Video: What is a customer referral program?

When people try to learn about customer referral programs there is still a lot of confusion. So in our first video we'll take you through the basics of what a referral program is and how it can be used as a major growth engine for your business.

What Is a Customer Referral Program from SaaSquatch on Vimeo.

Full Transcription

Hi, and welcome to another session on customer referral programs. Today we’re going to talk about what is a customer referral program. The question at first actually seems rather straight forward, but in our time working in the industry we’ve discovered a lot of people still have a misunderstanding about what exactly a customer referral program is.

Breaking it down

So, if we break it down really simply, a referral program is any systematic way that you can get one person to tell another person about your product, company, or service. So that’s a very broad interpretation of what’s available there. Now, when we bring in a customer referral program, what we end up doing is defining who’s telling people about your program, and this is key. In a customer referral program, we want to encourage your existing customers, the people that know your product best, are most passionate about the value your product delivers, and are more likely to convert their community. We want to bring those customers in and we want to give them a reason and a way to tell their friends about your product, your service, or your company. So a customer referral program is a systematic way that you can drive referrals from your customers to new customers.

Dropbox Example

Now, one example that a lot of people in the webspace know is a company called dropbox. So dropbox provides online storage of your files, where you can share them with your friends. Now they wanted to grow their space, their company, so they decided they were willing to give away 250mb of space to anyone who referred a friend, and that friend was able to get 250mb of space as well. So, they took their existing customer base and said “Hey, you know other people who would like to store a file, and we’re going to give you a little reward for telling your friends.” When that friend signs up, they also get a little treat, 250mb of space, and the referral was complete. Now that's a very good example in the web space, but it is important to remember that customer referral programs work offline, and that’s really all we’re doing here, we’re taking those offline programs and adapting them to the web world, so you can easily see a customer referral program at something like a car dealership or lets say maybe you’ve bought a car from a dealership and they’re willing to give you $500 towards your next car for every person that purchases a car. It’s a simple referral program once again, a customer who knows your product, your service, your company has gone ahead and told a friend, and when that friend goes ahead and makes a purchase a reward is given. That wraps up our session on “What is a customer referral program”

Watch the next video and learn from our CEO, Will Fraser on How to Reduce Friction in Your Referral Program »