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How to create refer-a-friend campaign for your SaaS company that actually works.

The hidden gem for rapidly scaling your business are referrals. Every growth hacker in the SaaS community knows that exponential growth is only possible if your clients start referring you. Now how do you do that? Well, if you were the first one to think of this, you would be very successful. There are a lot of cases where refer-a-friend facilitated exponential growth with 2 of the most famous examples being Hotmail & Paypal.

Why are successful refer-a-friend campaigns so difficult?

When looking at previous examples, it’s clear why their strategy works. Hotmail gave away email software: it was completely free, so there was no upsell whatsoever. It’s easy to make something free viral. Second very successful case was Paypal, changing the payment industry forever. And their growth strategy was also based on refer-a-friend. But they heavily invested in their strategy, giving away free money to every subscriber. That’s also a good tactic to get subscribers (a lot of banks are still doing this).

Downside to these 2 tactics: doing something free or giving money away cost a lot of money. It’s a simple as that. If you are in a cash strapped saas startup, I can assume that you don’t have millions of dollars laying around to give away to subscribers?

Without examining why these strategies worked so well, it’s difficult understanding why yours wasn’t successful. Does this mean that refer-a-friend is dead? Ofcourse not! But you have to be smart about it.

The basics of refer-a-friend

A refer-a-friend has 3 crucial parts in the equation. The user, the offer and the incentives. You need to balance these 3 parts and brew up a successful strategy. When you have a proof of concept, you can scale your campaign.

Part 1: the users

You need happy users, otherwise there is nobody to refer your saas company. Listen to your users, certainly those power users. They will help you improve your service and be ambassadors for your brand. Later you will need their support to get initial traction for you campaign.

Part 2: the offer

It’s important that your communication and USP (unique selling proposition) are clear. The moment your ambassadors start sending out your refer-a-friend campaign, someone receiving the offer should be able to understand your business. You have only 1 shot to convince them of your saas solution, so make it count. Have a clear offer that converts easily.

Part 3: the incentives

How do you motivate people to share your campaign? To get out there, contact their friends and actively promote your business. You’ve read it in the title: incentives. You need to give your ambassadors a reason (incentive) to promote your company. Here are a couple of common reasons:

  1. 10% off your next subscription
  2. 1 month of free access
  3. Free account upgrade
  4. 100 Sexycoins to spend in the app

All of these are incentives are perfectly ok to stimulate your users. There is only one problem, they aren’t physically tangible…

The missing ingredient

missing-ingredient

Why does your refer-a-friend campaign fail? Because your incentives aren’t tangible. They are digital gifts they can only use and spend in your saas solution. Your ambassadors are already clients, they use your solution, they spend money in your solution. The incentive of free digital content just isn’t strong enough to convince them to push your brand to their connections.

What is your campaign missing?

Your refer-a-friend campaign needs a real life gift people can touch, hold and wear. If they are your true ambassadors they want to wear your colors and show the world they support you. You need to give them some real exclusive merchandise. This way your SaaS company crosses the border from digital to the real world. You need to reward your referers with some awesome branded apparel.

The best strategy to use merchandise for refer-a-friend campaigns

tl-sweater

To make your campaign a success you need a couple of checks:

  1. Awesome premium company swag: read this article for a complete guide
  2. Exclusive stuff for referers: merch they can only earn if they refer you
  3. Full service scalable partner that handles all production, warehousing & logistics

This way you have all the triggers to motivate your users to become true brand ambassadors and start spreading your saas solution. Exponential growth: here we come!

It’s all in the numbers: calculating ROI

Like everything in a SaaS company, it boils down to the numbers. How can you calculate the ROI on your refer-a-friend merchandise campaign. Well it’s pretty easy using this formula:

Refered users* conversion % * average lifetime value
————————————————————————– = ROI per pack %
Total cost merch pack

For example your launch a winter campaign giving away exclusive christmas jumpers if you refer 5 people. The average lifetime value of your clients are $750. And the chance of a referred user converting to a full user is 60%. Complete cost of a Christmas jumper is for example $ 35 + $15 logistic fee = $50

5 * 60% * $750
——————–= 4500% ROI
$50

How to start

Our team is specialised in complete projects like a refer-a-friend campaign. We help our clients with designing company swag, producing it ethically & ecologically and helping them with a complete logistic solution. Like you are a software-as-a-service company, we are a merchandise-as-a-service company. We’re here to help you get results with your merchandise. We can be as involved as you like from only producing your t-shirts to a complete solution, you decide.

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