Referral Program

A referral program turns your existing customers into an acquisition channel, and because the referrer is vouching for the product to someone they know, referred customers usually convert faster and churn less than customers acquired through ads. What makes a referral program work: a reward valuable enough to prompt action, a moment in the product where the user is happy enough to refer (right after a win, not at signup), and a frictionless way to share, one link, not a form to fill out. Two-sided incentives, rewarding both the referrer and the new customer, tend to outperform one-sided ones. Example: PayPal's early referral program paid $10 to the referrer and $10 to the new signup, an aggressive incentive that cost the company tens of millions of dollars but drove rapid daily user growth and helped PayPal reach critical mass before competitors could. Referral programs work best once you already have engaged, satisfied customers. Launching one before you have product-market fit just pays people to refer a product their friends will churn out of, which burns the reward budget without building lasting growth.

A B2B SaaS tool gives existing customers one free month for every paid referral who sticks around 60 days, tying the reward to retention rather than signup, so it only pays out for referrals that actually work.