August 30, 2011, 9:39 AM

Referrals among friends pay off for

The hair care e-retailer rewards customers whose endorsements win sales.

Lead Photo

Folica Inc., an online retailer of hair care and hair styling tools, knew from reading the product reviews on its e-commerce site that new customers often bought from the site because friends told them about it. Wanting to reward and accelerate such word-of-mouth recommendations, last year Folica began offering customers who referred others a $10 credit toward future purchases at when a referral resulted in a purchase. The referred customer also received a $10 credit as an incentive to make her first purchase from the e-retailer.

“We needed to find a way to encourage our advocates to continue to grow our brand awareness organically,” says Jessica Bohm, marketing director at is No. 265 in Internet Retailer’s Top 500 Guide

To create the program, Folica worked with Extole Inc., a vendor that manages word-of-mouth referral programs on web sites and social media. To launch the program, Folica explained the refer-a-friend program in an e-mail sent to its 850,000 e-mail subscribers. It also announced the news on Facebook and added a “send to a friend” link to the top of every product page on 

Extole’s technology makes it possible for customers to share their endorsements via their preferred electronic communication tools. Customers enter e-mail addresses, post the referral offer to their Facebook walls or send it through Twitter. Friends then click a referral link to visit, and buy, from Folica. The landing page provides each referred customer a unique promotional code that entitles the customer to a $10 credit when entered at checkout. Once the code is used, the friend who recruited the new customer receives a coupon code via e-mail.

Metrics gathered after the first 30 days of the promotion exceeded Folica’s early expectations, Bohm says. 93% of the referral e-mails customers sent to friends were opened, and 22% of those who opened a referral e-mail clicked through to visit 16% went on to make a purchase, according to Extole’s program statistics. The average online conversion rate for e-commerce is 2.9%, according to Forrester Research and statistics released last year.

The refer-a-friend program continues today and Folica promotes it in its regular e-newsletters to customers and on Facebook. Bohm says Folica plans to test an offline referral program to reach an even broader audience.

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