How much can you afford to give?
Use one simple subtraction to set referral rewards and offers you can sustain.
Who it's for
Owners who want to reward ambassadors and new customers but worry about giving away too much.
What you'll get
A reward amount based on your own margin, written down before you set up coupons, ambassadors or campaigns.
Know your margin on a first purchase
Take what a typical new customer spends on a first visit and subtract what it costs you to deliver it: materials, product and the time involved. What remains is your margin on that first purchase. Use your own numbers; a rough figure is fine to start.
Add up the cost of what you give
Count what both sides receive. In a referral, that is the friend's first-visit benefit plus the ambassador's reward. Use what it costs you, not the price on your menu: a free add-on service costs you time and supplies, not its full price.
Do the subtraction
Affordable reward = margin on a first purchase − cost of the reward. If the result is above zero, the first visit pays for itself. If it is below zero, you are betting on repeat visits, which can be a deliberate choice as long as you know you are making it.
Choose the reward mode that fits
With By Referral, the ambassador earns a reward for each referred customer who buys, or once their referrals reach a sales target you set. With By Commission, they earn a percentage of what their referrals spend in the month. Commission ties the cost directly to recorded referral sales, because purchase totals are entered at the counter.
Check against real referral sales
Referral revenue and the average referred purchase (AOV) appear on your dashboard once purchases are recorded. Compare them with the numbers you assumed and adjust the rewards if needed. Coupon redemptions do not record a purchase amount, so this check works for referrals, not coupons.
All numbers here are hypothetical. Suppose a first haircut at a barbershop is $38.50 and costs the shop $15 in time and supplies. The margin on that first purchase is $23.50.
The friend gets 20% off the first cut, which costs the shop $7.70. The ambassador gets $10 off their next visit; the shop estimates that costs about $4 in time and supplies. Total cost of the reward: $11.70. Affordable reward: $23.50 − $11.70 = $11.80 above zero, so the first visit covers itself.
If the shop chose commission mode at 10% instead, an ambassador whose referrals spend $731.50 in a month would earn $73.15 in rewards.
Checklist
- Typical first-purchase amount written down
- Cost to deliver it estimated
- Friend benefit and ambassador reward priced at your cost
- Subtraction done and result above zero, or a conscious bet on repeat visits
- Reward mode chosen
- Plan to compare with real referral sales on the dashboard