How to Build the Best SaaS Referral Program

saas referral program

As a business, one way to put yourself out there is through your customers. People tend to go with businesses that were referred by people they trust, making it very necessary for you to have a referral program for your business. The good thing is they are very effective for any type of business, especially SaaS. That’s why in this article, we’ll discuss the A to Z of the SaaS referral program. Let’s dive in!

What is a SaaS Referral Program?

Just as the name implies, SaaS referral programs are referral programs designed for SaaS companies to expand their customer base. Like regular referral programs, these help the software companies reward existing customers when they share the service with others (referrals).

Since the service being referred is a cloud-based one, referral programs are also run online. The customer is usually given a referral code which they share with others through social media and blog posts. The goal is to bring others in and when a new user signs up using the link or referral code, the referrer is rewarded.

Often, new users through these methods are also rewarded as well. Gifts such as vouchers, gift cards, access to free content or subscriptions, free products or major discounts, and in some instances, cash rewards. What is offered as a reward could vary depending on the type of software.

Why Do You Need a SaaS Referral Program?

Since SaaS runs exclusively online, the SAS referral program is best for SaaS businesses offering several benefits. Here are some reasons why you need a SaaS referral program.

Qualitative and Quantitative Improvements of Leads

Businesses spend so much on lead generation; blogging, marketing, SEO, and paid ads. With your customers well aware of the service you are offering, they easily and readily increase your brand awareness. But by engaging your existing customers, through referral programs, you can generate a large number of newer users that would engage better with your service.

Reduce the Costs of Acquisition

Whatever service your software is offering, you could always do it with new customers. By running a SaaS referral program, you acquire new customers at a very low cost. Once the referral program is up and running, you only have to focus on the cost incentive. This could come easier for SaaS businesses as you could offer virtual services such as monthly access to limited content.

Enhancing the Conversion Rates

Remember that people are more likely to stick with something or a service that was referred to them. Existing customers would speak convincingly since they are familiar with the service and there is a higher tendency that those that were referred to become steady customers as well. This saves you the time to walk new users through understanding the software and what it does.

Reduce the Churn Rate

When your customers make referrals, they would most likely speak with those who would benefit the most from the service you are offering. Thus, they would bring your service to the ideal customer to whom your product would solve their problems directly. Therefore you would have a reduced number of subscribers canceling subscriptions.

Increasing Customer Lifetime Value

The customer lifetime value is a measure of how much monetary value the customer has in the business. Through referrals, you would be able to build a base of customers who would stay signed up for a longer time and would be willing to commit even monetarily. Having stable and loyal customers is important for business, especially for SaaS businesses where recurring revenues come from monthly or annual subscriptions of users.

How to Build a SaaS Referral Program

Now that we have seen the benefits of using a SaaS referral program, it is important to make it part of the marketing strategy. Here are important pointers to help you understand how to build a SaaS referral program.

1. Make sure your customers love your SaaS tools and products

Ensure that you have a list of satisfied customers as people would only refer to products or services they have enjoyed using. To increase the chances of getting your service referred, give your current customer the best in your SaaS tools, products, and services.

2. Establish referral program incentives

The most attractive thing about referral programs are the attached incentives that are captivating. You would have to decide whether you want to give incentives to just the referrer or both the referrer and the referred person. Once that is settled, you would want to identify what passes as attractive. Remember to work within your budget.

3. Outline your terms and conditions

Make the referring process straightforward for both the referrer and the referred person. What must be done to receive the incentive and how are they to be done? Are there other terms and conditions attached, make these very clear and easy to understand.

4. Make your choice of a referral tool

For a successful referral campaign, you need the right tools to communicate with others. This could be either through social media, blog posts, or direct SMS. There are several options available for you to use as a referral tool such as sharing links and referral codes. Your business should look into selecting the right tool that would engage the referred person as soon as they have been referred.

5. Choose the right time to ask for a referral

Consider the best time to ask your customers for a referral. Often, it is best to ask for a referral after they must have completed a milestone on the product or service. You could also include them at the end of monthly newsletters or blog posts. It is up to you to select when the perfect e is.

6. Decide how to market your SaaS referral program

Customers would not want to miss out on discounts or promotions you are making so it becomes necessary for you to know how best to announce that to them. You could make promotions, announcements on social media, and blog posts about the ongoing referral program. Choose what works best, preferably the platform most of your existing customers use.

7. Measure and track your results

With the referral program running, you need to track how much success you are making. Using the right analytic tools, you would be able to identify where the most referral is coming from and put more effort into the top customers and sites. You would also be able to measure the results and note where you can improve.


Building a SaaS referral program has several benefits that the software company can benefit from. Just like other businesses, your software business would benefit from an army of satisfied customers. Even if you are building one from scratch, it is not difficult if you know what to look out for. Give our SaaS blog posts a read if you want to dive deeper into the SaaS world here!

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