5. Referrals  >  Provide Two-Way Benefits

Provide two-way benefits in your referral program to reduce SaaS churn

Offer reward to both referral and referrer. This will motivate your current customers to invite several new people. Referrals will complete the signup and will follow program guidelines to get reward quickly.

● PERSUASION

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How to use the technique

  • Choose an appropriate reward. Discount on upgrade, percentage off, gift voucher, or anything else. Link it to your customer needs. Get feedback from customers and ask what type of reward will excite them. Grab our free churn optimization framework for more details.
  • Decide when to disperse reward. Giving it too early (or immediately) will increase churn. Your customers will exploit your program for fake referrals. Decide with caution.
  • Make it easy-to-achieve. The reward needs to be challenging yet achievable. Don’t make it too hard to achieve. Don’t delay it.
  • Link reward to actions. For instance, when a referral completes a task or converts to a paid plan. This might reduce conversions but it will boost engagement and will reduce churn in the long-run.
  • Communicate it. What reward two parties will get, how they will get it, and when it will be dispersed need to be clearly communicated.
  • Tweak and analyze rewards. If it isn’t motivating customers to take action, change it. Track performance of different two-way rewards for conversion optimization. Get free access to our PDF for step-by-step instructions.

Mistakes to avoid

  • Make them earn the reward. It’s a big mistake that you should avoid. Don’t send rewards unless you’re sure that the referral will stick and won’t churn.
  • Unclear referral program description. This is one reason why your referral program will fail to deliver. Set expectations without hype. State all terms on the landing page to avoid ambiguities.

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Research evidence

Bressan and Crippa published a research paper on the role of dopamine in reward and pleasure. They found that dopamine is released when humans expect a reward which then motivates them to take action to get the reward. This is what exactly you should do with your referral program: Offer reward to both the parties for motivation.

Dope

Dopamine is released when humans expect a reward which then motivates them to take action to get the reward.


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Implement with our proven SaaS Churn Optimization Framework

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