On the admin area, go to Loyalty > Earning Flows > Referral Growth
From there, you could define the 3 basic rules:
A. How much the referral customer earns for inviting friends (The loyalty customer)
B. How much the referred customer earns (The new customer)
C. How many customers a referral customer can invite to receive rewards
Basic referral flow is activated when referred customer installs the loyalty card and joins the program.
Advanced referral flow is activated when referred customer completes an action. Ex: Make a purchase.
If you have the Loyalty Lion integration you could follow this guide.
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