Stagnancy is where most businesses suffer.
After a point, your potential customers need a suggestion to check your brand out.
What is a way to reach out to those potential customers and make your current customers happy?
The answer is: referral programs.
Let’s start then!
What is a SaaS Referral Program?
A SaaS referral program is not different from any other referral program, to be honest. The dynamics you can find in any other business’ referral program are valid here, too.
The primary motivation behind a SaaS referral program is to reward your current customers for acquiring new customers. This can be achieved through QR codes, invitation messages, or special links.
Note that brand awareness is key to successful word-of-mouth marketing. That’s what referral programs exist; to spread your brand recognition.
Why should you have a Referral and Loyalty Program?
Referral and loyalty programs are generally mentioned together. Although they both encourage the customers by rewarding them, referral and loyalty programs differ in their ultimate aims.
First, let’s just lay out the dynamics of the loyalty program.
In a typical loyalty program, your customer only makes a purchase, and you reward them for that specific purchase. The purpose of a loyalty program is to have a stronger bond between the customer and the brand. This will yield an increase in the sales rate.
Referral programs, on the other hand, are designed to acquire new customers via your current customers.
Your existing customers “lure” new customers via invitation. The outcome is according to the purpose – new customers.
For this article, I will focus on referral programs.
However, as one can infer from the previous two paragraphs, loyalty programs are another way of promoting your brand. Therefore, the only thing you have to do is decide whether a referral or a loyalty program suits you better.
5 SaaS Referral Program Examples
Now you know what a referral program is and why you need to have one. Hence, it is only logical to look at some examples in the industry.
Let’s see them, shall we?
Dropbox is one of the most known and used file hosting services. They were one of the trailblazers in the creation of referral programs. That’s why you can see them on every similar list.
Dropbox referral program offered an extra 500 MB of storage for every person you have invited. In this referral program, you could get up to 36 GB of additional storage, and every person who has accepted the invitation would get 500 MB, too.
This simple yet very effective idea has resulted in 3900% growth in 15 months.
Can you even imagine?
Evernote is a platform where you can take notes, organize them, and collaborate with your coworkers or friends. If you like doing research on the web, the chances are you know Evernote.
The cloud-based SaaS platform has a referral program that works wonders.
The process has three steps:
- First, you invite a person to use Evernote, and if they accept this invitation, you both get 10 points.
- The points you have can convert to premium membership – 10 points equal to 3 months of premium.
- And, if the person you have invited purchases premium, you get 5 points.
The point system is so simple and easy to understand that you can not resist the urge to invite another friend.
Sometimes, referral programs can be the savior of your brand at the initial stage. Uber is an excellent example of this.
Uber, as everyone knows, is an alternative to standard yellow cabs.
The idea has proven to be the best idea ever…
Doesn’t sitting in a stranger’s vehicle – who also does not have a taxi license – seem a bit disturbing?
The referral program came to the aid.
Since it is a mobile app, Uber integrated the referral program into its main menu so that the users could see their progress in the referral program.
Just imagine, every time you open the app you see two things: A bar and a text saying “free ride”.
To get the free ride, all you have to do is to invite people. After they set up an account, the ones you have invited also get free credits.
With this program, Uber surpassed the initial challenge with ease. Now, they are the biggest third-party transportation company in the world.
Canva is a graphic design platform that enables everyone to create beautiful images, social media posts, and more.
That’s why Canva contains lots of stock images, icons, etc., and a portion of them are exclusive to premium users. If you want to get these images without any payment, you can invite your friends and coworkers to Canva.
For every person who has registered to Canva via your invitation, you get a credit to use to get a stock image.
Although the “deal” might seem generic, timing is the important element here:
- The reminder tooltip for the referral program appears right after you create an image – just when you feel good and feel the success.
Our final example is Trello – a collaboration platform to track the tasks and manage them. The cumulative nature of Trello brings a program that is also cumulative.
The referral program has ties with Trello Gold – the premium version of Trello.
If you invite someone to Trello and they sign up, you will get one month of Trello Gold membership.
The maximum number of people you can invite to get Trello Gold is 12.
I guess one doesn’t need to be a math genius to see that you can use Trello Gold for free for a whole year.
The key point of Trello’s referral program is how they put the message:
- Encouraging tone and sentences help them to convince people to refer Trello to other people.
On a quick note, Trello gold wasn’t something people were familiar with before the referral program. Due to the referral program’s popularity, Trello Gold became more purchased by users.
Now you have seen the examples of what successful referral programs can accomplish.
However, I might need to be more direct:
What should you learn from these examples?
5 Key Steps to Create the Perfect Referral Program
This is a list where I’ll be more direct and explain how you can create a referral program to increase the number of active customers.
1- Accessibility is the Key
The general tendency for companies is to keep their referral programs a secret. However, you have to let everyone make referrals – even if they are not your brand’s customers. The aim here is to reach out to the maximum number of people.
Also, the referral process should be simple. If people feel it is not worth the effort, you will lose customers at the end of the day.
2- Timing is Significant
As we have seen in the Canva example, timing is another major factor in the success of your referral program. Imagine Canva did not capture the “happy moment” and instead showed the widget at the beginning of the creation process.
Who would refer to Canva? No one!
Both the feeling of success and the appropriate placement of the referral program are the things to which you should pay strict attention.
3- Reward People
You can see a referral program as a way of asking a favor. In this process, you owe them one, too. If you don’t adequately reward them, why would they do you a favor? There is no point in that. After all, they do not see you as their friend.
Hence, one can say that without any rewards there can not be a referral program. Or in other words, no pain no gain.
4- Both Sides Need a Reward
This and the entry before are the two sides of the same coin. A potential customer has to find something inviting in your brand. As long as they see you as just another company, you do not have a high chance to have a successful referral program.
Rewarding the people who are invited is what you should not see as a waste of money, on the contrary, it is a must of a referral program.
5- Know Your Brand, Know Your Customers
You should always keep in mind that there is a balance between your company and your customers. If your customers are divided into different customer types, their needs will be different from one another.
So, you should keep in mind how your brand is structured and what different types of customers might need from you.
Frequently Asked Questions
How much does a referral program cost?
You can calculate the costs by simply looking at the cost of the software, the person who will operate that software, and the cost of rewards – the backbone of any referral program.
What is a B2B Referral Program?
A B2B referral program is making your customers recommend you to their peers, then initiate communication with their sales team in order to get in contact.
How do you write a referral program?
In a referral program, you have to offer people products that otherwise they have to pay, create a bond between you and your customer, and finally have a clear marketing goal.