How to start a referral program

You have a few happy customers, and everyone tells you referrals are the cheapest customers you will ever get. To start a referral program at your size, you need three things: a thank-you that both people get, a code or link for each customer, and a lot of personal asks. Most founders put a "refer a friend" page in the footer, wait for it to work, and hear nothing, because two customers cannot carry a program on their own.

Do these three things

About 3 hours a day, every day, for 4 weeks. Judge your asks after 2,800 messages, and pay for referral software only at about 100 orders or customers a month.

Show the three actions in fullHide the full list

1. 1Today: pick a thank-you that both sides get, such as 15% off or a free month for the friend and the same for the person who sent them, and give every customer their own code or link.
2. 2Every day: send 100 personal messages to customers and people who know your work, each asking for one introduction to a named kind of person, and answer every name you get the same day.
3. 3Every Sunday: count asks, names, new customers and rewards, and send every reward that is due. After 2,800 messages, fix the first number below its line.

Get help doing these

ChatGPT or Claude reads this guide and works through it with you.

Do this with ChatGPT(opens in a new tab)Do this with Claude(opens in a new tab)

1. Pick a referral reward that both people get

A good referral reward gives the friend and the person who sent them the same thing, and you pay it only after the friend pays you. Write it as one line a customer could repeat from memory: what the friend gets, what the customer gets, and when.

Give both sides a reward. Referral software makers see more referrals when both people get something, and Smile.io tells stores to make the two rewards equal. A friend is more likely to try you with a discount in hand, and your customer does not feel they are selling to a friend.

Pick the size from your price and your profit, not from what big brands give:

• Start at about 15% off the first order, or the first month free, for the friend, and the same value for your customer.
• Check the cost. Add the two rewards together. They must cost less than the profit on the friend's first order (or the first 2 months of a subscription). If they cost more, give free shipping or a free sample instead.
• Pay only after the friend pays. Never on a click or a signup, which pays people for nothing. If you give refunds, wait until the refund window has passed.
• Never tie a reward to a review. Since 21 October 2024, the FTC's reviews rule bans rewards that require a good review. Ask for reviews and testimonials separately, with no reward attached to what people say.

Then check the reward against two numbers. Work out what one customer is worth to you over time, your lifetime value, and what you would pay for one any other way, your cost to win a customer. The reward should sit well below both.

If you run a SaaS: "give a month, get a month" is easy to explain and costs you no cash. Price it against your plan price.

If you run a B2B firm or an agency: check it against your project price or your retainer. Give the friend 10% off their first project or first month. Give the person who sent them 5% to 10% of what the new client pays in their first payment, as a credit or a gift. If that person works for one of your clients, give the discount to their company or send a gift, not cash to them: paying a client's employee is a conflict of interest. Businesses that refer you are referral partners, with their own deal.

People who are not customers can refer you too (step 5). Give them the same value as a gift card when their friend pays.

[Friend's reward, e.g. "15% off your first order" / "your first month free"] for anyone you send us, and [your reward, the same value] for you, once they [pay / their first order ships].Rules:
For new customers only.
The reward is sent after your friend pays.
One reward for each friend who becomes a customer.
No reward for orders that are refunded.

• Tool: a Google Doc.
• Time: 30 minutes.
• You will have: one offer line and four short rules.
• It worked if: 3 customers can repeat the offer after reading it once, and the two rewards together cost less than your profit on a first order.
• Common mistake: "Refer a friend and earn rewards!" with no amount. Nobody acts on a reward they cannot see.

2. Give every customer their own referral code or link

Give each customer a code or link with their name in it, so you know who sent each new customer and who to thank. At your size you do not need paid referral software: use a free app, your billing tool, or the customer's name and a sheet.

Set it up for your kind of business:

If you run a D2C store on Shopify: install Smile.io from the Shopify App Store. Its Free plan includes referrals for up to 200 orders a month. In Smile, go to Program > Referrals. Click "Add reward" on the "Referring customer reward" card and enter your customer's reward, then do the same on the "Referred friend reward" card. A referred friend is someone who has never ordered from you, so old customers cannot use the friend's discount.

If you run a SaaS on Stripe: in the Stripe Dashboard, open Products, click Coupons, then "+New". Make a coupon for the friend's reward (for "first month free", 100% off, duration once). Click "Use customer-facing promotion codes", type your customer's first name as the code, and tick "Eligible for first-time order only", so the code only works for new customers. Make one code for each paying customer. It costs nothing extra. If you bill with another tool, use its discount codes the same way.

If you run a B2B firm or an agency: you need no code. The person's name is the code. On every first call, ask "Who told you about us?" and write the answer down, so you know which channel brought each deal.

Add the same question, "Where did you hear about us?", to your signup form or checkout. This is self-reported attribution, and it catches the friends who forget the code. If you share links, tag each one with UTM parameters too, and check that your conversion tracking records each signup or order.

Then make one sheet. Every referral goes in it, whatever tool you use:

Date | Who sent them | Friend's name | How they came (code / name / intro) | Became a customer? | Date they paid | Reward sent (what, when)

• Tool: Smile.io Free (stores), Stripe promotion codes (SaaS), Google Sheets (everyone).
• Time: 1 hour.
• You will have: a code or link for every customer, the question on your form, and the sheet.
• It worked if: a test order or signup with one code gets the friend's discount, and the referral shows in the app or the sheet. Use a friend for the test, or a test mode, and refund it.
• Common mistake: one code anyone can use again and again. It ends up on coupon sites, and you pay rewards for buyers who were coming anyway. Keep every friend's code to new customers only.

3. Write the referral ask and a message people can forward

Write three short texts today: the ask, a message your customer can forward in their own words, and one line for anyone who posts their code in public. The ask names one kind of person and one situation, because "Do you know anyone who might be interested?" makes nobody come to mind.

Ask for one person. Name the kind of person from who your product is for, and the moment they need you: "Who is one studio owner whose clients still send bugs by email?" Your customer can picture a face for that. Then give them a short note they can send from their own phone or email.

Let your customer send it, in their own words. Do not ask for their friends' email addresses so you can email the friends yourself. In the US, the FTC says a business that gives a reward for a referral is likely to have duties under the CAN-SPAM Act, the US law on business email. So keep the note personal, never collect the friend's address, and when you write to a friend yourself (step 6), add your postal address and a way to say no. If you sell in the UK or the EU, check the local rules before you build any "invite a friend" email.

If someone posts their code on social media, they should say they get a reward. The FTC's endorsement guides say a paid link needs a clear disclosure. Put one line for this in your rules.

ChatGPT or Claude can draft each ask. Give it the customer's name, what they bought, and the result they got. You add one true line about them, then send it yourself.

Hi [first name],[One true line: the result they got, in their words.]Who is one [kind of person] you know who [has the problem you fix]? If you send them the note below, they get [friend's reward], and you get [your reward] once they [pay].Thanks either way,
[Your name]

I use [product] for [what it does for me]. If you try it with my code [CODE], or tell them [your first name] sent you, you get [friend's reward]: [link]

I get [your reward] if you use my code.

• Tool: ChatGPT or Claude, and a Google Doc.
• Time: 45 minutes.
• You will have: the three texts in one doc, ready to copy.
• It worked if: you read the ask to 3 customers, and each one names a real person before you finish.
• Common mistake: a long message about your company. The ask is three lines: their result, one named kind of person, and the two rewards.

4. Ask every customer right after they get a result

Ask each customer for one introduction at the moment they get what they paid for, and put your offer in three places they already see. People refer you when they have just had a good result, not when you remember to ask.

Today, ask every customer you already have, one by one, with the ask from step 3. From now on, ask each new customer at their best moment:

If you run a SaaS: ask after their first real win, such as the first time the main feature saves them time. That moment is your activation point. Put "Give a month, get a month" in your app's account menu and in your onboarding emails.

If you run a D2C store: ask about 7 days after the order arrives, when they have tried it. Put a small card with the offer in every parcel, and add it to the delivery email in your email flows. Ask again after each repeat order.

If you run a B2B firm or an agency: ask when you hand over a result: the delivered order, the launched site, the first monthly report that shows a win. Put one line about the offer in your email signature and on your invoices.

Whenever anyone says "thank you" or praises you, ask that same day. If a customer is not happy, do not ask. Ask what went wrong and fix it first.

• Tool: your email, your store or app, and your invoices.
• Time: 1 hour to set up the three places, then about 5 minutes for each customer.
• You will have: every current customer asked once, and the offer in three places they see.
• It worked if: every customer is asked within 7 days of their result, and at least 1 in 5 names someone.
• Common mistake: hiding the offer in the footer or an account page. ReferralCandy lists this as the first reason referral programs fail: customers never see the offer.

5. Ask 100 people a day who know your work for one introduction

Two customers cannot bring you enough introductions, so ask everyone who knows you or your work. Send 100 personal messages a day, each asking for one introduction to a named kind of person, with the same thank-you as your customers get.

Make the list first. Write down every person who knows you or what you make:

• your customers, signups, free trial users and beta users;
• people on your waitlist or your email list;
• people who replied kindly to your outreach, even with a "no";
• past colleagues, past clients and old bosses;
• your LinkedIn connections, phone contacts and members of communities you take part in.

An introduction from someone they know carries weight. In a March 2026 survey of 1,200 US business decision-makers by Reddit and SurveyMonkey, 73% trusted recommendations from peers, more than vendor websites (55%) or AI chatbots (39%).

Aim for about 1,000 names. 2,800 messages in 4 weeks is a first ask and two follow-ups to about 1,000 people. When the list runs low, add every new customer, signup and friendly reply from your lead list and your outreach to first clients, every day.

Let AI do the drafting. Paste 10 names at a time into ChatGPT or Claude, each with one thing you know about the person, your one-line value proposition, and the template below. Read each draft, make the first line true, and send it. That is about a minute a message, so 100 take under 2 hours.

Send each one yourself, one at a time: from your normal email, as LinkedIn messages to people you are already connected to, or by text. Spread the 100 across all three. Do not use a bulk-sending tool, and stop the moment anyone says no. In the US, the CAN-SPAM Act covers business email, so put your postal address and a way to say no in every email. Follow up twice with everyone who has not replied, 5 days apart, with one new line each time.

Hi [first name],[One true line: how you know each other, or something they did.]I'm building [product], which [result] for [kind of person]. Who is one [kind of person] you know who [has the problem]? If they become a customer, they get [friend's reward] and I'll send you [a gift card of the same value] as a thank-you.No worries if nobody comes to mind.
[Your name]
[Your company, postal address]
Not for you? Reply "no" and I won't ask again.

• Tool: Gmail, LinkedIn, your phone, ChatGPT or Claude to draft, and the referral sheet to log every ask.
• Time: about 2 hours a day, every day.
• You will have: 700 asks a week, and 2,800 by the end of week 4, each logged.
• It worked if: you get at least 3 names for every 100 messages. If you have fewer than 1 after 500 messages, make the "who" line narrower: one job, one size, one moment.
• Common mistake: one group post saying "We launched, please share!" Everyone thinks someone else will do it. The other mistake is stopping after 20 messages because nobody replied yet.

6. Answer every introduction the same day and send the reward when they pay

Reply to every name you are given on the same day, thank the person who sent it within 24 hours, and send their reward the day the friend pays. Then tell them what happened, and once the friend is happy, ask them for a testimonial or a short case study. People keep referring when they see their friend was looked after and their thank-you arrived.

When someone gives you a name, message that person the same day and say who sent you. Offer the friend's reward and the next step: a discovery call, a demo, or a trial you start together. In B2B and agency work, ask your customer to make a double opt-in intro: they ask their friend first, then send one email with both of you on it. The referral partnerships guide has the intro email.

When the friend makes their first payment, send the reward that day. Smile.io sends store rewards on its own. In Stripe, open your customer's subscription, click Actions > Update subscription > Add coupon, and add their free month. For B2B and agency credits, take it off their next invoice. If you pay cash to people in the US, anyone you pay $2,000 or more in a year needs a Form 1099-NEC. The limit rose from $600 to $2,000 for payments from 2026.

Look after the friend like your best customer. Onboard them yourself and help them get their first result, so they stay past the trial and have something good to tell your customer.

Hi [first name], [customer's name] said you might be dealing with [problem]. They use [product] for [result]. As their friend, you get [friend's reward]. Would [a 15-minute call / a quick demo / starting a trial together] this week help?[Your name], [your company, postal address]
Not for you? Reply "no" and I won't write again.

Hi [first name], thank you for sending [friend] my way. [What happened: they became a customer and your reward is [what, where] / we spoke and they are deciding by [date] / it wasn't a fit because [reason].] If you think of one more [kind of person], I'd love to help them too.

• Tool: email, the referral sheet, and Smile.io or Stripe for the rewards.
• Time: about 30 minutes a day.
• You will have: every name answered, every reward sent, and every person who referred you told what happened.
• It worked if: no name waits more than 24 hours, and everyone who sent you someone hears back within 7 days.
• Common mistake: going quiet after the intro. A customer who never hears what happened assumes it went badly and does not refer again.

7. Count your referrals every Sunday and decide when to pay for software

Every Sunday, fill in one row: asks sent, names given, chats or orders, new customers from referrals, and rewards sent. Send every reward that is due. After 2,800 messages, check two numbers in order and fix the first one that is below its line.

Week | Asks sent | Names given | Chats, demos or orders | New customers from referrals | Rewards sent ($) | Best ask line this week

After 2,800 messages (4 weeks at 100 a day), check two numbers in this order:

1. Names per 100 asks. Under 3: the ask is too wide. Narrow the "who" line to one job, one size and one moment, and test it on the next 500 messages.
2. New customers per 10 names, your conversion rate for referrals. Under 1: the friends are not buying. Ask 5 friends who did not buy what stopped them. If it is the offer, raise the friend's reward. If it is the product or the price, work through why no one is buying.

Then compare the reward cost for each new customer with what a customer costs you from paid ads or any other channel, in a monthly review. Keep the asks going while they bring customers for less.

When to pay for referral software: at about 100 orders or customers a month, or when the sheet takes you more than an hour a week. Referral software makers put the starting point at 100 or more customers. Before that, the asks are the program.

• D2C: stay on Smile.io Free up to 200 orders a month. Its Essential plan is $15 a month up to 500 orders.
• SaaS: Rewardful's Starter plan is $49 a month, with a 14-day free trial, and it handles rewards for both sides.
• B2B and agencies: move the sheet into a CRM when it gets slow.

Once customers refer each other, open the same deal to creators and businesses with an audience through an affiliate program.

• Tool: Google Sheets.
• Time: 20 minutes each Sunday.
• You will have: one row a week, and a clear answer on which number to fix next.
• It worked if: you can say who sent every referred customer, and which ask line brought the most names.
• Common mistake: judging after 50 asks, or paying for referral software while you have 2 customers.

Your referral program checklist for the next 4 weeks

0 of 12 done

Work through this list with an AI assistant

It drafts the work and keeps track of what is done.

Do this with ChatGPT(opens in a new tab)Do this with Claude(opens in a new tab)

Step 1 · Pick a referral reward that both people get

• Write your referral offer: the same reward for both sides, paid after the friend pays.

Step 2 · Give every customer their own code or link

• Set up a code or link for every customer, the question on your form and the referral sheet, then test one code.

Step 3 · Write the ask and the note to forward

• Write the ask, the note people can forward, and the line for public posts.

Step 4 · Ask every customer after a result

• Ask every customer you have today for one introduction.
• Put your offer in three places your customers already see.
• Every dayAsk each customer who got a result today.

Step 5 · Ask 100 people a day for one introduction

• List everyone who knows you or your work.
• Every daySend 100 personal asks for one introduction.
• Every dayFollow up twice with everyone who has not replied, 5 days apart.

Step 6 · Answer every intro the same day

• Every dayAnswer every name the same day, send rewards when friends pay, and tell each referrer what happened.

Step 7 · Count your referrals every Sunday

• Every SundayFill in one row of the Sunday sheet and send every reward that is due.
• After 2,800 messagesCheck the two numbers in order and fix the first one below its line.

Copy listDownloadReset