Customers are constantly bombarded with discount codes and referral links, so why should they care about yours? Traditional referral programs often fail because they lack excitement and urgency. Offering a small discount doesn’t motivate customers enough to actively share your brand.

Referral contests solve this by making it exclusive and adding a little competition. Tiered referral contests where top referrers earn exclusive perks can drive repeat engagement and higher participation rates. Similarly, a limited-time challenge creates urgency, pushing customers to refer faster.

But how can you set up a referral contest that suits your brand? In this blog, we’ll dive into how referral contests work, their benefits, and how you can set up a successful referral contest for your ecommerce brand. 

5 benefits of running a referral contest

Referral contests get your customers excited about your brand, but they do so much more than that. Here are 5 ways they help your ecommerce store’s growth: 

Increased brand awareness

When you run a referral contest, your customers become ambassadors for your brand, sharing your products with friends and family.

88% of consumers trust recommendations from people they know, above all other forms of marketing messaging.

This organic channel helps your business reach new audiences without the need for paid ads. More people hear about your brand, building stronger trust at lower costs.

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Lower customer acquisition costs

When running referral contests, you only pay for referral rewards (like gift cards, coupons, or a grand prize) when a new shopper completes an action, like signing up or making a purchase. 

This makes referral contests one of the cheapest acquisition channels. Use email marketing or social media to boost your referral campaign, and you’ll be driving higher conversions at the lowest acquisition costs!

Boost in customer engagement and retention

Who doesn’t love rewards? Contests give participants a reason to eagerly stay involved with your brand, whether it’s to unlock discounts, earn cash rewards, or win the grand prize. 

The excitement of winning while engaging in friendly competition keeps customers engaged and coming back for more. This increases their connection with your brand and makes them more likely to shop again, driving more revenue.

Building trust with social proof

Word-of-mouth recommendations are more persuasive than traditional advertising. If you’re looking for good sunscreen, would you pay more attention to what a friend suggests or an ad on social media? 

Since referral programs involve actual customers recommending a brand they love, they are seen as an effective channel to increase trust in the brand.

Increased sales and revenue

Referrals are incentivized through rewards like free products, discounts, or Amazon gift cards to recommend your brand and its products to new people, bringing in new customers.

If your referral contest has a grand prize, referrals will spread the word about your brand to as many people as possible, capturing more customers for your brand, increasing first-time purchases, and boosting sales.  

Types of referral contest format and how to choose one

While there are several benefits of running a referral contest, they only make sense if the contest format fits your goals. The referral contest format you choose should align with the incentives you have to offer and how you plan to engage participants.

To help you make a decision, here are 5 common types of referral contest formats:

Leaderboard-based contests

Leaderboard-based contests allow participants to earn points for each referral they make. Those who accumulate the most points land at the top of the leaderboard. Top referrers win exclusive rewards like gift cards or free products.

This type of contest taps into the competitive spirit of participants, encouraging them to keep referring to climb higher on the leaderboard. You can also add tiered rewards as participants unlock new point levels.

When to use: Use when you want to drive consistent participation and competition to keep referrers engaged over a long time.

For instance, a fitness brand may launch a 30-day referral contest. In the contest, customers earn 10 points per successful referral. At the end of the contest, the top 3 referrers get exclusive rewards:

• 1st Place: A $250 gift card + a year’s supply of protein
• 2nd Place: A $150 gift card + a custom workout bundle
• 3rd Place: A $75 gift card + a limited-edition gym bag

Milestone-based contests

In milestone-based contests, participants earn referral rewards after hitting certain milestones, like at their 1st, 5th, or 10th referral. For example, after the 1st referral, they might receive a coupon, and after the 5th, a free product.

This format motivates participants by offering incentives at different stages, which encourages them to keep engaging with the referral program longer.

When to use: Ideal if you want to keep participants motivated by smaller, achievable rewards throughout the contest period.

Harry, a personal care brand for men, implemented a milestone-based referral contest where participants received a new gift item for different tiers they crossed.

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Sweepstakes-style contests

In a sweepstakes-style referral contest, every successful referral counts as an entry into a drawing for a grand prize. This format works well if you want to keep things simple, as each entrant has an equal chance of winning, regardless of the number of referrals.

You can offer a raffle for a big-ticket item like an Amazon gift card or exclusive access to new products. 

Sweepstake-style contests tend to attract a wider range of participants, from brand advocates to even new leads.

When to use: Perfect for attracting a large volume of participants quickly, especially when you want to offer an enticing grand prize that appeals to many.

Nestlé DiGiorno, a frozen pizza brand, launched a giveaway campaign to celebrate National Pizza Month. Participants visited the site, referred friends, and shared the giveaway on social media. Winners got an all-expense paid pizza trip to Italy and exclusive invitations to pizza parties.

Tiered rewards contests

A tiered rewards contest provides different levels of rewards based on the number of referrals that a participant brings in.

So, the 1st referral could earn them a small reward, the 5th could give a freebie or a larger discount, and the 10th referral could unlock a grand prize for the participant.

Tiered rewards motivate participants to keep referring, with the promise of bigger rewards as they hit higher tiers. 

When to use: Use when you want to incentivize continuous referrals and motivate participants to refer multiple people. These contests also don’t need an end date, allowing you to run them as a part of your marketing strategy.

Duradry, a dry deodorant brand, uses Social Snowball to set up a tiered referral program.

Exclusive access contests

In an exclusive access contest, brands need to offer something rare to the winners. This could mean early access to new products, VIP memberships, or limited-edition products.

This type of referral contest works best for brands with a loyal customer base that is involved with the brand more closely since they’ll be eager to get access to these special privileges.

When to use: Best when you want to reward your loyal customers and give them a sense of exclusivity to make them feel valued.

For example, a skincare brand can launch a referral contest where the top five referrers get access to the entire product line 2 months before its official release. Details like designing limited-edition packaging with their names engraved can make them feel like VIPs.

How to choose incentives and prizes that drive participation

Prizes that align with what your audience values will generate more buzz and motivate participants to refer more people. The right mix of rewards, combined with clear contest rules, will keep your referral marketing efforts effective and impactful.

Here’s how to select incentives that maximize participation:

• Align rewards with your target audience’s preference: Offer rewards that resonate with your audience's preferences, such as cash, discounts, free products, or store credit. This makes your referral program more appealing and increases the chances of participation.
• Balance prize value with contest difficulty: Make sure that the rewards match the difficulty level of the contest. If the referral program is easy, small rewards like coupons would do the trick. For more challenging or larger contests, offer larger prizes like cash prizes, free products, or exclusive access.
• Offer experiential or exclusive rewards: Instead of tangible items, you can also offer exclusive experiences like VIP access, product bundles, or early product releases. Such rewards can make your customers feel more special.
• Time-sensitive or limited-quantity rewards: Add urgency to your contest with limited-time rewards or limited-quantity prizes to drive quicker action. Participants are more likely to refer friends quickly if they believe they might miss out on something exclusive.

How to create your contest for maximum participation

Creating a referral contest that drives high participation is all about making the process simple and rewarding for your audience. By following a few key steps, you can maximize engagement and turn your referral contest into a powerful tool for brand growth. 

Website landing page with clear and simple entry rules

The easier you make it for people to join, the more likely they are to participate. 

Set up a landing page that is user-friendly and provides all the necessary information, including the contest rules, entry process, and end date. This is where participants can get a clear understanding of the contest, so it’s important to design a page that people want to visit.

Make your contest rules straightforward to understand, with steps to refer, share referral link, and join the contest laid out clearly.  

Complicated rules can discourage entrants from even trying, so keep things simple and actionable.

Pro-tip: Make it mobile-friendly! 

Most people use their phones to get online, so it’s crucial to optimize your referral contest experience for smaller screens. Make sure your contest page, forms, and email list sign-ups are easy to navigate on mobile.

Multiple sharing options

Make it effortless for participants to share your contest. Allow participants to refer friends directly through their preferred channels. 

Include social media share buttons, unique referral links, and one-click share options so that customers can refer people and spread the word with ease.

The simpler and more accessible the sharing process, the more new customers you’ll attract.

Automated tracking & reward distribution

Managing entries manually can be time-consuming. You need a tool that automatically tracks referrals and distributes referral rewards based on the logic you’ve set. 

This saves you time and resources, ensuring you don’t have the additional workload. This process also delivers a positive experience for your referrers, sending them their rewards without any delays. This ensures they can trust your brand and motivates them to refer more.

Set up Social Snowball to set up a powerful referral management system for your ecommerce store. 

Competition & gamification tactics

People love competition, especially when there’s a grand prize at stake. 

Incorporate leaderboards or progress bars to give real-time updates and keep participants engaged. Add elements like quizzes or additional perks like early product access to add a fun twist to the contest, keeping it exciting. 

The Pod Company, an ice bath brand, runs a gamified content program where affiliates create and submit videos. Every month, affiliates create content using their product. The top three submissions win $100, directly deposited into their affiliate accounts.

The brand promotes this content through email and other marketing channels to inspire other customers to join the program. By incentivizing content creation, the brand drives competition within its community and engages customers in a unique way. 

Omnichannel promotion

Promote your contest across multiple channels—social media, SMS, email marketing, and even website pop-ups. A broad reach through various platforms will help you capture a wider target audience.

5 ways to promote your referral contest 

Once you've set up your referral contest with clear entry rules, the next step is to promote it effectively. Here are 5 actionable ways to promote your contest and drive maximum participation.

Leverage email marketing

Start by announcing your contest to your existing customer base by sending them an email about what’s in store for them if they participate. Use this announcement email to appreciate their love for the brand and build excitement for the incentives you’re offering. 

Never forget to include a referral link within the email that takes them directly to the contest page. The more straightforward the process, the higher the chances of participation.

You can send follow-up emails reminding them about the contest. Make sure that you don’t spam them!

Streamline your referral marketing efforts by integrating Klaviyo with Social Snowball. This integration helps you:

• Set up promotions for your referral contest.
• Automate follow-ups with a mix of emails, SMS, and push notifications.
• Segment your audience for targeted outreach and better conversion rates.
• Sync insights from Klaviyo to your Social Snowball dashboard, giving you a comprehensive view of your referral contest.

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Social media promotion

Create engaging posts across all your platforms and include clear calls to action that encourage users to join. Use a mix of organic posts and paid ads to target specific segments of your target audience, such as new customers or those who have already shown interest in your brand but haven’t purchased yet.

Website pop-up and banner

You already have a lot of traffic to your website. You can turn them into participants in your referral contest too! 

Set up a banner at the top of your website to inform visitors about the contest and direct them to the referral contest page to learn more.

If you want to capture the attention of your website visitors more directly, use pop-ups. You can even set up a pop-up that has all the details about the contest, along with a widget that allows people to enter your contest in just a few clicks without having to go to another page. 

This way, you can increase participation and make the experience as easy as possible.

Affiliate & influencer partnerships

Teaming up with micro-influencers and affiliates can help you spread the word better. They already have established trust with their followers, which makes them ideal for promoting your referral program.

With influencers, you’ll have to go beyond the usual referral rewards and offer them additional perks like free products. However, since their audience would match your ideal customer profile, you’ll be able to draw more conversions.

With Social Snowball, you can automate influencer management and eliminate the manual process of managing and tracking its effectiveness. How?

• Generate UTM links & discount codes automatically for new sign-ups.
• Prevent coupon abuse using Safelinks, which creates unique, single-use discount codes.
• Automate payouts—bulk send cash, store credit, or gift cards with just two clicks.

SMS notifications

To keep participants engaged and motivated, use SMS to provide real-time updates. Let participants know when they’ve earned referral rewards, moved up the leaderboard, or reached other milestones in the contest. 

These timely SMS updates help maintain excitement and keep participants informed so that the contest is at the top of their minds. They are likely to share the contest more frequently, increasing your reach.

With Social Snowball, you can automate and personalize SMS marketing for your referral contests. Integrations with tools like Postscript and Sendlane allow you to set up automated, on-brand SMS campaigns triggered by specific referral actions, engaging participants at the right moments.

Increase word-of-mouth with a referral contest

Referral contests turn your customers into brand ambassadors. When done right, you can leverage this strategy to effectively bring in first-time shoppers, increase loyalty among past customers, and boost your revenue.

To maximize the potential of your referral campaign, you need a referral platform built for success. Social Snowball allows you to automate the entire process—onboarding affiliates, segmenting them, enabling customized rewards like cash, gift cards, or store credit, automating payments, and tracking your campaign’s success.

Ready to set up a referral program that simplifies your workflow and helps your store grow? 

Schedule a demo to see how Social Snowball works. 

Frequently asked questions

How can I prevent fraud or fake referrals in my contest?

Fraudulent referrals can dilute the effectiveness of your referral contest and impact your marketing budget. To prevent this, use tools like Safelinks, which generate unique, single-use discount codes for every referred customer. This makes sure that only genuine referrals count, preventing coupon abuse and inaccurate affiliate attributions while maintaining the integrity of your contest rules.

What’s the best way to handle reward fulfillment?

The best way to handle reward fulfillment is by automating payouts. Use a referral program platform that lets you bulk-send cash, gift cards, or store credit to winners with minimal effort. 

A self-serve payout portal is another option where entrants can choose their preferred reward method, giving them a memorable experience.

Should I offer a discount or a cash reward for referrals?

The kind of reward you offer for referrals depends on your budget and audience preferences. 

Discounts increase repeat purchases and retain loyal customers, while cash incentives attract brand advocates willing to actively promote your business. Test different incentives and gauge responses and the motivation levels of referrers to figure out the best option for your referral marketing strategy.

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