Referral Based Loyalty Programs

Loyalty & Referral Programs: A Comparison Of The Two and How A Referral-Based Loyalty Program Can Help Your Business

Tired of the same old loyalty programs that seem to yield minimal results? 

Looking for a fresh and effective way to incentivise your customers and attract new ones?

Maybe you just want to amplify your existing customer referral program or referral marketing strategy to create a better experience for your customers?

Well, you’re in luck because we will talk about loyalty, referral programs, and how combining the two can take your business to the next level.

DX United understands that running a business isn’t easy. 

Still, by implementing a referral-based loyalty program, you can not only increase customer engagement but also create a community of loyal brand advocates. 

So what are you waiting for? Let’s get to know more about referral-based loyalty programs.

A Deeper Understanding of Modern Loyalty Programs

A modern loyalty program is designed to reward customers for their repeat business and incentivise them to continue engaging with a brand. 

These programs have evolved significantly over the years, moving beyond traditional punch cards and discounts to include personalised rewards, gamification, and digital experiences.

One of the key features of modern loyalty programs is the use of data to personalise the customer experience. 

Modern Loyalty Programs

In a survey conducted, it was found that 74% of buying customers consider the product as the major factor in their loyalty. In comparison, 66% say it’s about the value they get with their money, and about 56% consider customer service.

Brands collect data on customers’ shopping behaviour, preferences, and demographics, which allows them to tailor rewards and promotions to each individual’s needs and interests. 

By making the rewarding process more enjoyable, brands can increase customer engagement and encourage loyalty.

Loyalty and Referral Programs Used To Be Two Different Things

In the past, loyalty and referral programs were two distinct marketing strategies used by businesses to drive customer engagement and retention. 

Loyalty programs were designed to reward customers for their repeat business and encourage them to continue purchasing from the same company. 

It can be a gift card, reward points, loyalty points, discounts, etc.

These programs typically offered customers points or rewards for every purchase they made, which could be redeemed later.

On the other hand, a referral program focuses on incentivising customers to refer their friends and family members to the business. 

These programs often offered rewards or discounts to both the loyal customer who made the successful referral and the person they referred to encourage customers to spread the word about the company and help drive new business.

It can be through a referral link, referral platform, or referral code which a new customer or an existing one would be delighted to try.

However, businesses have started to blur the lines between these two strategies over time

Many companies now offer a loyalty program or rewards program incorporating referral elements, such as additional rewards for referring new customers or giving customers bonus points for each successful referral.

This approach can be effective for businesses, as it allows them to not only reward their most loyal customers and tap into their existing customer base to drive new business.  It can also add to their referral marketing strategy or loyalty marketing plan.

Making Referral Programs Make Sense With Loyalty Strategies

Referral programs have become a popular marketing tactic for businesses looking to expand their customer base. 

However, many referral programs fail to deliver results because they lack a clear strategy and fail to create genuine loyalty among customers.

To make referral programs truly effective, businesses need to combine them with loyalty strategies. 

Referral Programs Loyalty Strategies

As mentioned above, loyalty programs are designed to incentivise customers to remain loyal to a brand by offering rewards and incentives for continued patronage. 

But when combined with referral programs, these strategies can help businesses create a virtuous customer acquisition and retention cycle.

1. Getting A Grasp On Customer Behaviour

The first step in creating an effective referral program with loyalty strategies is understanding the customer’s motivations

Customers are more likely to refer friends and family to a brand if they have had a positive experience with the brand themselves. 

Therefore, businesses should create a positive customer experience by providing excellent customer service, quality products or services, and personalised attention.

2. Offering Something They Can’t Resist

Satisfied customers often refer the business they benefit from to their friends and family – especially if it has a loyalty program. 

In fact, 71% of consumers stay loyal to a business that offers them great value.

For example, businesses can offer rewards for each referral, such as discounts, exclusive access to events or products, or points that can be redeemed for rewards. 

By offering these rewards, businesses can encourage customers to refer their friends and family and remain loyal to the brand.

3. Leverage On Accessibility and Convenience

In addition to incentivising customers, businesses should make it easy for customers to refer their friends and family. 

This can be achieved by providing easy-to-use referral tools, such as social media sharing buttons or referral links. 

Businesses can also make it simple for customers to track their referral progress and rewards through a loyalty program dashboard.

4. Nurturing The Relationship You Built

Another important aspect of combining referral programs with loyalty strategies is continually engaging with customers

You should regularly communicate with customers, providing relevant information about the brand, new products or services, and exclusive offers. 

Businesses can create a sense of community and foster long-term loyalty by engaging with customers.

Referral-Based Loyalty Programs Can Help Your Business

One of the biggest benefits of referral-based loyalty programs is that they can help businesses acquire new customers at a lower cost than traditional marketing methods. 

When your existing customers refer their friends to your business, those customer referrals are more likely to convert into paying customers because they come with a trusted recommendation.  

This can help you save money on marketing and advertising while attracting new customers.

Referral-based loyalty programs can also help increase customer loyalty. 

When customers refer their friends to your business, they become more invested in your brand and are likelier to continue doing business with you.

Referral Based Loyalty Programs

Another benefit of referral-based loyalty programs is that they can help you build a community around your brand. 

By incentivising customers to refer their friends and colleagues, you create a sense of camaraderie and shared interest among your customer base. 

This can lead to increased engagement on social media and other digital channels, which can help your business reach new audiences and build a stronger online presence.


In conclusion, loyalty and referral programs are effective ways for businesses to retain and acquire customers. 

Loyalty programs reward customers for their repeat business, while referral programs incentivise existing customers to refer new customers to the business.

Businesses should consider implementing a referral-based loyalty program to maximise the benefits of both loyalty and referral programs and create a mutually beneficial relationship with their customers.

But what happens after that? What if you decide you want to leverage a referral-based loyalty program?

If 1-in3 businesses without a loyalty program will start one before 2027– why not get ahead of those competitors by doing a referral-based loyalty program now?

Well, you don’t need to worry about getting started because DX United is here to help you.

With our SAAS-based, API-centric customer loyalty platforms, create experiences that would make your target market say, “Wow!”.

We can help you shorten the decision period of customers, deploy rewards systems seamlessly, and connect you with over 2000+ brands to ensure your customers get the returns they desire and your business the loyalty it deserves.

Book a demo call today.






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