11 Referral Program Ideas For Practical SaaS Founders

You know the feeling. That momentary jolt of happiness and excitement when you hear about a product from a friend and then try it out yourself. We’ve all been there, and it’s no coincidence.

Referral programs are one of the most effective ways to market your product. Not only are they incredibly cost-effective, but they also tap into the power of social proof and word-of-mouth marketing. 

If you’re looking to start a referral program for your software company, here are 11 ideas to get you started.

1. Start at the End

Yes, you read that correctly. The best way to start crafting your referral program is by thinking about your end goal. What do you want your referral program to accomplish?

• Do you want to increase brand awareness?
• Drive more traffic to your website?
• Generate more leads and sales?

Your goal will dictate the type of program you need and the compensation you offer for referrals.

For instance, offering monetary compensation wouldn’t be ideal if your goal is to increase free trials. Without reinvesting profits, you’ll be quickly out of cash to keep your referral program going.

A discount, more usage credits, or even an entry into a contest might be better alternatives in this case.

Of course, there’s always an exception to the rule. Dropbox is an excellent example of a company that has driven incredible growth with a referral program that offers cash rewards.

Ultimately, it all comes down to knowing your numbers and what you can afford to give away.

2. Make It Worthwhile

If you want customers to make referrals, you must give them a reason. Make sure your referral program offers valuable rewards to your target audience.

For example, if you’re offering enterprise-level solutions with a long sales cycle, a percentage of the deal might be more enticing than a one-time discount.

Your compensation must be fair and in line with the perceived value of your product. Offering too much might seem suspicious and turn people off while providing too little won’t give referrals enough incentive to bother.

A rule of thumb is to offer at least 10% of the product’s value, but this will vary depending on your industry and pricing. You’ll need to assess what’s feasible and attractive to your audience.

A few ideas to start might include:

• Launch a test referral campaign with different reward structures to see what works best.
• Conduct customer surveys to get feedback on what type of rewards they would find most valuable.
• Interview past customers who have made referrals to find out what drove them to do so.

Ultimately, it’s all about offering something that will make a difference to your customers without breaking the bank.

3. Keep It Simple

The best referral programs are always the simplest. The easier it is for customers to refer to your product, the more likely they’ll be to do so.

Instead of making customers jump through hoops, make the referral process as straightforward as possible. The fewer steps involved in the process, the better.

A great way to do this is to use a referral link. You can track referrals and ensure that customers are properly compensated for them.

With Reditus, for instance, creating and sharing referral links is pretty straightforward. You can provide referrals with a link to sign up, and they’ll be automatically tracked in our system, making it easy for you to track who’s making referrals and how much they’re owed.

This is an example of how you can use technology to simplify the referral process for everyone involved. The primary goal is to remove the complexity from the equation and make it easy for customers to make referrals.

4. Promote, Promote, Promote

Your referral program won’t amount to much if no one knows about it. Make sure you let your customers and target audience know that you have a referral program and how it works.

There are a few ways to do this:

• Add a banner or pop-up on your website or landing pages: This is an effective way to capture attention and get people to learn more about your referral program.
• Include information about your referral program in your email signature: A great way to promote it is to include a link in your email signature. This way, everyone you correspond with will be reminded of your referral program every time they see your signature.
• Mention it in customer service communications: If you have a customer service team, ensure they promote your referral program to customers. This is a great way to get the word out about your referral program and generate more leads.

You can also promote your referral program through social media (e.g. LinkedIn, Facebook), SEO, paid advertising, podcasts, marketing campaigns, and other marketing channels.

Dropbox, for example, ran a very successful referral program that was promoted through various channels. They even went as far as creating a dedicated landing page for their referral program, which was very effective in getting people to sign up.

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The key is to get creative and promote your referral program through as many channels as possible. The more people you can reach, the more likely you are to generate referrals. This is how affiliate marketing works.

5. Offer Free Products and Swag

Who doesn’t love free stuff? Offering branded merchandise is a great way to incentivize your customer base to make referrals. If you have the budget for it, you can offer customers free swag for every referred customer they bring.

This doesn’t have to be expensive. You can give away t-shirts, mugs, pens, gift cards, and other promotional items with your brand logo.

The Hustle, a popular business newsletter, is an excellent example.

When you subscribe to The Hustle, you’re given the option to refer friends in exchange for free swag. For every friend you refer, you can get t-shirts, stickers, and other branded merchandise.

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You can even win the opportunity to meet with Sam Parr, the former CEO of The Hustle. This is an excellent way to incentive customers and gets them to promote your brand, boost customer acquisition, decrease churn rate, and increase customers’ lifetime value.

Instead of just offering referral rewards, The Hustle goes the extra mile by offering unique experiences that money can’t buy. This is a great way to make your referral program stand out.

6. Offer Exciting Discounts

Discounts are another great way to incentivize customers to make referrals. You as a founder/co-founder can offer referral discounts on your products and services or even partner with other businesses to offer discounts on their products and services.

For example, you can offer a 10% discount to customers for every referral they make. Or, you can partner with another business and offer a 2-for-1 deal on their products or services.

Take it a step further and offer a tiered discount system, where customers can get progressively more significant discounts for making more referrals. This will encourage customers to make even more referrals, driving more business your way.

Some other ideas might include:

• A discount for customers who refer a certain number of friends within a given timeframe.
• A loyalty program where customers earn points for referrals which you can redeem for discounts or other prizes.
• A “friends and family” discount that customers can share with their referrals.

The sky’s the limit when it comes to referral discounts. Get creative and create a discount that will excite your customers and encourage them to make referrals.

7. Run a Contest

People love contests and giveaways. They’re a great way to get people talking about your product, and they can be a powerful tool for driving sign-ups and referrals.

Chick-fil-A does an annual “Cow Appreciation Day” contest that offers a free entree to anyone who comes to the restaurant dressed as a cow. The company also partners with schools, small businesses, and organizations to do smaller giveaways.

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This is a remarkable SaaS marketing strategy that has helped Chick-fil-A become one of the most successful fast food chains in the country.

Contests and giveaways tap into people’s natural desire to win. They create a sense of urgency and excitement that can prompt people to take action.

And while they may require a bit more effort to set up, they can be well worth the investment.

To successfully launch a contest or giveaway, start by coming up with a prize that will appeal to your target audience. This step is vital – the prize should be something that people want. Otherwise, you’re likely to end up with many people entering the contest but few referrals.

Next, create some simple rules for the contest or giveaway. For example, you might require people to refer two friends to participate.

Finally, promote the contest or giveaway on your website and social media channels. You can also reach out to influencers and ask them to help spread the word.

For example, if you’re giving away a free year of your software, you could reach out to famous bloggers in your industry and ask them to write about the contest.

You might even consider running a contest or giveaway with a launch or other major event. This can help you maximize the impact of your promotion.

8. Leverage Social Proof

Social proof is the psychological phenomenon that occurs when people take cues from others to make decisions.

In other words, if we see that other people are using a product or service, we’re more likely to use it ourselves.

This phenomenon is often referred to as “herd mentality” or “monkey see, monkey do.”

And it explains why testimonials and reviews are so powerful.

If you want to leverage social proof to drive referrals, consider adding testimonials or customer reviews to your website. You can also feature loyal customer stories on your blog or social media channels.

Make sure to include a call-to-action with each testimonial or review, such as “Sign up for a free trial” or “Refer a friend and get $10 off.” Doing so will make it easy for people to take action and engage more with your potential customers.

9. Provide Exclusive Content or Access

People love feeling like they’re part of an exclusive club. And you can use this to your advantage by providing exclusive content or access to people who refer others to your product.

For instance, you could give people who refer three friends access to a beta version of your product. Or you could give them early access to new features or content.

You can even launch an exclusive newsletter or magazine for people who refer others to your product. This is a great way to keep people engaged and encourage them to refer more friends.

Instead of offering exclusive content or access to everyone who refers a friend, you could also consider launching a referral program with tiers.

For example, you could give people who refer five friends a free month of your service. And people who refer ten friends could get two free months.

This type of program can be a great way to incentivize people to refer more friends. And it can help you attract high-quality referrals.

10. Tap Into Monetary Incentives

This one might be a no-brainer, but it’s worth mentioning. Offering monetary incentives is a great way to encourage people to refer others to your product.

For example, you could give people a $10 credit for every friend they refer. Or you could offer a percentage of the sale, such as a 10% commission.

Again, just ensure that the monetary incentives you offer are worth people’s time and effort. Otherwise, you’re likely to end up with many low-quality referrals.

11. Use a Referral Management Platform

Consider using referral management software to automate and streamline your referral program.

Referral management software can help you keep track of referrals, send automated emails and notifications, and even offer incentives.

With referral management software, you can also track the performance of your program, getting valuable insights to optimize your process and improve your results. 

Reditus, for example, is a great option for companies that want to launch a referral program. Reditus offers a wide range of features, including:

• Partner management: Keep track of your affiliates and partners in one place.
• Referral tracking: See which partners are generating the most referrals.
• Payment processing: Pay affiliates and partners quickly and easily.
• Analytics: Get insights into your referral program’s performance.
• Referral marketplace: Get your program listed in the Reditus referral marketplace.

Besides, Reditus's interface is simple, so you don't need a degree in computer science to figure it out. Even if you've never used referral software before, you should be able to get the hang of it quickly.

To see for yourself, you can create a free account and explore the features. It's a great way to see if Reditus is a good fit for your business.

Referral Marketing FAQs

What is a SaaS referral program?

A SaaS referral program is a well-designed initiative that encourages existing customers to refer new users to a particular B2B SaaS platform. By incentivizing referrals, startups can tap into the power of word-of-mouth marketing to acquire new customers. This strategy not only drives growth but also fosters loyalty among existing user base, as they become brand advocates and reap rewards for their recommendations.

What are the advantages of a customer referral program?

One of the most significant advantages of implementing a SaaS referral program is its positive impact on conversion rates. Referral leads tend to convert at a higher rate compared to other acquisition channels. Why? The trust and credibility established between the referrer and the potential new user significantly increase the likelihood of a successful conversion. These warm leads arrive with a pre-existing interest in the SaaS product or service, making them more receptive to conversion efforts.

What Makes a Good Referral Program for Your SaaS?

A good referral program should be easy to use, provide a clear incentive for customers to refer their friends and family, and be tracked and managed effectively.

To make a successful referral program, it’s essential to consider the following:

• Make it easy to refer: Make it easy and convenient for customers to refer their friends and family by providing simple and clear instructions.
• Offer an incentive: Offer a meaningful reward to both the referrer and the referred person. This could be a discount, free service, or other bonuses.
• Track and manage effectively: Make sure you have a tracking system to measure your referral program’s success. Also, ensure that you can manage the referrals efficiently.

By taking the time to consider these factors, you can create a successful referral program that will bring new customers to your SaaS business.

What are the 4 types of referrals?

There are four common types of referral programs:

• Cash rewards: Customers are rewarded with cash for referring new customers.
• Discounts or free gifts: Customers can receive discounts or gifts for referring new customers.
• Point-based rewards: Customers are rewarded with points that can be redeemed for prizes.
• Referral links: Customers can share referral links with their contacts to earn rewards.

What is a good referral incentive?

A good referral incentive should be meaningful to both the referrer and the person being referred. It could be a discount, free service, or other rewards that both parties would find attractive. It should also be easy to understand and straightforward for customers to take advantage of.

How do you build a strong referral program?

Building a solid referral program requires careful planning and execution. The critical elements of a successful referral program include:

• Setting clear objectives: Establishing the goals and objectives of the referral program will help ensure that it is successful.
• Creating an attractive incentive: Offering an appealing incentive that is meaningful to both the referrer and the referred person is critical to gaining referrals.
• Creating promotional materials: Developing promotional materials such as emails, banners, and social media posts will help spread the word about the referral program.
• Tracking and managing effectively: Tracking the referral program’s success is essential for ensuring it is running smoothly. Having the capacity to manage referrals efficiently is also important.
• Offering rewards: Rewarding customers for referring new customers will help encourage them to keep referring.

Ready To Start a Referral Program for Your SaaS Company?

Referral programs can be a great way to drive growth for your business. And there are several different ways you can set up a referral program.

To get started, consider these 11 referral program ideas. And be sure to tap into referral management software to make it easy to launch and manage your program.

Reditus can help you launch a referral program quickly and easily. And it offers a wide range of features to help you manage and optimize your referral program.

Create a free account and get started today.

Meet the author

Joran Hofman

Back in 2020 I was an affiliate for 80+ SaaS tools and I was generating an average of 30k in organic visits each month with my site. Due to the issues I experienced with the current affiliate management software tools, it never resulted in the passive income I was hoping for. Many clunky affiliate management tools lost me probably more than $20,000+ in affiliate revenue. So I decided to build my own software with a high focus on the affiliates, as in the end, they generate more money for SaaS companies.