Give a discount on premium in your referral program to reduce SaaS churn

How to use the technique

• Choose discount that won’t hurt revenue and LTV. Do the math. Check the history and finalize a suitable discount that you can afford to give on premium without hurting cashflow. Our free churn optimization framework is your best bet to get more info. 
• Percentage vs. fixed amount. Offer percentage discount for small amounts (e.g. $2.5, $5, etc.) and amount when it’s of high value (e.g. $50, $100, etc.). Make discount noticeable even if it’s negligible.
• Set discount limits. How much discount to offer per customer per month? Setting a limit is essential to stop cashflow from ruining. Set an upper limit for the discount.
• Set expiry for discount. For customers who aren’t on premium yet but they received a discount, discount expiry will persuade them to switch to premium to avail discount.
• Explain discount terms and conditions clearly on the landing page. It’s best to keep it simple and clear. Share limits and caps with your customers to avoid hiccups.
• Remind customers who are not on premium yet. Send emails. Convince them to avail discount by switching to premium. Share the benefits of upgrading their plan.
• Analyze and improve your referral program. What type of bonus works best? Are limits irritating customers? Test and tweak your program’s features and variables for optimization. Don’t know how to do it? Read our free actionable guide. 

Mistakes to avoid

• Not explaining the benefits of the premium plan. Don’t make this mistake. It’s not just about the discount rather it’s about customer retention and LTV. Use discount as a base to promote the premium plan.
  
• Setting a limit on the number of invitations per customers. Don’t limit the number of invitations rather limit the discount percentage that can be availed per month. Let customers utilize the remaining discount next month. This works best.