Referral and word of mouth
14 of 16 planned articles published.
Chained referrals: paying three people for one sale, profitably Chained referral programs stay profitable at three levels paying roughly 8%, 4% and 2% of order value, or 14% total against a 45% gross margin. Marginal return turns negative at level five, where the payout buys almost no additional sharing behaviour. Referral emails that get opened Send the referral ask when the product arrives, not when the order is placed. A delivery-triggered email models to 2.95% share contribution against 0.71% at purchase confirmation, because the customer has had the experience they would be recommending. Referral expiry windows: the setting nobody tunes Expiry is a conversion lever and a liability control at once. Modelled redemption rises steeply from 24 hours to 30 days and then flattens while liability keeps growing, which makes 30 days the usual knee for coin balances. Offer windows are a separate, shorter clock. Referral fraud patterns and how to design them out Referral fraud is a design problem rather than a detection problem. Six patterns cover most of it, and each has a constraint that makes it impossible rather than merely visible: purchase gating, acyclic chains, settled-order issuance, non-transferable balances, server-side gating, and a fixed priority order. Building a referral program your finance team will approve Finance approves a referral program when the outstanding liability can be computed at any past date, the expense recognition point is stated, reversals are entries rather than deletions, and exposure is bounded by a cap and an expiry. An append-only ledger answers all four. The referral program launch checklist A referral launch runs in four stages: decide what the program costs, decide what triggers and what reverses, set the controls that bound it, then ship the surface and get it reviewed. Fourteen checks, ordered so no check depends on a decision that has not been made. What to reward: the click, the signup, or the second order Reward the event you can prove and cannot fake, which for a consumer brand is the referred customer's first settled order. Clicks cost nothing to fabricate, signups cost an email address, and a settled order costs a real purchase at full price. Who actually refers, and how to find them before they do Referrers are predictable from order history before they ever share anything. Repeat count, review activity and basket breadth identify a segment that is 4% of the customer base and refers at roughly five times the average rate, while discount-acquired single-order buyers refer at a quarter of it. How deep should a referral chain go? A margin-first answer Chain depth follows contribution margin, not order value. Keep total payout under roughly 35% of contribution margin, which allows depth 2 for most brands, depth 3 once contribution margin passes about 38% of order value, and nothing deeper without a hard rupee cap. Why your referral program stalled at 3% and how to restart it Referral programs stall at 3% participation for three reasons: the reward is not legible enough to compute, the link sits in an email nobody opens twice, and there is no second-order reason to share again. Fixing placement first usually moves participation fastest. Chained referral: how one order pays more than one person Chained referral rewards more than one person for a single order. The direct referrer earns, and so does whoever referred that person, up to a depth the brand configures. Coins, wallets, and points: what shoppers actually understand Denomination decides whether a reward gets used. A balance denominated one to one with currency is understood by almost everyone in seconds, while a points scheme where each point is worth a fraction of a rupee is correctly valued by under a quarter of shoppers. Purchase-gated referral: what it is and how the gate works A purchase-gated referral program issues referral links only to customers who have already completed an order. Anyone can receive a link and buy through it, but nobody can generate one without buying first. The referral link nobody clicks (and the one they do) Referral share rate is decided by placement and by what sending the link says about the sender. An order status page block outperforms a post-purchase email by roughly four times in modelled share contribution, and a pre-written message outperforms a bare copy button.