If you’re like most SaaS companies, finding a sustainable and reliable customer acquisition channel is hard. Especially with the increasing cost of online marketing.
But before you get discouraged and leave, chances are you probably have a decent list of satisfied customers and power users.
This is where referral marketing sweeps in and saves the day.
Generating leads through word of mouth from your current user base is one of the most effective and cheapest marketing strategies around.
In this post, we will cover why you should start a SaaS referral program and how you can get your own program in place, so you can stop worrying about lead generation and start focusing on providing more value to your customers. We’ll also cover 9 stellar examples of SaaS referral programs.
The benefits of SaaS referral programs
Why start a Saas referral program? Here’s our breakdown of the main benefits.
- Friends’ recommendations are more trusted than traditional ads and other messaging directly from your company
- Referral programs are a reliable way to acquire new customers— people are 4x more likely to buy when referred by a friend.
- Referral programs rapidly create brand awareness by encouraging word-of-mouth sharing. They mobilize your customers to promote you at little to no cost to you. And if the referral program includes social media sharing elements, the word spreads to many people at once.
- Referral programs increase customer loyalty, which leads to increased customer lifetime value (referrals have 16% higher CLV on average than non-referred customers, so they’re more likely to stay loyal)
- Referral programs result in reduced customer acquisition costs, thanks to all the benefits listed above.
How to develop a successful SaaS referral program
Here are five tips to get you on the right track with developing a winning SaaS referral program.
1. Give customers a reason to share
In order to build a scalable referral program, you must first have an amazing product. While incentives and rewards might attract users, customers won’t refer their personal network unless they are satisfied with your service.
So first thing’s first— build a great product that fits your target audience’s needs and deliver exceptional customer service. Make sure your users are satisfied with your platform before thinking about creating a referral program.
Take a second to research your online reviews and digest customer feedback to see if there are any obvious pain points or areas you can improve in your funnel.
2. Make it quick and easy for users to share
The point of a referral program is to make the referral process as easy as possible. Providing users with multiple ways to share your offer is a great way to drive engagement and make the whole process a lot more convenient. Some common sharing channels include email, social media, and SMS.
Always remember you’re asking your customers to do you a favor by spreading the word about your SaaS. The more time and effort it takes to send a referral, the more likely they will get frustrated and bounce. Thus, the fewer steps, the better.
- Referring a customer should only take 1-2 clicks.
- In order to make the sharing experience as frictionless as possible, you should focus on creating clean, concise messaging and referral pages.
One of the most important pages is the landing page—the page the recipient of the referral will land on. After all, you want your advocate’s referral to click through and continue the process. A great way to make sure they follow through is with a catchy headline and a clear description of how your SaaS referral program works.
One of the reasons why so many referral programs have gone viral in the past is because they were so easy to use.
Think about Airbnb or Uber.
- In those referral programs, people simply have to click a button, and a custom link will generate with their code and provide them multiple options to share it.
- And to make the process even easier, they provide generic messaging, so users don’t have to waste time writing their own message.
3. Choose the right incentives to motivate customers
Now that you have the foundational laid, we can begin building out your referral rewards program. Choosing an incentive can be tricky; you first have to understand what drives your users and what they find most beneficial.
Once you’ve selected a reward, you’ll have to come up with the terms and conditions. Think about how much you want to reward users. When you should reward a user, and how many ways they can earn rewards.
Here are some of the most common referral incentives.
- Cashback – It might not surprise you that most customers are motivated by cash. After all, who doesn’t like money? But besides from being appealing to customers, cash is a scalable reward. When structured properly, your customers will get the same value, whether they refer one customer or a hundred.
- Discount on subscription – Discounts are great for companies looking to build customer loyalty through increased engagement.
- Free month of subscription/free extension of trial – One of the hardest things is attracting new users, so why push them away? Offering a free extension is a great way to provide your ideal customer a little more time to convincing.
- Branded swag – While I usually wouldn’t recommend free merchandise for Saas companies. If your business already has a referral program, running a special giveaway promotion could be a fun way to mix things up for your most loyal users.
- Unlock added features/upgrades – If you want to increase the odds of converting trial customers, then you have to pull back the curtains fully and let prospective customers have access to all of the bells and whistles.
- If your Saas is B2B, consider the incentives in our article on B2B referral programs.
Once you’ve decided on an incentive, you should turn your attention to your reward structure. A reward structure is basically who you will reward and how often.
For best results, I recommend using either a dual-sided or cumulative program.
Dual-sided incentives offer rewards to both parties, current users, and referrals. The added peer pressure to help a friend out often motivates them to try your service out.
You can also try cumulative incentives, which provides users the opportunity to earn cash and credit for every person a customer refers. The draw of a big payday is a great motivator for users to refer multiple people.
4. Promote your SaaS referral program
Now that you have all your pieces in place, it’s time to promote your program. A great place to start is your website. Don’t be afraid to put your offer above the fold on your homepage. Remember, your referral program should be easy to find. If that seems like a bit much, you can always promote your offer in your navigation bar or use pop-ups to attract users.
Another great place to promote your offer in-house is your software. Like with most things in marketing, timing is everything. Promote your offer when a user completes a task or hits a certain milestone. It pays off to promote when users are feeling satisfied with your service.
Utilize your mailing list and newsletter to reach your whole user base at once and social media to capture a wider targeted audience. And don’t be afraid to reach out directly to your most loyal customers.
5. Track referrals, and gauge the ROI of your program, with referral software
Whether you build your program in-house or choose to use a third-party tool, tracking, testing, analyzing, and optimizing your program is key.
You need to keep track of your new users’ behavior to see if they drop off or convert to loyal customers. Basically, you need to know if your referral program is working or not and see if it’s worth keeping.
The simplest way to think about it is in terms of cost vs. revenue.
Your cost is how much you are spending on incentives, plus the cost of running the program. And your revenue is how many sales you’re acquiring.
If your referral revenue exceeds your customer acquisition cost (CAC), then you’re getting a positive ROI on your referral program. This should be your guide when deciding whether to keep running your referral program or not.
Referral program software tools like Referral Rock have made it easier than ever to create, automate, and customize a referral program in minutes – providing you with in-depth analytics and reporting to optimize your campaign.
By now, I’m sure you’ve thought of a few things to try, but just in case you’re unsure, here are some examples of well-executed referral programs.
What makes these types of referral programs stand out?
Let’s take a look at a few SaaS referral program examples that put these practices into play.
Trello is a collaboration platform that helps you keep all your tasks on track. With a quick glance, you can see who’s working on what, what work is being done, and where someone is at in the process.
They use a simple cumulative structure when you refer a friend, and they sign up, you get a free month of Gold (their premium plan). You can refer up to twelve friends. That’s a whole year of Gold for free!
But what makes Trello’s referral program so effective? If you take a look at their ideal customer and their referrals, you’ll find that they’ve done a great job of driving look-alike referrals. Better yet, if you look at how they engage with those users, you’ll discover it only takes a few weeks to convert them to paid customers. Thanks to the simple fact that life is better when using Gold.
The main takeaway is to create a platform that makes users realize that they can’t live without the paid features.
Evernote is a cloud-based saas that acts as a personal assistant. Take notes, organize files, and collaborate with others all in one secure place.
The Evernote referral program is created with a points system to help them attract more customers. For a user to enjoy a free month of Evernote Premium, they must acquire 30 points. Each referral is worth 10 points, and when your referral converted to Premium, your earned 5 points.
Evernote did a great job of laying out its program in a clear and simple way, streamlining the sharing process. Not only did they make it easy to share, but they also used their software as an incentive for driving down the cost and build customer loyalty.
Notion aims to solve the common problem of a cluttered desktop. By consolidating most of the common features of our favorite tools into a single, minimal workspace. So you don’t have to keep a dozen tabs open all the time.
The goal of the Notion referral program is to earn enough credits to cover the cost of a paid Notion plan. When a referral signs up using your unique URL, you’ll earn $5, and they’ll receive $10 toward a paid Notion plan.
They also offer a few other ways to earn credit by completing simple tasks that make Notion more productive, such as:
- $5 off your Notion plain when you import your notes from Evernote
- $3 off when you install Web Clipper’s extension and save your first link
- $3 off for using Web Clipper’s mobile app
All of these easy wins are designed to make your experience with Notion better and build loyalty with their customers. Notion does a great job of laying out their reward structure and offers a robust FAQ section, making their program as transparent as possible, while building trust with new users.
Shoeboxed is perfect for freelancers and contractors looking to track their business expenses. They make it easy to scan receipts using their mobile app and eReceipt reader. They even offer prepaid mail-in envelopes for less tech-savvy users.
The Shoeboxed referral program uses a dual incentive model to find more of their ideal customers. When you refer a friend, you both will receive 10% off of your monthly payment when they sign up for a premium plan. What makes their program unique is that the discount is applied to the entire year, or until your friend cancels their subscription.
Shoeboxed does a great job of streamlining the process, bringing new customers directly to their referral landing page with a welcome message, and a quick rundown of the referral bonus and sharing options. Always remember that you want to make your referral program as easy to find as possible, and Shoeboxed does a great job of doing just that.
Zoom is a cloud-based video conferencing platform that can be used for video meetings, audio conferencing, webinars, meeting recordings, and live chat.
Zoom’s refer a friend program lets you earn cash and gift cards by spreading the word about Zoom to your personal network. However, there is a time limit for receiving your reward to build urgency. When you share your referral link, your referral has 30 days to purchase a Zoom plan for you to receive your commission.
The best thing about Zoom’s referral program is its reward tracking. By visiting their refer a friend page and clicking the “rewards” tab, you can track your referees’ activities, view pending points, and redeem your points for cash or gift cards all in one place.
Postcron is designed to help users save time scheduling and posting content on all their main social media channels. Unlike other social media scheduling tools, Postcron allows you to schedule, carousels, photos, videos, and stories on Facebook, Instagram, Pinterest, Twitter, and LinkedIn.
With Postcron’s referral program, you can get a free month for each new user who signs up for a paid plan. When a friend signs up using your link, they automatically get their first month free, and as soon as they renew their subscription, you get a free month as well.
Airtable is a collaboration tool that allows you to organize anything, anywhere. It positions itself as part spreadsheet and part database, which enables teams to stay organized and get things done.
Airtable’s features are broken up into bases. Every referral that signs up, you receive a credit, which can be used to upgrade any base you have admin access to. You can also opt to use your credits to extend your current plan for free.
Drift provides a modern buying experience for potential customers, generating more qualified leads, and dramatically accelerate their sales cycle. Allowing users to build chatbots and conversation flows in minutes, with absolutely no code.
While most of the incentives we have covered have either been discounts, cash, or credit, Drift’s referral program uses swag to drive demand.
For one referral, you can snag a special edition Adidas jacket and sticker pack. Five referrals will land you an all-access pass to Hypergrowth’s conference, and ten referrals will get you a free lunch with Drift’s founders, David Cancel and Elias Torres.
Drift does a great job of standing out in the saas referral world but offering unique products geared towards their user base. While it might not work for every brand, I would highly recommend testing it out if you have some leftover gear from a conference or event.
If you’ve done your fair share of referral marketing research, chances are you’ve seen Dropbox a couple of times. The file-sharing service dropped their referral program over a decade ago and was one of the first SaaS companies to use referrals programs effectively.
Dropbox didn’t do anything crazy, though. In fact, what made the Dropbox referral program so effective was how simple and direct their message was. For every person who joins and installs Dropbox, we’ll give you 500MB of bonus space.
They were able to utilize their existing user base and bypass other more expensive marketing channels in a time where no one else was really thinking about it, and the numbers speak for themselves.
- Doubled their growth every 3 months
- In just one month, users sent out 23 million referrals
- 3900% total growth in registered users over 15 months
There you have it. If you’re starting a SaaS referral program, you’re going to want to follow a few general rules. And before you start, take a look at some of your competitors to see if they might offer a referral program. At the very least, take a note or two from some of the popular ones that are already out there.