on the Audiences tab.

  2. Click Create Audience

  3. Click Add Condition, select Have a Computed Trait, and choose the trait we just created.

  4. Set the condition to be greater than and add in 500.

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  5. Click Preview and follow the steps to Review & Create.

  6. Name your audience 90 days big spenders and click Create Audience. Make sure to leave the “Gather historical data” checkbox toggled on.

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You’ve made an Audience! You now have a living, breathing segment of your most high-value customers to sync to anywhere.

Note there are many other ways we could have filtered to our top users:

  • The amount of time they spent in our app

  • Their average order size

  • Top purchasers by product category

  • And whatever makes the most sense for your product

Our next step is to set up Segment Destinations to pass these audiences onto our third-party tools, such as our email marketing software. That’s where we’ll send our referral outreach from.

Step 3: Set up your destinations

Every third-party tool has its own setup, but the steps are always the same within Segment:

  1. Log into Segment, and navigate to Personas > Destinations.

  2. Click Add Destination. Search for your tool, click on it, and click Configure.

  3. Complete the configuration settings based on the tools’ requirements.

  4. Finally, connect the Persona audiences you built with the destinations as discussed in the previous section.

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Which tools should you use for automating drip and transactional emails? For email marketing, Mailchimp and Customer.io are great choices that give you both power-user features and a simple UI for building beautiful emails.

You won’t need to pull in engineering to build outreach campaigns.

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We also recommend Zapier if you’re looking for something that’s channel-agnostic.

For example, maybe you want to send notifications through push, text, or Slack messages. Zapier is a swiss army knife for automation. You can Zapier alongside Segment to automatically send referral prompts when a visitor crosses the power user threshold in your app.

Email outreach

The contents of your email needs to accomplish a few things:

  • Make your customers feel genuinely valued — that they’re not the recipient of thoughtless spam.

  • Propose an incentive that gets them excited to share with friends.

  • Explain how the referral program works.

  • Make the next actionable step clear and easy. (e.g. coupon codes, social sharing buttons, referral pages, etc.)

B2C

For B2C, the referral email should come shortly after they’ve made their purchase.

Reach out to thank them and to remind them that their product is on the way — to keep them excited about their recent purchase.

You can make your reward incentives memorable by keeping them short and simple. Things like:

  • Give $20, Get $20: Refer a friend and you both get $20 off your next purchase.

  • Give your friends a free {Product X} when they purchase with your referral code.

Viral Loops is a tool that lets you design referral programs, and takes care of everything from email design to the logistics of execution and management of campaigns.

B2B

B2B requires a more hands-on approach. Their referrals are typically worth more, and so the labor is justified.

Here’s an example of a referral email:

Referral growth tactics

When prompting customers to refer, timing is key: reach out when (1) you’re still top of mind for the customer and (2) when they won’t dismiss your email.

Here are a few tactics:

  • Consider your customers’ time zones when reaching out. Don’t reach out at 2 AM if you can avoid it. With Segment, you can segment customers by geography and send emails at optimal times.

  • Identify your most recently active users. Why? Your product’s benefit will still be fresh in their minds. For example, if you’re an app that lets people send money to friends, and you’ve identified that the tipping point for engagement is five transfers, send them a notification to refer their friends at that very moment. If you sent this too early, they’d dismiss the notification as annoying because they’ve not yet fallen in love with your product. This is easily computed using Segment’s filters.

  • The same tactic applies for B2B but with the outreach done via sales or support instead. Identify your most active users and your biggest spenders so your sales team can offer a high-touch outreach experience with a tailored message. You can do this via email or a messaging platform like Intercom. Using Segment’s integrations means that the audience data will always be up to date and synced with your communication tools. No more manual CSV downloads and uploads to various platforms.

  • Re-activate your past big spenders by incentivizing them to return through referral bonuses. For example, someone that buys an expensive pair of sneakers will be more interested in a targeted email campaign six months down the line when their shoes are starting to wear out. Offer them a special promotion where they gain a significant discount by referring a couple of friends.

  • For B2C, you can offer exclusive deals and rewards for your biggest influencers and advocates. You can use a tool like Viral Loops to simplify this process: it does the heavy lifting of setting up the infrastructure to design, track, and manage referral campaigns. Furthermore, the Segment integration syncs your campaign results back to Segment so you can continually refine your messaging across all your channels, including your website, app, and email outreach.