Referrals are the cheapest acquisition channel when they work and the easiest to game when they are badly designed. The difference is usually three details: when the reward is paid, how many referrals one person can make, and whether the referred customer actually orders.
A referral programme is not a discount code. It is a small incentive system with fraud risk, accounting and a clear definition of a qualified customer.
| Design choice | Option A | Option B | Recommendation |
|---|---|---|---|
| Reward timing | On sign-up | After first delivered order | After delivery |
| Reward type | Cash | Platform credit | Credit keeps spend in the ecosystem |
| Reward split | Referrer only | Both sides | Both sides, capped |
| Cap | Unlimited | 5–10 per month | Cap to limit fraud |
| Qualification | Install | First order above minimum | Delivered order above minimum |
Pay after the order, not after the install
Install-based rewards attract fake accounts and low-intent users. Pay the referrer only after the referred customer receives a delivered order above a minimum basket. That single rule removes most of the abuse.
Hold the reward for a short window (for example, seven days) to cover refunds and chargebacks. Then release it automatically and show the status in the app.
Reward both sides, but cap it
A “give $5, get $5” offer is easy to understand. The referrer gets credit after the friend's first delivered order; the friend gets a discount on that order. Cap the number of rewards per account per month and require a verified phone number.
If the contribution per order is $4, a $5 reward on both sides is a loss. Set the reward from the contribution you can afford, not from what a competitor offers.
Fraud controls that do not punish real users
- One account per phone number; verify with OTP.
- Block self-referrals and same-device sign-ups.
- Require a delivered order, not just a sign-up.
- Cap monthly rewards and flag clusters of new accounts.
- Review addresses shared by many new customers.
- Make credit non-transferable and non-withdrawable.
Where to promote the programme
Put the referral link in the app, the receipt, the delivery bag and the post-delivery notification. Ask for the referral at the moment of satisfaction, not at sign-up. A customer who just received a good meal is more likely to share than one who is still filling a form.
Measure incremental acquisition
Track referred customers separately: first-order conversion, second-order rate, basket size, refund rate and contribution. Compare them with paid-acquisition customers. If referred customers are not cheaper to acquire or more valuable, the programme is a discount, not a channel.
Referral economics
Cost per referred customer = reward cost (both sides) + platform credit redemption + admin cost. Compare that with the contribution from the first three orders. If the payback is longer than your cash runway, reduce the reward or tighten the qualification.
See the loyalty guide, the marketing ideas, or the software page.
Referral mistakes
- Paying on install instead of a delivered order.
- Unlimited rewards with no phone or device checks.
- Rewarding cash instead of platform credit, which leaks spend.
Start with a small cap and a seven-day hold. Increase the reward only after referred customers show better repeat rates than paid ones.