What are the benefits of setting up a referral program? Learn more about why you should set up a referral program
Implementing an in-app referral program can drive cost-effective and scalable growth for your SaaS. It can create a viral loop for your SaaS. Learn what an in-app referral program is.
Here are the key benefits:
1. Create a Viral Loop for your SaaS
When implementing an in-app referral program, you will be able to create a viral loop. Users invite users, which can invite new users again. If done right, the loop can keep going; creating virality & a real network effect.
2. Low Customer Acquisition Cost (CAC)
As you would only give something away (discount + commission) when someone moves to a paid subscription, it will be a low + predictable CAC. It will be a lot lower than other acquisition channels like paid ads, outbound or any other channel.
3. It is a performance based growth channel
Similar to an affiliate program, you can only pay on performance; receiving a paid client. As you already received the money, you will only be giving something away (discount + commission) when a payment came in.
This makes sure you don't have high upfront costs, and making it a very scalable channel. nel.
4. Higher-Quality Signs ups
It is a well know fact that referred users tend to have a higher lifetime value (LTV) because they trust the recommendation from a friend or colleague.
They are often pre-qualified since they come from someone who understands the product’s value. Increasing the conversion rates of the sign ups moving to a paid subscription.5. Increased Retention & Engagement
To continue on point 4, as they are higher quality leads and converting better. They will be more engaged, and will have a higher retention rate. Users who refer others are more engaged and tend to stay longer.
On top of that, referral incentives encourage existing customers to remain active and involved in the product.
6. Competitive advantage
Wether you are bootstrapped similar to ourselves, it can be a great way to differentiate your SaaS from competitors who rely solely on investing a lot of money to acquire new users.
When you have build a great product, turning it into a viral loop for your growth. As a referral program can give users an (additional reason) to advocate for your product, strengthening brand loyalty.
7. Scalability & Automation
If set up correctly; the possibilities are limitless. You can have the in-app program run automatically and keep scaling it along with the growth of your users. By automating everything from generating links, rewarding users it doesn't have to take you more time or effort when scaling.
With the right tracking and reward structure, it scales without significantly increasing costs.