Setting up the “Bring a Friend” promotion: reward conditions, promo codes and rules for calculating bonuses upon returns

«Word of mouth» and referral marketing are among the most effective tools for attracting new customers. In retail, there is often a need to automate this process so that customers are financially motivated to recommend the store to their acquaintances, while those acquaintances receive a pleasant discount on their first purchase. 

This is exactly why Torgsoft has the additional option «"Refer a Friend" Promotion», which allows you to build a two-level bonus reward system. 

When implementing this tool, entrepreneurs most often contact technical support specialists with the following practical questions: How should reward limits be configured correctly so as not to operate at a loss? How can unique promo codes be generated and sent to customers? And most importantly — how does the program recalculate the bonuses of the person who recommended the store if their friend decides to return the purchased goods? 

The answers to these questions are naturally integrated into the program logic, which we will review in detail below.

Two-level reward system: how it works and how to configure the conditions

The essence of the mode is that the discount card owner is motivated to recommend the store, because bonuses are automatically accrued to them for their friends’ purchases. In turn, the customer’s friend receives an incentive discount.

To launch this tool, you need to go to the customer card (Marketing — Customers), open the «Refer a Friend» tab, and click the «Add» button. The program will offer flexible conditions for setting up the reward system:

1. Discount for the friend

You can specify the promotion validity period in days or enter «0» for unlimited validity, as well as the desired discount percentage that the friend will receive when making a purchase. To protect your profit, you can limit this discount to a specific Product Group.

2. Reward for the card owner (referrer)

Torgsoft offers three options for bonus accrual conditions on the main card:

• Fixed bonus amount: the customer receives a fixed amount, for example, 50 bonuses, for the very fact that their friend made a purchase.

• Percentage of the friend’s purchase amount: the referrer receives bonuses as a certain percentage of the total amount of the friend’s receipt.

• Percentage of the purchase amount with a limit: the safest option for the business owner. The customer receives bonuses as a percentage of the friend’s receipt, but you set a maximum limit, for example, 10% of the purchase, but no more than 200 bonuses in total.

Control barcodes (promo codes): generation and use at the checkout

So that the system understands exactly who the new customer came from, the program uses control barcodes (promo codes). When setting up the promotion in the customer card, you specify the number of cards (promo codes) you want to issue for their friends.

After saving the settings, Torgsoft generates individual promo codes for each friend’s card. They can be:

• Printed and attached to physical cards for distribution.

• Copied to the clipboard and sent to the customer via messengers (Viber, Telegram) or by email.

• Moreover, thanks to the «Mass Mailings to Customers» option, you can automatically send customers their individual control barcodes for the promotion so that they can attract acquaintances.

How to apply a promo code at the checkout? 

When the friend comes to the store, the seller in the «Sale» window scans or enters the received promo code directly into the «Barcode/Article» field. The program will request confirmation to use the promo code, after which it will provide the friend with a one-time discount. After payment for the receipt is made, bonuses will be automatically accrued to the owner of the main card.

Return of goods by the friend: fair bonus recalculation

One of the most important issues that entrepreneurs raised with the developers concerned return-related fraud. For example: a friend buys 15 product items for a large amount, and the referrer receives a significant bonus. The next day, the friend returns only 1 cheapest item from the receipt. Previously, the algorithm canceled absolutely all bonuses accrued to the referrer for that receipt, leaving them with nothing, which caused misunderstandings.

To make the settlement system as fair as possible and eliminate the possibility of fraud, Torgsoft changed the logic for writing off bonuses during a partial return. Now the algorithm works depending on the reward condition you selected:

1. Under the «Fixed bonus amount» condition: if the friend returns at least one first item from the promotional receipt, the accrued fixed bonus will be fully written off from the referrer’s main card.

2. Under the «Percentage of the friend’s purchase amount» condition: bonuses are not fully written off from the main card, but proportionally to the return amount. That is, if the friend returned goods worth UAH 300 and the condition was 10%, only 30 bonuses will be written off from the referrer, leaving the rest of the reward intact.

3. Under the «Percentage with a limit» condition: bonuses are also written off proportionally to the return amount, taking the percentage into account, but the system controls that no more is written off than was actually accrued, meaning the maximum bonus amount.

Where can these write-offs be checked? 

All analytics are transparent. The store owner can go to the Analysis — Bonus Movement Analysis — «Refer a Friend» tab menu. There, each fact of bonus accrual cancellation is displayed as a separate row, indicating the exact return document number that caused the write-off and the return amount. This allows you to always give the customer-referrer a reasoned explanation of why their bonus balance changed.