How to set up a winning SaaS referral program to boost sales
The power of referral programs isn’t solely confined to retail businesses. Tech companies and startups in the SaaS industry can also boost their leads through word-of-mouth referrals.
Unsurprisingly, when software is referred by a trusted business partner, thought leader or colleague, we’re more likely to believe it. Because they’re buyers like us, we think their assessment is more trustworthy than sponsored posts and promotions.
So how can you take advantage of SaaS referral programs? In this blog post, we’ll teach you everything you need to know.
What is a referral program?
Referrals occur when people in our network recommend a product or service.
While referrals can happen organically, businesses can also automate the process through a referral program.
For starters, referral programs incentivize people to refer a business through rewards. Brand advocates can claim discounts, freebies or a free subscription month, if they manage to convince their friends to make a purchase.
For example, collaboration tool Airtable lets brand advocates earn $10 credit that they can use to get an upgrade to their premium plan. They receive their reward once their referred friend signs up and verifies their email.
How to set-up a winning SaaS referral program
Of course, launching a referral program is a lot harder than it sounds. To set you up for success, here’s the step-by-step guide to starting your own.
1. Have a valuable SaaS product
Naturally, people will only refer to SaaS products and services that they like. No one will recommend a business, especially if they had a relatively bad experience.
As such, it’s important to ensure that your business is referable. Think about what your product brings to the table. Why do people love your business? Why would they refer to your brand? As long as you have a good customer experience, a few referrals will come your way.
Not surprisingly, people like to talk about positive consumer experiences, regardless of their industry.
Forbes reports 78% of B2B marketers state that referrals lead to good or excellent leads. In addition, 60% of marketers vouch that referral programs enable them to generate a high volume of leads.
Now how can you identify whether your products are valuable enough? Here’s what you need to do.
- Launch a survey or interview: Conduct a survey to determine the likelihood that customers will refer your software to others. You can also ask questions related to customer satisfaction to identify whether people are satisfied with the products or services that you offer.
- Read customer reviews: Take a look at positive and negative customer reviews to identify your businesses’ strengths and weaknesses. Pay attention to negative comments, especially if they’re consistent. By working on these flaws, you can make your business more likeable.
- Look at your customer retention rate: The success of your referral program will depend on the brand advocates or people that have tried and tested your product. Do you have enough brand advocates willing to make a referral? Your customer retention rate has the answers. (By the way, in case you need some help with improving customer retention, check out these 8 strategies)
2. Have a compelling incentive
“What’s in it for me?” The incentives you pick will determine whether brand advocates will be motivated to sign-up and participate. Besides the budget, you also have to consider a brand advocate's thoughts on your referral rewards.
There are a lot of incentives SaaS companies can choose from. The most common types are a free subscription month, cash or discount or store credit.
Now, which is best for your SaaS business? Here’s our take on choosing the ideal referral program incentive for your business:
Free subscription month
A free subscription month is best for SaaS companies with subscription-based services. It’s relatively cost-effective, easy to implement, and practical. Customers want to enjoy a product or service they love for free, even if it’s just for a temporary period.
Trello’s referral program encourages users to recommend their friends. In exchange, they can earn a month of Trello Gold for free.
Discount or store credit
A small discount or store credit can go a long way in tempting budget conscious customers. In fact, 93% of shoppers use coupons or discount codes because they want a good deal.
Notion's referral program lets users earn store credits worth $5. They can use this money to cover the cost of their premium plan. If they want to enjoy the product free of charge, all they need to do is to keep referring their friends.
Cash is a practical reward that people can use anytime and anywhere. It’s also highly scalable. When you refer more friends, you earn more money.
Cloud software company Blackbaud lets brand advocates receive a $100 prepaid gift card for referring someone. The more people you can successfully refer, the more money you can receive. Much like a salesperson, you receive a commission for every deal that you can close.
Custom rewards can easily motivate your most loyal brand advocates. After all, these are items that they won’t find anywhere else.
Revenue acceleration platform Drift rewards customers with exclusive prizes. Because their rewards are priceless, brand advocates feel that the reward is special and genuine.
3. Use a referral program software
SaaS companies may have the tech talent necessary to create their own referral program from scratch. But if you want to save on time, money, and resources you can also opt for referral program software.
The best part? You can integrate it to your website and build your own referral program within minutes.
All you need to do is to create your own account and pick your referral program incentives. Upon installation, most automation tools or referral program software can automate the entire referral process by distributing rewards and sending referral emails to customers and their referred friends. All you need to do is to sit back and relax.
4. Market your referral program
Nobody will join your referral program, if they don’t know it exists. Thus, you’ll have to prepare promotional materials and campaigns to boost awareness in your customer base.
Here are some ways you can market your SaaS referral program using different marketing channels:
Send a referral email
Sending a referral email is one of the fastest and most efficient ways to announce your referral program to your customer base.
For the best results, it should have the basic instructions and a unique referral link that customers can use to refer their friends. If the program is a bit complicated, you should send a link to your FAQ page or referral program landing page so interested customers can learn what they want to know.
For example, Webflow's referral program encourages brand advocates to share their unique referral link.
There are also social media buttons and an email button which let customers share and message their friends with the click of a button.
Create a referral program landing page
A referral program landing page will help interested brand advocates understand everything they need to know about the referral program. You can make it more user-friendly and attractive with the help of popular landing page builders.
Ideally, this landing page should have referral program instructions and a sign-up form that lets brand advocates join in an instant.
You can send your audience here in a variety of ways including social media, live streams, from your blog posts, email marketing, or even as a call to action within webinars you host assuming you have webinar software that allows you to do that.
For example, Evernote's referral program landing page lets users earn points that they can use to get three months of premium membership. By gamifying the referral process and requiring brand advocates to refer three friends, they are able to get more referrals.
Evernote’s referral program is very straightforward. This is crucial to motivate customers to complete the entire referral process. Otherwise, you’ll lose out on opportunities for customer acquisition.
Spread the word on social media
For extra publicity, create a social media campaign for your referral program. That way, more customers are aware about the referral program perks and incentives.
Project management tool Shortcut (formerly Clubhouse) announced their referral program launch on Twitter. While it’s not flashy, it could still pique the interest of loyal subscribers looking to save money.
Include a noticeable CTA
Whether you’re creating a referral program landing page or email, it’s best to have a noticeable CTA button. That way, users know the next steps essential in joining the referral program or recommending their friends.
Google Workspace has a dedicated referral program landing page with clear and concise details about the referral program rewards. The blue “Join now” CTA button, which perfectly stands out from the white background, is easily noticeable.
Ask your customers for a referral
Have your sales, support, or customer success reps ask your customers for a referral. Especially in B2B sales, this often yields high-value leads for your sales team to reach out to. Make it as easy as possible for your customers to refer you—one way to do that is to simply prewrite a referral email that they can send to their contact for them.
Create a winning SaaS referral program to boost sales
A well-designed SaaS referral program can bolster your customer acquisition process.
The first step is to ensure that you have a valuable product worth talking about. As long as you have that, all you need to do is to have a compelling incentive and a referral program software to create your own referral program.
For the best results, generate publicity for your referral program. Send referral emails, create a dedicated landing page and create social media posts to spread the word.
Here's hoping these tips will help you create a successful SaaS referral program. We’ve also included referral programs from SaaS companies to inspire your own.
About the author
Raúl Galera is the Chief Advocate at ReferralCandy, an app that allows ecommerce brands to set up and run customer referral programs.
ReferralCandy is the leading platform in terms of referral marketing for ecommerce brands. Founded over 10 years ago, ReferralCandy has helped over 30,000 brands leverage the power of word-of-mouth and turn their customer base into their marketing team.
Raúl has been leading ReferralCandy’s partnership efforts for the past five years, working alongside marketing agencies, media and tech companies.