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 a trusted business partner refers software, 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?
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 convince their friends to make a purchase.
For example, the collaboration tool Airtable lets brand advocates earn $10 credit, which they can use to 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 a 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 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? If 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 that 78 percent of B2B marketers state that referrals lead to good or excellent leads. In addition, 60 percent 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 study to determine how customers will likely refer your software to others. You can also ask questions about customer satisfaction to identify whether people are satisfied with your products or services.
- Read customer reviews: Review positive and negative customer reviews to identify your business’s strengths and weaknesses. Pay attention to negative comments, especially if they’re consistent. By working on these flaws, you can make your business more likable.
- Look at your customer retention rate: The success of your referral program will depend on the brand advocates or people who 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 eight 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 must consider a brand advocate's thoughts on your referral rewards.
SaaS companies can choose from many incentives. The most common types are a free subscription month, cash, a 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. Ninety-three percent 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, they just need to keep referring their friends.
Efectivo
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 to, the more money you can receive. Like a salesperson, you receive a commission for every deal you can close.
Custom Rewards
Custom rewards can quickly 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 to create their referral program from scratch. But if you want to save time, money, and resources, you can also opt for referral program software.
The best part? You can integrate it into your website and build your own referral program within minutes.
You need only create an 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. Then, you can 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 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 links.
There are also social media buttons and an email button that lets 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 instantly.
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 can 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 will be aware of the referral program's perks and incentives.
Project management tool Shortcut (formerly Clubhouse) launched its referral program 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 to 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 rewrite 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 ensuring you have a valuable product worth discussing. Once you have that, you only need compelling incentive and referral program software to create your referral program.
For the best results, generate publicity for your referral program. Send referral emails, create a dedicated landing page, and post on social media.
I hope these tips will help you create a successful SaaS referral program. We’ve also included referral programs from SaaS companies to inspire your own.
