Despite ever-changing internet algorithms, word-of-mouth referrals remain powerful. In fact, 92% of consumers trust friends and family more than any ads. The SaaS industry is no different from this trend.
This blog will cover SaaS referral programs. It will also share strategies to acquire more prospects for your SaaS products.
However, before learning how to build referral programs, let's define them. Then, we'll look at some examples for clarity.
What is a SaaS Referral Program?
A SaaS referral program allows software companies to grow their customer base by offering rewards to existing users each time they refer the service to others.
SaaS products are cloud-based. So, users, including partners and affiliates, can easily access and share them. For example, you can easily promote tools like CRM software or project management solutions with a few clicks.
Users can share their unique referral code via direct messages or social media. They will earn rewards for successful referrals.
The right referral tracking tool helps users set up and run a successful, automated referral campaign. Tools like HubSpot, Zoho, and Salesforce work well.
A successful referral campaign can connect your business with sales-qualified leads. So, your SaaS business will never run out of potential clients.
Next, we will understand the different steps to create a SaaS referral program.
How to Build a SaaS Referral Program with 5 Steps
Understanding the significance of a SaaS referral program is just the beginning. To build a successful SaaS referral program, you must get the important steps right.
Let us take a look at the top 5 steps that facilitate the SaaS referral process.
Step 1. Research extensively on your target audience and market
The first and foremost step is to plan to save time and money through your referral program. This will help you in creating a SaaS referral program under budget constraints. Ensure that your business goals align with your existing customer base.
Furthermore, ask yourself ‘What is it you want from this referral program?’ "Do you want to grow or better retain customers?" Your answer will set the metrics to judge your referral program's success.
Hence, competitor research is prevalent among the best SaaS companies. They research the different incentives their competitors offer and the referral channels they use.
Example – Imagine you are in an industry that requires relationship building. Hence, you will be relying on super users who have been using your product for a while and know the pros and cons of it to refer it to their other friends. As a result, market research helps a lot in this case and the more you know, the better chances of a successful referral program are underway.
Step 2. Identify the target audience and individuals to sell to
Selling your product to the right audience is as important as researching the market. Social media has made influencer marketing very effective. It is a great way to reach a large audience for referral marketing.
Based on your target audience, your SaaS referral program will impact differently. Existing customers who are satisfied with your product do a decent job of referring your product to their peers. However, it is also important to specify the type of leads that you want through your referral program.
Specifying how the program functions and the rewards that the referee gains is important for SaaS businesses in their campaign. Industry influencers have a high customer base which is why your business can touch new heights if they like your product.
Example – Dropbox is a cloud storage platform. It is popular with students and business leaders who want to store files in the cloud. Hence, they sought high-quality leads that were users who invested long-term in their business. Their referral program offered each user storage space for every user they referred their tool to. This caused an overwhelming rise in their popularity.
Hence, the right target audience for your business program determines heavily the success rate of your referral program.
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Step 3. Pick a referral process to retain your referrals with
Once you have decided on your goals and target audience, the next step is to manage these referrals without turning them away. So how can you do that?
Remember, your customers can only refer your product to their peers and not convert them. Picking your product over every other business is their choice to make. You need to figure out how these referrals align with your sales funnel.
Creating an optimal strategy to retain these customers is a task in itself. Some referrals might focus more on emails and social media links. Others might go for different inbound marketing tactics. Some might even consider a hybrid ABM technique to become a loyal customer.
All of this depends on the customer itself. For enterprise customers, ABM marketing works best since it can handle big contracts conveniently. For SMB customers, ABM can be quite expensive. Hence, organic methods like content marketing, email marketing, and landing pages can help to convert them into clients.
Step 4. Prioritize incentives to display your referral rewards
The next step for a successful SaaS referral program is to reward your referrers. Give them incentives for their referrals. Referrers get rewards like referral fees, discounts, and cash back. They also get free upgrades, software credits, extended trials, and more.
Once you are done determining what the audience wants from your product, you also need to consider the revenue goals. Incentives can provide more value from the referral program if it is about unlocking new and better features.
After you find out what the audience wants from your product, consider the revenue goals. Hence, you can drive increased revenue with such offers in your referral program. Once you decide on the referral incentives, develop a reward model highlighting the ones who get the rewards and when.
Step 5. Promote and track the referral program rewards
Once you are done with incentives, the final step includes launching your program. A landing page helps users who can learn the details about your referral program. The page must highlight how the program works and offer an FAQ section that answers general questions regarding the program.
Your company website is an incredible place to promote your referral program. Make sure to link the landing page at your website footer. You can also set alerts to direct the user’s attention to the program once they have clicked on your website.
Use tools like Referral Candy and Mention Me to track your referral rewards. They can help you develop, automate, and monitor your referral programs. They can monitor links and leverage conversions. They spot conversion opportunities when paired with CRM software.
3 Best Tools to Create Effective SaaS Referral Programs
To develop highly efficient and convenient SaaS referral programs, let us take a look at the following tools.
Tool | Features | Best For |
---|---|---|
GrowSurf | AI-powered ideas and referral link generator | Startups and small teams |
Referral Hero | Advanced analytics and fraud detection | Large-scale SaaS companies |
Viral Loops | No-code templates and CRM integrations | Marketing-heavy SaaS products |
Let's take a look at a few referral software in detail that can help you set up your referral marketing programs.
1. Growsurf
Growsurf is a referral marketing software that helps product, engineering, and marketing teams launch a customer referral program in days. Users can conveniently set up their own customer referral programs in a flash.
Some of the features that Growsurf includes are:
- Referral program idea generator – Users can generate ideas based on the tool’s AI-powered algorithm that is based on industry-specific recommendations.
- Referral rewards library – Users can access a whole library of referral reward ideas that they can implement in their SaaS customer acquisition strategies.
- Referral link generator – Users can generate referral links for free to promote their brand/service through them by implementing them into their referral program.
2. Referral Hero
Another popular tool for successful referral programs, Referral Hero has been one of the best referral tools in the industry so far. They utilize an automated referral growth engine that helps them build referral programs with the same scale as Airbnb, PayPal, Uber, and hundreds of others.
Some of the features that Referral Hero displays are:
- Advocate dashboard – This feature helps users drag and drop the design elements for their SaaS brand and show the referral progress to their clients. This helps them to realize how close they are to unlocking their next reward.
- Advanced analytics – This feature allows users to track their progress and referral metrics along with the conversion and participation of the lead.
- Fraud detection – As the name suggests, this feature helps to safeguard your private data with its anti-fraud algorithms and complex user verification process.
3. Viral Loops
Viral Loops provides multiple referral program templates that are inspired by multi-billion dollar companies to elevate, track, and reward customer referrals. It also provides customer referral campaigns with no code. Overall, it is a popular and efficient SaaS referral program tool to use.
Some of the features that Viral Loops provides are:
- Campaign wizard – This feature helps users customize their templates for their own SaaS referral program.
- Viral loops pages – Users can utilize custom-built website pages if they don’t own a website through this feature. Its referral program landing page builder can be used to develop a website without a single line of code.
- Integrations – This feature helps users to export and import contacts as it provides multiple CRM integrations. Users can avoid manually performing the task.
3 Major Benefits Of A SaaS Referral Program
SaaS referral programs help organizations save on service ads. They can then focus on the audience to find better prospects.
There are 3 major reasons why a SaaS referral program is important to companies and their success.
1. Low customer acquisition cost (CAC) in referral marketing
One of the best merits of SaaS referral programs is its low CAC. This is one of the best SaaS go-to-market strategies as it provides great returns. Be it an e-commerce business or an SEO organization, the returns of a low CAC are plentiful.
The referral program works like a charm for companies. It uses a pay-for-performance marketing tactic. The client is rewarded only when their new referral signs up for their product. Also, some resources are free. They please both their audience and cost-cutting companies.
Referral marketing is quite popular in the B2B sector. It is one of the most cost-effective and successful marketing strategies.
2. Loyal customer acquisition for better ROI
To any startup founder or CEO, customer loyalty is one of the driving factors of a successful referral program. This is true, especially for SaaS products that provide recurring revenue like monthly or annual subscriptions.
The primary purpose of a referral program is to decrease the customer churn rate and elevate customer lifetime value (CLV). The latter determines the customer value across the entire timeline of their business dealings based on monetary numbers.
It uses money to assess the customer's value over their entire business deal
3. Enhanced brand awareness
Referral campaigns are one of the best SaaS sales strategies. They raise awareness through word-of-mouth marketing.
Influencer and affiliate marketing plays a huge role in the success of referral marketing. Customers purchasing products due to referrals implies its high success rate.
However, it is not easy to determine the exact metrics of a certain organization without the help of a few tools. Brand image depends on the SaaS product and how long the customer has been using it. They need to interact with your product long enough to trust the business’ services.
Now that you are well–versed in how beneficial referral programs can be for your company, it is time you knew how to build your own referral program.
5 Best Real-Life Examples of SaaS Referral Programs
It is always better to back up claims with solid proof. This is why we picked 5 of the best companies that implemented SaaS referral programs in their campaigns.
Let us take a look at them and determine if a referral program is suitable for your business or not.
1. Dropbox
Dropbox is a cloud storage and productivity tool that helps users store and share files on the cloud along with their collaboration. From a struggling startup to a multi-billion dollar organization, Dropbox’s journey has been that of rags to riches.
Dropbox started to become popular in April 2010 due to its referral program campaign. It invited 2.8 million users to the platform, leading to a 3900% growth rate. Within the first 15 months of its launch, 35% of its daily signups were through referrals.
However, what was the reason for Dropbox’s overnight success?
Its referral program aimed to reward the customers with what they required or what connected them to the platform in the first place. They also offered free cloud storage to loyal customers and existing users in exchange for new customers.
Every user can enjoy free 500 MB of cloud storage and an additional 16 GB of cloud storage if they continue referring better prospects.
They also started a referral program. It removed long, complex registration steps. Encouraging customers to make in-app purchases not only enhances their interest in the company but also their long-term loyalty.
2. Shoeboxed
Shoeboxed is utilized by freelancers and contractors who are searching for a tool to monitor their` business expenses. This tool facilitates receipt scanning with a mobile app or an e-receipt reader. Furthermore, the less tech-savvy users can catch a breather as it also provides prepaid mail-in envelopes.
So, what made Shoeboxed so successful?
- Shoeboxed uses a dual incentive model to attract more customers.
- Once you refer a friend who signs up for a premium plan, both the referrer and referred will receive 10% off of your monthly payment.
- The unique selling point of this referral program is its discount. It lasts all year, or until your friend cancels their subscription.
Hence, Shoeboxed gained the success and high ROI it has today. It also has streamlined its onboarding process by bringing them to its referral landing page. It also welcomes them by offering a quick rundown of the sharing options and referral bonuses.
3. Trello
Trello is a savvy collaboration software that connects remote teams and lets them communicate and manage their projects. Trello also has an incredible referral program system that encourages existing users to share it.
What different offers does Trello implement in its referral system?
- Every user that refers a friend after signing up gets a free month of Trello Gold. It's an add-on pack and the premium version of Trello for individual accounts.
- Users can also recommend up to 12 friends for the signup process, which implies they can enjoy a whole year of Trello Gold if all of them sign up.
- Referring can be performed either by sharing a unique link or inviting someone new to the Trello board, which facilitates the process.
Such reasons make Trello famous amongst its community and why referral marketing works for the platform. This tactic has helped them expand their user base.
4. Airtable
Airtable is a cloud-based collaboration tool. It combines a database with a spreadsheet. It also allows teams of all sizes to track and monitor their respective projects in real-time.
So, how did Airtable make it big through its referral program marketing tactic?
Refer a friend to Airtable and get a $10 credit towards any paid Airtable plan. You can also use your credits to extend your current plan.
The unique approach of Airtable here is to give away a $10 credit to the existing customer who refers the product to his/her friend. By implementing this referral program, Airtable generated massive revenues. Due to this, free plan users were convinced to upgrade to a more expensive plan to receive this reward which boosted Airtable’s sales.
If the user finds the premium version lucrative, they will not stop referring to earn more credit. Even the monthly subscription would mean net profit for Airtable.
5. Drift
Drift is a conversation marketing tool that helps users build chatbots and conversation flows in minutes with no code at all.
Other rewards in this list have been discounts and offers, while Drift provides giveaways in its referral program.
- A single referral provides you with an Adidas jacket and a sticker pack.
- You can access Hypergrowth’s conference if you convince five referrals to sign up.
- If you can convince ten referrals to sign up, you can have lunch with the founders of Drift, Elias Torres, and David Cancel.
Drift's referral reward system for B2B SaaS companies takes a unique approach. While such exciting rewards might not be the best choice for each organization, if your brand requires them, you should provide them.
However, make sure that your target audience does not desire something polar opposite of what you are offering. To avoid their dissatisfaction, you can mix things up with both discounts and fun offers like the ones above.
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Build Your Own Effective Referral Program For User Satisfaction
Keeping your SaaS product interesting enough for potential customers to interact with it is a task in itself. To ensure the success rate of your product, you need to understand how to launch a SaaS product.
This article covers most of the SaaS referral program tactics and real-life examples. However, there is still a lot to tell about the SaaS referral program. Deciding on a strategy can be overwhelming. However, make sure to pick the one that fits your ideal business plans.
LabsMedia provides effective SaaS services like SEO, marketing, development, designing, and much more. These services help SaaS product owners conveniently launch their services. We also ensure that you never miss out on any of the latest SaaS-based trends and are always rewarded for your lucrative choices.
FAQs
What are the general commission ranges for referral partners for Enterprise B2B SaaS?
The referral commissions in Enterprise B2B SaaS usually range from 10% to 30% of the first-year revenue or 5% to 15% of recurring annual revenue. Some providers offer flat fees of $500 to $5,000 per referral, while others use tiered structures that increase commissions based on the size of the deal. Partners can also earn extra 5-10% bonuses for meeting sales targets. Programs often separate influence referrals (5-10%), where partners just refer leads, from full-sale referrals (15-30%), where partners help close the sale.
What is the average referral rate for SaaS?
The average referral rate for SaaS is around 2%, which is considered healthy for the majority of industries. However, a few implement rates as high as 3-5%. These rates can be improved by double-sided rewards, tactically timed emails for your program, a user-friendly experience, and software automation.
How to ask for a referral in SaaS?
To ask for a referral in SaaS, time your request after positive feedback or a key milestone. Be clear and direct, and offer incentives like discounts, extended trials, gift cards, account upgrades, or exclusive features. Moreover, you can make the process easy with referral links or forms, highlight the value for the referred party, and follow up with personal thanks or additional rewards.
How to create a SaaS referral program?
To create a SaaS referral program, define your goals and rewards, such as discounts, cash bonuses, or free months. In addition, set clear rules, offer easy referral links or forms, and choose one-sided or two-sided incentives. You can also use referral software to track progress, promote the program through emails and social media, and monitor results to optimize over time.