Do you use referral programs to get new users?

Question

Referrals from friends and people you trust must be the most convincing arguments to signing up for a product.
Yet, referral programs don't work for everybody. I hear that in SaaS they hardly work at all.
Does your product have a referral program? What's your experience from it?

Tatiana Vdovychenko · Accepted Answer

Absolutely, referral programs can be a game-changer! While they might not fit every SaaS model, many companies have found great success by incentivizing users to bring in friends. For instance, Dropbox grew rapidly by offering extra storage for both the referrer and the new user. Here is a video where my colleague from JetSoftPro, a software development service, shares our insights from working with SaaS projects in particular. https://youtu.be/mQxsyL_BIOY

Samuel Parker · Answer

Referral programs can definitely help drive growth if executed well. We use one at my SaaS startup and have seen solid results. The key is offering compelling rewards for both the referrer and referee. Tools like Viral Loops and GrowSurf make it easier to set up referral campaigns without a ton of dev work. Worth testing out to see if it moves the needle for your business!

Doğa Armangil · Answer

If a service has network effects, then it's often not necessary to compensate a user who brings in new users.

For example 𝙳𝚛𝚘𝚙𝚋𝚘𝚡 doesn't have network effects so it understandably has to compensate the referrer (plus the new user in their case).

On the other hand, 𝙵𝚊𝚌𝚎𝚋𝚘𝚘𝚔 does have network effects, so all it needs is to make it easy for users to bring in their friends, no compensation needed.

Also, to my knowledge referral programs are unheard of when the customers are organisations rather than the end-users themselves. In these B2B cases, customers testimonials and success stories are frequently used instead for customer acquisition. (Supply chain networks might be an exception to this rule, but I am unfamiliar with those.)

For my part, I don't plan on putting in place a referral program, because my Qworum.net platform has networks effects and targets organisations rather the end-users.

Amanda Nicole Harris · Answer

Referral programs can definitely supercharge growth for the right kind of SaaS! A well-designed program incentivizes existing happy users to bring in their network. The key is offering appealing rewards to both the referrer and referee that tie into your product's core value prop. For example, Dropbox's famous program offered extra storage to both parties. Uber gave ride credits. But it's not one-size-fits-all - gotta tailor it to your audience and product. Overall though, when done right, referrals can be an insanely efficient acquisition channel with great ROI since the new users come pre-vetted by your existing base. Worth testing for most SaaS IMO to see if it moves the needle!

Tyler · Answer

Referral programs can be an effective way to attract new users by leveraging existing customers to spread the word about a product or service. These programs typically offer incentives, such as discounts, rewards, or exclusive benefits, to both the referrer and the new user Ehsaas Program, creating a win-win situation.

Derrick · Answer

Great point about referrals! Word-of-mouth recommendations are incredibly powerful. mcdvoice Our product does have a referral program, and we've had mixed results. Initially, we saw a surge in referrals when we first launched the program, but over time, the momentum slowed down. We realized that our users weren't inherently motivated to refer friends. To revamp our approach, we: Simplified the referral process. Introduced incentives (discounts, free trials, etc.). Highlighted user success stories. Engaged with our community through social media. While our referral program still isn't our primary acquisition channel, we've seen a steady increase in referrals from our most loyal users. Key takeaways: Referral programs require ongoing optimization. Incentives alone may not sustain engagement. Community building and storytelling are crucial. In SaaS, referral programs might not work for everyone due to: High customer acquisition costs. Complex sales cycles. Low customer lifetime value. However, for products with strong network effects or viral potential, referrals can be a game-changer.

Liam Patrick O'Connor · Answer

Referral programs can definitely work wonders for user growth when done right. The key is offering incentives that are genuinely enticing for both the referrer and the new user. Dropbox's example of bonus storage is a classic. I've also seen effective programs that give discounts, premium features, or account credits. Just make sure the rewards align with your product's value prop and target audience. And don't forget to A/B test!

Do you use referral programs to get new users?

Replies