How to Master SaaS Referral Programs: Your Comprehensive Guide

Are you looking for an easy and effective way to grow your business? 

By creating a SaaS referral program, you can incentivize your loyal fans to bring in high-quality leads that are likely to convert.

When this strategy works, it works. DropBox grew 3900% in 15 months thanks to an effective referral program.

But how do you get such great results from a referral program? What are some best practices you need to follow? As a SaaS SEO agency, we have worked with SaaS companies who have succeeded with their referral strategy. In this guide, we’ll break down the secrets for you.

What We'll Cover:

What is a SaaS Referral Program?

A SaaS referral program is a marketing strategy that engages and incentivizes existing customers to share your product with others. Through this sharing, you bring in an influx of new customers. 

This process works by providing the referrers a referral link or code, which they can share with friends, family, or colleagues via social media, email, or direct messaging.

Every time the referral is successful, the referrer (and sometimes also the referee) gets an incentive. Typically, this comes in the form of discounts, free upgrades or free content.

Here’s a closer look at DropBox’s strategy in action, which offered free extra storage for referrals. 

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The Benefits of SaaS Referral Programs

Instead of paying for expensive ad placements and investing in marketing campaigns that might not bring results, SaaS referral programs are a surefire way to keep your existing customers happy and build a strong user base. 

Here are three key benefits of adopting SaaS referral programs.

Low CAC (Customer Acquisition Cost)

As referral programs are a pay-for-performance marketing strategy, you only have to reward referrers when someone signs up for your free trial or monthly subscription.

You can lower your CAC by offering incentives that are at no cost to you, like free content, limited-time upgrades, or a free month of service.

Enhanced Loyalty

SaaS models put a lot of importance on customer lifetime value (CLV) and retention. You need users to stay with your business for a long time and renew their subscriptions.

Referred customers are more likely to stay with a brand than non-referred customers, and thus, you can increase loyalty. 

Brand Visibility

With fierce competition in every SaaS niche, you need to make your brand more visible. Referral programs encourage word-of-mouth marketing, which helps increase awareness and interest in your brand.

Add to that the exponential growth and visibility you can get when the referred person also goes ahead and refers your business to more people.

How to Start Your SaaS Referral Program?

Building a successful SaaS referral program is not that challenging. All you need to do is follow these five simple steps and best practices to get the most out of your referral strategy.

#1 Decide on Rewards

In real life, customers don’t refer your product just because they love it. You need to offer them compelling incentives to do the work for you.

You need to know your customers well to finalize the incentives you offer. Some of the most common incentives are discounts, a free month of subscription, an extension on the free trial, unlocking premium features or upgrades.

You will also have to decide whether to offer a one-sided reward structure (incentive to the referrer) or a two-sided reward structure (incentive to the referrer and the referred person).

Here’s how Fiverr offers a two-sided referral incentive.

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If you’re confused between cash or non-cash incentives, here’s a statistic that might help you: Non-cash incentives are 24% more effective than cash incentives at boosting referral performance.

#2 Craft Clear Guidelines

Nobody wants to read paragraphs of information to refer someone to your product. Instead, make the referral process as simple as possible. Here’s an example of a simple process from Bench.

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The reward is clearly outlined, and the testimonial below clearly shows how easy it is to refer people to Bench and gain incentives.

Here are some things your referral program landing page or email should have:

• A clear incentive
• Whether you’re offering incentives for every referral or successful referrals
• If there’s a limit on the number of bonuses you can earn
• The people who are eligible for referrals

You can check how your competitors outline their referral programs to ensure you provide users with a simple and seamless experience.

#3 Effective Implementation

Your referral program should integrate across various platforms, including websites, apps, or communication channels. You can do this in-house or with the help of referral software like Viral Loops, Referral Factory, or Referral Rock.

Whichever option you choose, ensure the implementation is smooth. If the user can’t share the link or code with their colleagues or friends, you might see low conversions even if you have done everything correctly.

You can A/B test your referral program landing pages to select the ones users find the most appealing. You can even launch a survey to find out how to optimize your program or remove existing errors and bugs.

#4 Promotion Strategy Development

You need to increase visibility and awareness to get the most out of your referral campaigns. Here are some ways to do that:

• Use pop-ups on your website or create landing pages accessible via your homepage footer.

• Send in-app messages to your customers. The timing is crucial, so send it when a user completes a task or reaches a milestone where their engagement is high.

• Post about it on social media and pin that post if you’re using platforms like Instagram.

• Promote it in your email footer or newsletters.

• Reach out directly to your customers, especially when you have resolved their problems or helped them use your tool more effectively.
  
  

Here’s an example from MailerLite where they promote the program in the email signature.

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#5 Tracking and Optimization

It’s important to test, track, and analyze your SaaS referral marketing program regularly. Here are some key metrics you can track to measure the effectiveness of your program:

• Number of referrers
• Number of referrals sent
• Number of referrals sent per referrer
• Percentage of customers who become referrers
• Conversion rate (percentage of customers who sign up via a referral)
• Click through rate 

You should also check if the cost of running a referral program is lower than the revenue you’re generating from it. If not, you must find out how to optimize your program or get more referrals and conversions. You can subscribe to certain tools that help you track these things.

Best Practices for Success

Like every SaaS marketing strategy, you need to adhere to certain best practices to make your program effective and successful. Here are three such practices you can implement.

Motivating Customers to Share

Your referral program is only successful when many customers know about it. You should utilize email and social media campaigns to generate awareness and showcase success stories to inspire trust. This helps remind customers about the program through targeted messages, ensuring it stays top of mind.

You can encourage more customers to share about your referral campaign and incentivize referrals by providing loyalty points, exclusive discounts, and freebies for the referrer and the new customer. Many companies use a tiered reward system to reach specific referral milestones and foster continuous engagement. 

Choosing Compelling Incentives

It’s common to offer incentives that other companies offer. But if you’re catering to specific audiences, such as B2B customers, you might want to choose incentives that appeal to them.

You can get creative with your reward system by experimenting with different incentives and finding the ones that bring the most results.

One great way is to offer your customers a free month of your premium plan. Once they start using it and realize the benefits of those upgraded features, they might be tempted to subscribe to it once their free month is over. This helps expand your user base and allows you to upsell to your existing customers.

Utilizing Tracking and Promotion

To track and promote your referral program, start by implementing robust analytics tools to monitor the performance of the program. Track key metrics such as referral conversion rates, the number of successful referrals, and customer engagement. You should also utilize unique referral links and codes to attribute conversions accurately. 

Promote the program across various channels, including your website, social media, and email newsletters. You must also communicate with your customer base through targeted campaigns, emphasizing the value of the referral program and any ongoing promotions. Many SaaS companies use gamification elements, like contests or leaderboards, to boost engagement.

Inspiring SaaS Referral Program Examples 

You might already have some great ideas to experiment with for your own referral program. Still, here are the four best SaaS referral programs to get you started.

Trello

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Trello is a Kanban-style list-making application that helps people manage their projects and productivity.

Referral program outline: Earn a free month of Trello gold by referring someone to the tool by sharing an invite or a unique referral link.

What we like about it:

• The process is simple and clear. They also don’t have lengthy paragraphs to explain their referral program. All the customer needs to do is use the link and get their incentive unlocked.
• They offer premium benefits, which act as a great incentive for free and basic plan users to move to the premium tiers.

Airtable

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Airtable is a collaboration tool that helps teams store, organize, and manage information with the familiarity of a spreadsheet.

Referral program outline: Refer someone and get $10 in credit towards any Airtable plan.

What we like about it:

• With their reward structure, customers can be motivated to refer more people and get more credit towards their paid plan.

• The page also shows the customer the credit they have earned and the people they have referred so they can keep track of their progress.

• The process is simple, with the customer only needing to enter the required email address or get the link.

LiveChat

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LiveChat is an online customer service software with help desk software, online chat, and web analytics capabilities.

Referral program outline: Refer someone and get $39 in credit to your LiveChat account.

What we like about it:

• They have outlined a three-step process so customers know how to earn the rewards.

• They also have an FAQ section at the end to answer common customer doubts.

• The SaaS business also allows users to check the status of their referrals, which allows for transparency in the process.

Zoom 

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Zoom is a communications tool that allows people to connect and collaborate from anywhere using an internet connection.

Referral program outline: Refer someone and earn points that you can convert into a gift card or a check.

What we like about it:

• Customers are given different ways to share referrals, i.e., via emails and social media.

• They also provide reward tracking where you can track activities, view pending points, and redeem points for gift cards or credit.

Build Your Referral Program Today

If you have customers who love your product and have stayed with your business for a long time, you should leverage the opportunity to get referrals from them.

Instead of having a haywire referral strategy where your sales team contacts each customer, you can create a successful referral program and promote it on your website, emails, or social profiles.

By following these tips in the article and getting inspired by some real-life referral programs, you’re all set to create one for your SaaS business.

If you need help with the landing page content or SEO, reach out to our experts at MADX.