Referral Programs are everywhere. The concept is old and apps have adopted them with open arms (btw great song). Every B2C app has some variant of it.

It is considered an excellent customer acquisition strategy. And it indeed is. At the heart of it is some kind of reward for an existing app user for referring someone to become one. You can get your friends, family members, etc. to sign-up and can get rewarded. Often apps also have a program that incentivizes the new user also with a bonus for signing up. This makes it a sweet deal.

However, just aping an existing reward program offered by others does not guarantee a slew of new users. Even if an app gets such users, they may not be "activated". Such users would just sign-up, get the reward, and sit idle. No Confirmed Account. No Transactions. No Revenue. Just some ghost users. Every reward program designed needs to ensure such leaks are controlled.

In an ideal world, users should just sign-up for your app without any such "seemingly costly" programs. But often, you can't just sit on zero spends and hope users magically arrive.

[I'm all for 0 CAC hacks but hey I'm assuming you have some marketing budget]

<aside> 💡 So how does one go about designing a kick-ass referral product?

</aside>

I don't claim to be a referral program alchemist, but here are my two-cents on how to optimize the referral program for more success:

1. Tie the reward as close as possible to your "own app ecosystem"
   • If you offer cash or an out-of-system voucher, users would just grab them and not interact with your product and you want the new user to use your product, right!?
   • Try to figure out if you've your own "currency" to offer
     • It could be free credits if you're a SaaS venture or an extra nitro boost if you're a Discord Server 😃
     • If you don't, it's not the end of your world
2. If you identify that you can price your reward program in your currency, then
   • Incentivize both the referrer as well as the referee (new user)
   • But you can afford to load it more in the favor of the referee
     • Since reward is in your currency, you can be fairly confident that the new user will like to make use of all the goodies you've showered
     • In the process, you can hope for the acquired user to fall in love with your product 😉
3. If you are not so fortunate and will be spending or some H&M vouchers, then
   • Incentivize both the referrer as well as the referee - equally
4. Make the reward usage a task based exercise
   • If you simply credit the reward on sign-ups, there is a big chance that the acquired user will remain deactivated
   • You can follow a staggered credit (payout) of the rewards or at a very basic level, the rewards should be provided for doing the first transaction
5. Accumulating Rewards - Motivate the referrer to continue being your evangelist
   • Provide incremental (say 3x cashback) if your referrer gives you more than 10 users
   • Better - change the currency (if it suits your ecosystem)
     • Refer 5 friends, Earn INR 50 each. Refer 10 friends, Earn a free train ride.
6. Amidst the excitement - don't forget the hygiene checks
   • Clear and Attractive CTAs
   • Token of Appreciation (a thanks) for the both sides
   • Follow-Up message for the dormant acquired user

Some Great Referral Programs

Evernote Referral Program - ties the program to their freemium model. Almost 15% of new Evernote users are referred