Referral schemes are a great way to get new customers or companies to try out your SaaS product. With the right incentive programme, you make your customers far more likely to extend referrals. You also increase their satisfaction with your company, increasing the chance they’ll stick around. And for new customers, giving your product a try is far more attractive when there’s an appealing freebie on offer.
Referral schemes are particularly powerful because, when successful, they help you cement existing customer relationships and win you new business. To make the most of this opportunity, you should offer incentives for both parties – your existing customer making the referral and the new customer. Retaining users is easier when they feel involved in your success and rewarded for that involvement. And the idea of trying out a new SaaS product will be far more enticing, and feel like far less of a potential risk, with an extra incentive – especially one that saves them money.
So what makes a good incentive?
Free or Extended Use of your Product
There’s nothing more valuable you can share than your product itself. It’s a great gesture of goodwill to loyal customers, and an added benefit for you is that it also keeps those customers locked in with your product. As an incentive for new, referred customers, it is also very powerful as it makes the initial leap of trying out something new feel less risky.
Of course you don’t want to turn a paying customer into a non-paying customer, but you can extend free trials, or add free months to annual subscriptions, for instance.
The exact offer you extend may well depend on the nature of your SaaS product. Dropbox have a particularly effective incentive – referrals earn you extra space in your Dropbox – but, of course, this is specific to the sort of software it sells.
Credits or Discounts
Money talks, and cold hard (virtual) cash is always a popular and powerful incentiviser. Depending on your pricing model you can offer discounts or account credits. It’s one of the most simple incentive options, and you have full control over how much it will cost.
Discounts or credits can be one of the more expensive options though, and if you do mitigate this by keeping your offer low, you might find that it’s actually less enticing than a more tangible, but actually lower valuable, physical item offer.
Third Party Discounts or Products
Some customers might not be swayed by credits or free use of your product because they’re not paying for it out of their own pocket and they’d rather something that benefits them more directly. To maximise referral potential, consider offering alternative third party discounts at equivalent intervals. Popular options are things like coffee shop gift cards, tickets to sporting events or vouchers for big name eCommerce sites.
Does anyone really want to walk around wearing an ill-fitting t-shirt advertising their accounting software? Apparently so – branded merchandise continues to be offered as a common referral incentive by loads of businesses, so clearly it works. Giveaways of this type are usually most suited for the lower tiers of your referrral scheme, due to their relatively low value.
The benefits are obvious. These sorts of incentives are generally a really cheap option, and if your customers do actually wear or use their freebie, you get free advertising. On the other hand, if you don’t get the referral numbers you were hoping for you might find you have piles of merchandise taking up space and reminding you of your failure for months to come.
To get people to the referral stage you don’t just need to incentivise them, you’ll likely need to implement a retention strategy, and to entice users to your product in your first place, download our quick reference guide on attracting new SaaS customers.