How should a company design a referral program?

Harry Stebbings · Sep 13, 2024

He would far rather spend acquisition budget on referral codes or new-account discounts than on Facebook ads

22:48 20Product: What Facebook, Monzo and Deliveroo Do and Do Not Do To Build Great Products | How to Structure Product Teams For Success | Is Simple Always Better in Product and The Art vs Science of Product Design with Mike Hudack

Mike Hudack · Sep 13, 2024

It is better to spend acquisition money on your own users than to hand it to another company

22:55 20Product: What Facebook, Monzo and Deliveroo Do and Do Not Do To Build Great Products | How to Structure Product Teams For Success | Is Simple Always Better in Product and The Art vs Science of Product Design with Mike Hudack

Hila Qu · Jan 18, 2023

Monthly bonus campaigns layered on a paid referral program reliably lift near-term signup numbers but degrade the quality of invited users over time, so teams must monitor long-term metrics alongside the headline number.

Acorns ran these campaigns successfully for a while and the numbers looked great, but over a longer horizon the quality of invited users dropped — an expected trade-off; likewise channels that work great for a period eventually die down.

11:41 Bonus campaigns lift near term referrals but degrade invited user quality over time

Mike Salguero · Apr 5, 2023

Referral is the way out once a subscription business hits the point where growth gets hard, because referral cohorts are the best-performing customers

Referred customers buy roughly an additional box in year one and stay longer; only paleo/keto influencer-sourced customers perform better

41:08 Referral becomes the growth escape valve once other channels are exhausted since referred cohorts outperform

Mike Duboe · Feb 15, 2023

There is almost always more juice to squeeze from a referral program than companies realize, and referral engines are underused in B2B because they are typically thought of only in a consumer context

Faire's B2B referral mechanic pulling in cross-side referrals was the only thing working early on and carried the company's growth for years

48:27 B2b referral programs are underused and underexploited relative to consumer

Matt Swulinski · Aug 15, 2026

A referral program should be front and center and easy to discover in the product, with a tangible reward, and surfaced at the moment a user is about to hit a usage limit

At Superhuman give-one-month-get-one-month produced users with hundreds of referrals because it was delightful, easy to find and tactile; timing it to the moment before the word limit makes the trade obvious and the k-factor is what makes or breaks it

39:47 Discoverable tangible reward timed to the usage limit

Matt Swulinski · Aug 15, 2026

Paying existing customers a revenue-share of referred accounts is better economics than buying that customer through paid acquisition

You're willing to spend to acquire a customer anyway, and customers are better at finding the best-fit customers; the rev-share also lowers the referrer's own cost line

41:00 Pay customers a revenue share instead of buying the customer

Matt Swulinski · Aug 15, 2026

Referral programs fail at two extremes: rewards that aren't tangible (swag, vague asks) or over-gamified programs with many tiers and required actions that nobody wants to use

Intangible rewards leave users asking what they get; complicated multi-tier programs are a pain

42:28 Avoid intangible rewards and over gamification

Matt Swulinski · Aug 15, 2026

Affiliate is the most underappreciated growth channel — it compounds and delivers the highest early ROI if you build the program well

Non-customers with their own audience will create content and reviews for you, and people who can earn money from you before being customers end up becoming customers; at Viktor 10-15% of monthly acquisition comes through affiliates on a 10-15% revenue share

64:32 Affiliate with non customer audiences beats in product referral