Think of the most popular referral programs. Airbnb, PayPal, Dropbox. What do these have in common?
They’re all SaaS referral programs.
While referral programs work for all types of businesses, they’re especially effective for SaaS. If you’re a SaaS and looking for a marketing campaign that speaks directly to your customers, a referral program can do just that.
What is a SaaS referral program?
A SaaS referral program is exactly what it sounds like. It’s a referral program built especially for software-as-a-service models.
SaaS, being cloud-based and typically on-demand, can run referral programs entirely online. A SaaS user can join a referral program, share their unique referral code through social media or direct messaging, and redeem their rewards – all in a few clicks.
SaaS referral programs run just like any other customer referral program. They engage existing customers and reward them for sharing the service with others.
In the long run, a referral program can save your SaaS on customer acquisition costs (which are especially high if you’re a B2B SaaS) and improve customer loyalty. And if you choose the right referral tool, a successful program is easy to set up and run automatically.
5 benefits of SaaS referral programs
SaaS referral programs (and all other referral programs) work by engaging your existing users. Instead of paying for pricey ad placements, you are rewarding every successful referral and building a stronger user base.
Here are some other benefits of running a SaaS referral program:
- Faster, reliable conversions: Research shows that a high-impact recommendation from someone you know “is up to 50 times more likely to trigger a purchase than a low-impact recommendation” from companies
- Increase brand awareness: By encouraging word-of-mouth marketing from those who already love your service, referral programs build positive brand awareness and interest in your brand.
- Lower customer acquisition costs (CAC): Aside from the initial setup and software costs, referral programs are a pay-for-performance marketing strategy. You only pay for rewards when a referral successfully becomes a new customer or lead. (Note: As a SaaS business, you can lower your CAC even further by offering something that’s virtually no cost to you, such as a free month of service or limited-time upgrade.)
- Increased conversion rates: When existing users promote your SaaS, they generally refer like-minded leads who are ready to convert. Not only are your users already familiar with your service, they’re also likely to know specific people who will also benefit. Plus, having a personal endorsement of your brand increases the odds that others will also readily try your service.
- Increased customer retention and lifetime value: Most SaaS companies run on subscriptions or regular purchases. This makes referral programs even more beneficial, as referred users are 18% more likely to stay with a brand than those who weren’t referred. (This is a major benefit of a B2B SaaS referral program.)
How do I create a SaaS referral program?
The beauty of SaaS referral programs is they work with what you already have. Here are five steps to create a SaaS referral program that brings in more customers:
1. Give customers a reason to share
In order to build a successful referral program, you must first have an amazing product or service. While incentives and rewards do attract users, customers won’t refer their personal network unless they think your SaaS product is actually good.
So first thing’s first: Offer a great product that fits your target audience’s needs and delivers exceptional customer support.
Make sure your current users are satisfied with your platform before creating a referral program.
How? Start by researching your online reviews and digesting customer feedback. See if there are any obvious pain points or areas you can improve in your funnel. You can also reach out directly to some of your loyal customers and ask them to fill out a survey or schedule a 1:1 feedback session (throw in a free upgrade or discount for their time!)
2. Decide what your SaaS referral program is about
If you had to create an elevator pitch for our SaaS referral marketing program, what would it be? An elevator pitch gives you 20-30 seconds to grab someone’s attention (which is arguably long for someone online). It’s intended to keep your referral messaging short and to the point. Here’s are real-life examples:
- “Get 16 GB free space by inviting your friends to Dropbox.”
- “Invite friends to Evernote. When they register, install, and sign into Evernote, they’ll get Premium. You’ll also earn points to use for Premium or increased monthly uploads.”
- “Refer a friend and earn $10 in Groupon Bucks. You can earn $10 in Groupon Bucks whenever you refer a friend to Groupon and they buy their first deal.”
These are the headlines and copy from some top referral programs. But when deciding what your SaaS referral program is about, don’t forget to cover all bases: Will you require more than one referral for a reward? Are there tiered rewards, or is there a reward limit?
Think through the details of your SaaS referral program, and be sure to include all information in your landing page and referral FAQ.
3. Choose the right incentives to motivate customers
Choosing an incentive can be tricky. You first have to understand what drives your users and what they find most beneficial.
Here are some of the most common referral incentives.
- Cash back: It might not surprise you that most customers are motivated by cash. Who doesn’t like money? But besides 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. Not only are they an attractive benefit, but discounts are also put toward future purchases and help build long-term relationships.
- 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 show them your value. (This reward is especially attractive in B2B SaaS referral programs, where swag or cash back may not be as attractive.)
- Branded swag: If your SaaS has a unique brand and strong customer base, branded swag is a great incentive that will build even more brand awareness. Swag is also good for its many options. Users can start by earning a sticker, then a mug, and then a monetary reward. Keep in mind, users might not want all their rewards to be branded swag. Instead, try running a special giveaway promotion as a fun way to mix things up for your most loyal users.
- Unlock features or upgrades: To increase the odds of users upgrading their plan, you have to pull back the curtains a little and let them have access to all of the bells and whistles. By offering features and upgrades as a “reward,” you’re also positioning your offer as something of high value.
Once you’ve decided on an incentive, it’s time to decide on your reward structure. A reward structure basically covers who will get the reward, and when they will get it.
For best results, I recommend using either a dual-sided or cumulative program. Dual-sided incentives reward both parties – current users and referrals.
Cumulative incentives give users the opportunity to earn cash, credit, or points for every referral they bring in. The draw of a big payday is a great motivator for users to share with as many people as they can.
No matter what type of reward structure you choose, make sure your users are automatically rewarded. Don’t make them wait to receive their cash or upgrade. And if they’ve earned swag, send them a notification that their reward is on its way.
4. Consider offering a SaaS referral fee
Maybe your users will be more motivated by a referral fee. A SaaS referral fee is commission paid to the program participant for every new user they bring to your company. Unlike a cash incentive, which is typically a fixed amount for every referral, a referral fee is a percentage of the total sale.
SaaS referral fees can range from 5-50%, depending on the size of your business, your target customer, and whether you want to offer the commission in tiers (i.e., 10% for every lead, 20% for every sale).
5. Make it quick and easy for users to share
A major factor in a referral program is to make the referral process as easy as possible. Provide users with multiple ways to share your offer, including email, social media channels, and SMS. You can also create a unique referral link for every user who joins your SaaS referral program so they can send it however is most convenient for them.
Remember that you’re asking your customers a favor by spreading the word about your SaaS. The more time and effort it takes to send a referral, the more likely they’ll get frustrated and bounce. The fewer steps, the better.
- Referring someone should only take one or two clicks
- Create clean, concise messaging that’s easy to understand
- Build referral landing pages (where users sign up for your program) with all the important program information
- Provide ready-to-use templates and messaging that users can send right away
One of the reasons why many popular referral programs have gone viral is because they were so easy to use. Think about Airbnb or Uber.
- In those referral programs, referrers simply had to click a button, and a custom link will generate with their code with multiple options to share.
- Most programs already filled in referral messaging, so users did’t have to waste time writing their own message.
6. Promote your SaaS referral program
Now that you have your key pieces in place, it’s time to promote your program. Your referral program should be easy to find. A great place to start is your website. Don’t be afraid to put your offer above the fold on your homepage.
If that seems like a bit much, you can also promote your offer in your navigation bar or use pop-ups to attract users.
Another place to promote your SaaS referral program is right 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. You’re looking for those “aha” moments when engagement is high and users see value with your service.
Another highly effective place to promote in on your other media channels. Add the referral program to your email newsletter and reach your entire user base in one fell swoop. Or post about it on social media to capture a wider targeted audience.
And of course, don’t be afraid to reach out directly to your best customers. Send each one a personal note thanking them for their loyalty and inviting them to extend the relationship.
7. Track ROI with SaaS referral software
Whether you build your program in-house or use a dedicated SaaS referral software, it’s important to track, test, analyze, and optimize your program.
How many invited users joined your SaaS referral program? What channels are most used to share with others?
Marketers need to keep track of all this data to know if your referral program is working or not, what to improve, and to 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’re spending on rewards, plus the cost of running the program
- Your revenue is how much you’re gaining in sales
If your referral revenue exceeds your customer acquisition cost (CAC), then you’re getting a positive ROI on your SaaS referral program.
This should guide your decision about any next steps you want to take in your referral marketing strategy.
Thankfully, there’s a lot of good SaaS referral software (like ours at Referral Rock!) that makes it easier than ever to create, automate, and customize your program in minutes. These tools also provide you with in-depth analytics and reporting to optimize your campaign.
9 best SaaS referral program examples
By now, I’m sure you’ve thought of a few ideas to try out. But in case you need more inspiration, here are some examples of well-executed SaaS referral programs. We dig into them in detail to explain exactly what makes them stand out.
Trello is a collaboration platform to help you keep all your tasks on track. At a quick glance, you can see who’s working on what, what work is being done, and where someone is at in the process.
Trello’s referral program uses a simple cumulative structure: When you refer a friend who signs up, you get a free month of Trello Gold (their premium plan). You can refer up to twelve friends. That’s a whole year of Gold for free!
What makes Trello’s referral program so effective? If you look at how they explain their program, you discover they use encouraging messages (“adding collaborators to your boards” and “start collecting free gold”) that speaks the language of their users.
Plus, not many users knew about Trello Gold. The referral program and reward itself also helped promote the company’s premium plan, introducing users to the additional features and further converting them into higher paying customers.
As you can see in this B2B SaaS referral program example, having a good product users already love is a good sign they’ll be willing to share it with others.
Evernote is a cloud-based SaaS that take notes, organizes files, and invites collaboration with others – all in one secure place.
The Evernote referral program is based on a points system to help attract more referrals. Your first three referrals earns 10 points each, which is equal to three months of Premium. And if your referral converts to Premium, you earn five more points.
Evernote did a great job of laying out its program in a clear and simple way. The sharing process is explained in three short paragraphs. Plus, but using the software as an incentive, Evernote was able to drive down costs and build customer loyalty.
Notion aims to solve the common problem of a cluttered desktop. By consolidating the common features of our favorite tools into a single, minimal workspace, you don’t have to resort to opening all those multiple tabs.
The goal of the Notion referral program is to earn enough credits to cover the cost of a paid Notion plan. When someone signs up using your unique referral link, you earn $5 credit and the referral receives $10 credit toward a paid Notion plan.
Users can also earn more credit by completing simple tasks to make Notion more productive:
- $5 off your Notion plan 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 customer loyalty.
Notion also does a great job of laying out their reward structure, providing a robust FAQ section, and making their program as transparent as possible to build trust with new users.
Shoeboxed is perfect for freelancers and contractors looking for a way to track their business expenses. The platform makes it easy to scan receipts using a mobile app or e-receipt reader. And for less tech-savvy users, it even offers prepaid mail-in envelopes.
The Shoeboxed referral program uses a dual incentive model to attract more customer engagement. When you refer a friend who signs up for a premium plan, you both will receive 10% off of your monthly payment. What makes this B2B SaaS referral 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 giving a quick rundown of the referral bonus and sharing options.
You want to make your referral program as easy to find as possible, and Shoeboxed does a great job at just that.
Zoom is a cloud-based video conferencing platform 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 the platform to your personal network.
However, to create a sense of urgency, there’s a time limit for redeeming your reward. When you share your referral link, your referral has 30 days to purchase a Zoom plan for you to receive your referral 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 activities, view pending points, and redeem your points for cash or gift cards
Postcron helps 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 pots, photos, videos, carousels, and stories on Facebook, Instagram, Pinterest, Twitter, and LinkedIn.
With Postcron’s referral program, you can get a free month for every new user you refer (who signs up for a paid plan). The new user also gets their first month free. And if they renew their subscription, you get another free month too.
Airtable is a collaboration tool that allows you to organize anything, anywhere. It positions itself as part-spreadsheet, part-database, with functionalities that enable teams to stay organized and get things done.
Airtable’s platform is broken up into bases. For every referral that signs up, you receive a $10 credit that 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.
Drift provides a modern buying experience for potential customers, generating more qualified leads and dramatically accelerating the sales cycle. The platform enables users to build chatbots and conversation flows in minutes, with absolutely no code.
While most of the incentives we’ve covered have either been discounts, cash, or credit, Drift’s referral program uses swag to drive referrals.
- One referral gets you a special edition Adidas jacket and sticker pack
- Five referrals will land you an all-access pass to Hypergrowth’s conference
- Ten referrals gets you a free lunch with Drift’s founders, David Cancel and Elias Torres
By offering unique products geared towards their user base, Drift does a great job standing out with its B2B SaaS referral program. These types of fun rewards might not work for every brand, but I highly recommend testing it out if you have some leftover swag 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.
But Dropbox didn’t do anything crazy. 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 16 GB of bonus space.
In a time where no one else was really thinking about referral marketing, Dropbox was able to utilize their existing user base and bypass other more expensive marketing channels. The numbers speak for themselves:
- Dropbox doubled their growth every three months
- In just one month, users sent out 23 million referrals
- 3,900% total growth in registered users over 15 months
There you have it. If you’re starting a SaaS referral program, there are a few guidelines to get you started.
Your SaaS should have a service worth sharing to referred customers, an attractive incentive to motivate sharing, and a frictionless referral process.
It may also help to look at some of your competitors also offering a SaaS referral program. Take note of what they offer and how they promote their program. And of course, using referral software for your SaaS program can help streamline the entire process and give you a lot of data and insight on how you’re doing.
Stick to the guidelines and draw insight from SaaS referral examples above, and you’re well on your way to running a SaaS referral program that stands out from the rest.