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DTC Lessons: Build a more resilient brand with Referral Candy

Each week, we're handing the floor over to an expert in the Ecommerce space to share their wisdom on building a resilient DTC brand in 2022 and beyond.

Today, it's the turn of Referral Candy's Partnerships Lead, Raúl Galera. Referral Candy is a referral program that enables you to grow by word-of-mouth marketing.

Take it away, Raúl.

What's your role and what do you do on a day to day basis?

I manage agency and tech partnerships here at ReferralCandy, meaning acquiring new partners and engaging with existing ones. On a regular day I’m usually talking to either merchants or agencies, overseeing our content and account management efforts and brainstorming new ways we can put ReferralCandy out there.

What are the biggest challenges facing the DTC world right now?

Consumer spending in Ecommerce has been going through a rollercoaster over the last two years, making it hard for merchants to make long term plans and forcing them to adapt to quick and drastic changes. 

Back in 2020 when consumers were pretty much forced to buy everything online, Ecommerce beat every possible record. Now in 2022, for the most part, consumers seem to have gone back to their 2019 habits (traveling, dining, shopping at physical stores). Merchants have had to adapt to all these changes while also reacting to other challenges such as the increase in competition in Ecommerce, the supply chain crisis and the uncertainty derived from inflation and a potential recession in the US and Europe. 

We’ve definitely seen some fundamental changes take place over the past few years mostly in terms of Ecommerce sales and new consumers buying online for the first time, and I believe Ecommerce will continue to grow over the next few years and decades. However, from speaking with merchants and agencies who work with DTC brands, I get the sense that a lot of businesses were using their 2020 and 2021 extraordinary results as a benchmark for future years and reality turned out to be different – forcing them to make some adjustments in terms of budgeting.

What 3 things should DTC brands be doing to retain their active customer base?

1. Educate your customers about your brand. They might know about your products and the problem they’re solving, but do they know what your brand stands for? Do they know what makes you truly different from other options out there? The more relevant information you provide to your customers, the more they’ll identify themselves with your brand.

2. Try building a community around your brand. This can be either a physical place where people can hang out (either in person or online), or simply a place where you share content about your brand that your customers can interact with. One of our customers, A Box of Stories, which delivers a monthly “surprise box” with undiscovered books, created a book club on Facebook where their customers can share what they’re reading and look for ideas on what to read next.

3. Referrals. If your customers are enjoying the products they’re buying from you, and they’re happy being your customers, they’re already referring you to their friends and family. Without a referral program, however, this is hard to track. It’s also hard to encourage them to refer even more if there isn’t an incentive for them or their friends. By setting up a referral program, you can make sure that your customers are automatically invited to join, and they have an easy way to refer their friends with their referral link.

Your whole business is based around referrals. What industry knowledge or tips and tricks can you share that DTC brands should take advantage of?

1. Adjust your referral program reward to your customers’ purchase behavior. If you’re selling a product that your customers can buy on a regular basis such as nutrition supplements, skincare products or any sort of subscription box, offer them a discount on their next purchase for every friend they refer. On the other hand, if you’re selling a product that you’re either selling on a one-time basis or you know your customers aren’t coming back anytime soon, such as mattresses, home appliances or high end jewelry, offer them cash or a custom reward (such as a gift card) for every referral instead. 

2. Invite past customers to join your referral program. By the time you decide to launch a referral program, you’ve probably already been in business for a while. If you invite customers that have bought from you in the past to your referral program, you’ll dramatically increase the number of advocates in your system and the referral program will gain momentum in a much shorter period of time.

3. Lastly, make sure to promote your program. Promotion is crucial. It’s also a message that your customers are probably going to be more open to receive after they’ve bought from you. They’ve probably already thought about telling their friends about the product they’ve just bought, or maybe they’ve already shared it on social media. If you remind them about the referral program and how they (and their friends) can benefit from it, they’ll make sure to include their referral link in the recommendation.

One of my favorite referral programs is ThreadBeast. They’ve been with us for years and they’ve managed to create a very nice blend between influencer and referral marketing. On their site they have a section called “Free Threads”, where anyone can sign up as an advocate for their referral program. If I sign up, my friends will get $50 in additional products and I’ll get a free box. And if I refer 5 friends, I’ll get 5 free boxes. The result? Go to youtube and type “threadbeast” or “threadbeast unboxing”... I bet you there are at least 5 videos posted in the last 7 days. 

What are the common mistakes you see DTC brands make when trying to drive more revenue from their current customers?

Underutilizing customer retention by understanding customer behavior well enough. As a consumer myself, I see this on a regular basis. Most of the brands that interact with me over email do so by sending me coupon codes or flash sale promotions – when I have just bought something from them. 

Once a customer has bought something from you, it’s time to convince them to stick around and become loyal customers. Ask them, how was their experience at the store? Anything that could have been improved? And if they are happy with their purchase experience… Why not ask them to refer a friend? 

You can also ask yourself as a DTC operator: How am I trying to differentiate myself from my competitors? Am I offering a better product or service? Am I sourcing from unique manufacturers or have some sort of edge in my production process? Are my products more environmentally friendly? Those are all questions that your current customers might not know the answer to. Setting up a campaign in which you are educating your customers about who you are and what you stand for as a company can help you create a strong community around your brand. Christy Dawn and Matter did this very well.

Finally, what are your predictions for the coming months? What should DTC brands jump on?

I’m not really a fan of making predictions because they tend to backfire. I don’t know what’s going to happen over the next few months, but I’d say that one of the safes bets is to go back to the basics: 1) Try to diversify your customer acquisition as much as possible (referrals, influencers…) and don’t rely too heavily on ads; and 2) Make sure that you have a clear post-purchase path for your customers: whether it is to leave a review, refer a friend, receive relevant information about the company and products, or a combination of all of these.

Who do you look up to as an industry expert? If nobody- which business newsletters, podcasts or communities do you subscribe to?

I’m part of a couple of Ecommerce communities, but the one I follow the most is Partner League – a slack community of Shopify partners (both agencies and tech companies). This is where I typically go to get the latest news and updates on everything DTC-related.

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