There are a few things that have become standard in eCommerce — faster checkouts, quick delivery, personalised experiences, and the power of peer recommendations.

Referral programs, “refer-a-friend” bonuses, launch discounts, newsletter sign-up offers — all belong to that same playbook of proven growth tactics. And for good reason.

“83% of consumers trust recommendations from people they know — more than any ad.”— Nielsen Global Trust in Advertising Report, 2024

Bike Club Germany told us the same thing in an interview:

“Most of our new customers are coming through word of mouth or referral programs — which is great.”

Used strategically, referral programs can completely transform your customer acquisition, retention, and re-engagement efforts.

And just like in traditional eCommerce, referral programs are especially powerful for subscription-based business models, where every new customer brings recurring value.

In this article:

• What is a referral program
• Benefits of a referral program
• Types of referral programs
• Developing a referral program
• Must-haves for an effective program
• Tracking & key metrics
• Common pitfalls
• Real-world examples from subscription brands (Bike Club, StrollMe, NormNorm, Swapfiets, Grover & more)
• Referral Program Strategies for Early-Stage Brands
• FAQs about referral programs

What is a Referral Program

A referral program is a structured way of rewarding existing customers for introducing your brand to new ones. It’s one of the oldest and most effective marketing methods in the book because it builds on trust — something ads and social campaigns can’t easily replicate.

In practice, a referral program gives an existing customer an incentive (for example, a discount, free month, or store credit) when someone they refer signs up or makes a purchase. The new customer often receives a reward too, creating a win-win situation.

The Benefits of a Referral Program for Subscription Businesses

Referral programs are especially powerful for subscription models because they don’t just bring in new customers; they bring in the right kind of customers.

Here’s why they matter:

• Lower acquisition costs: Referred customers cost less to acquire compared to paid advertising or affiliate programs.
• Higher trust and conversion: People trust recommendations from friends and family far more than online ads.
• Better retention: Customers who come through referrals often stay longer and are more engaged because their expectations are realistic and shaped by people they trust.
• Community effect: Every subscriber you have becomes a micro-ambassador for your brand.
• Predictable growth: When your referral loop works, it becomes a self-sustaining growth engine that compounds over time.

Types of referral programs

Referral programs come in different formats. The best structure depends on your pricing model, the length of your subscription, and what motivates your customers.

1. Double-sided referral programs: Both the referrer and the new customer get a reward. For example: “Give €20, Get €20.” It’s simple, fair, and creates instant motivation for both sides.

2. Tiered referral programs: These referral programs offer increasing rewards for multiple referrals. For example, a subscription service might offer a $10 credit for the first successful referral, $20 for the second, and $30 for the third.

3. Give-one-get-one referral programs: These referral programs offer a free subscription or service to both the referrer and the referred friend. For example, a subscription service might offer a free month to both the referrer and the referred friend for every successful referral.
   

4. Points-based referral programs: These referral programs offer points or other rewards for referrals that can be redeemed for products, services, or other rewards. For example, a subscription service might offer 100 points for every successful referral, which can be redeemed for a free box or other rewards.

5. Discount on consumable subscription in case of bundle subscriptions - These referral programs can be very interesting for companies that have a physical product such as a washing machine, coffee machine etc., and also offers consumables that these physical products consume such as coffee, washing powder etc. In this type of referral program the company can create an offer in which the referrer and referee get a free one-time consumable subscription or a one-time discount on the consumable subscription. 

6. Free merchandise - In these type of referral programs the subscription company can offer their customers the possibility to get free products or discount on products that they can use alongside their subscription product. For example, bike gear for a bike subscriptions, small decoration pieces for furniture subscription etc. 

7. Partnership with other subscription companies - Leveraging the customer base of some other subscription company can also be an interesting referral strategy. For example if you offer e-bikes or mountain bikes, you can partner with another subscription company like Grover where the customer gets a free month or a discount if they subscribe to a goPro (or any other product that makes sense to bundle with an e-bike or a mountain bike). 

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Developing a referral program

Creating a referral program isn’t just about setting up a code and calling it a day. You need to design the strategy behind it.

Step 1: Define your goal

Is the goal to increase new subscriptions, reduce churn, or re-engage dormant customers? Each goal needs a slightly different approach.

Step 2: Choose the right incentive

Think about what motivates your customers. Do they respond better to discounts, free months, free products, or early access? Also, make sure the reward feels fair for both parties.

Step 3: Decide when to issue the reward

In subscription models, it’s common to wait until the referred customer completes their first or second billing cycle before granting the reward. This prevents reward abuse and ensures the referral has long-term value.

Step 4: Keep it simple

A successful referral program should be easy to understand. If customers have to read fine print or guess how to claim their reward, they won’t participate.

Step 5: Promote it everywhere

Add referral prompts in your customer portal, emails, newsletters, and even your product packaging. Don’t assume people know the program exists — they need to be reminded.

Must-haves for an effective referral program

Here are the basic building blocks every referral program should have:

• A clear value exchange (what both sides get)
• Unique referral links or codes to track participation
• A dedicated landing page that explains how it works
• Easy sharing options for WhatsApp, email, or social media
• Automated tracking integrated with your subscription system
• A simple dashboard in your customer portal where users can track their progress and rewards
  

Landing page

The landing page for a referral program should be designed to encourage customers to participate in the program and refer others. Here are some key elements that should be included on the landing page:

• Clear explanation of the program: The landing page should provide a clear and concise explanation of the referral program, including the rewards and how the program works.
• Compelling messaging: The landing page should include messaging that emphasises the benefits of the referral program, such as savings or discounts, and encourages customers to participate.
• Clear call-to-action: The landing page should include a clear and prominent call-to-action, such as a "Refer a Friend" button or form, that encourages customers to take action.
• Referral process details: The landing page should outline the referral process, including how to refer a friend, how to claim the reward, and any terms and conditions.
• Social proof: Including social proof, such as customer testimonials or reviews, can help build trust and encourage customers to participate in the program.
• Easy-to-use tools: The landing page should include easy-to-use tools, such as a referral link or form, that make it simple for customers to refer others.
• Mobile optimisation: The landing page should be optimised for mobile devices to ensure that customers can easily access and participate in the referral program from their smartphones and tablets.

By including these key elements, you can create a landing page that effectively promotes your referral program and encourages customers to participate.

Clear incentive and easy sharing

The rewards offered for referrals should be appealing and provide value to both the referrer and the referred customer. The referral process should be simple and easy to understand, and it should be easy for customers to share the program with their friends and family.

Regular communication

The program should include regular communication with customers to remind them of the program and provide updates on their progress.

Mobile optimisation

The program should be optimised for mobile devices, as many customers may access the program from their smartphones or tablets.

Tracking and key metrics

You can’t improve what you don’t measure. Here are the most important metrics to track:

• Referral conversion rate: Percentage of referred users who subscribe.
• Cost per acquisition (CPA): Total referral rewards divided by the number of new paying customers.
• Lifetime value (LTV) of referred customers: Usually higher than regular customers.
• Referral churn rate: How many referred customers cancel early.
• Participation rate: The percentage of active subscribers who send at least one referral.
• Average referrals per customer: Indicates how viral your program is.

Tracking these numbers helps you understand if your referral program is sustainable and whether it’s driving quality growth.

Common pitfalls to avoid

Even good referral programs can fail if they’re not managed well. Here are a few mistakes to watch out for:

• Complicated reward structures: Keep it simple.
• Rewarding too early: Wait until a subscription has proven value.
• Not promoting the program enough: Make sure customers know it exists.
• Poor tracking and verification: Use integrated systems to prevent fraud.
• Set-and-forget mindset: Refresh your campaigns periodically to keep them engaging.

Referral program strategies for early-stage brands

When your brand is new, website traffic will naturally be low. That’s normal. The biggest opportunity in the early phase is to activate your existing audience — especially your followers on social media — and guide them toward their first order.

Here’s how to do it strategically:

1. Social media followers → first orders

Run two simple offers in parallel:

• A launch discount (for example, “LAUNCH20” for 20% or €20 off).
• A newsletter signup discount, inviting followers to subscribe to your newsletter for an instant reward.

This not only drives first-time orders but also builds your email list for future campaigns.

2. Website visitors → signups and conversions

Offer the same newsletter incentive on your website.

• Add a banner at the top that highlights the discount.
• Include the same offer in the footer, visible on every page.
• Send the discount code automatically via email after signup.

3. Product-level discounts

Highlight specific products with special offers to make them more attractive.
You can create a “Winter Offers” or “Limited-Time Deals” section on your homepage and add visible discount tags on product images.

4. Voucher or discount tabs

Create a dedicated “Offers” or “Vouchers” tab in your navigation.
You can include themed offers, like discounts for newborns or birthdays. Verification isn’t necessary — the goal is to make customers feel encouraged to make a purchase.

5. Event-based discounts

Seasonal events are perfect for visibility.
Use Circular Monday to promote a sustainable alternative to Black Friday. Offer a small discount, but frame it around responsible consumption.

6. Encourage the second order early

After a customer places their first order, include a small incentive in your post-purchase email to nudge them toward a second order. This could also include referral information, inviting them to recommend a friend and earn rewards.

These strategies combine discounts, community engagement, and referral logic to build early momentum when organic traffic is still growing.

Final Thoughts

Referral programs combine two of the most powerful growth forces: trust and community. They don’t just bring new customers in; they make your existing ones feel part of your success.

For subscription-based businesses, they’re even more valuable because the reward compounds over time. A referred subscriber isn’t just a one-time purchase — they’re a potential long-term advocate.

The key is to start simple, make it visible, and keep it personal. When your customers feel that referring a friend helps them and their friend equally, your referral program will grow on its own.