Reward both the person who invites and the friend who joins, in the currency of the product, at the moment people are happiest with it.
Dropbox gave both the person inviting and the friend who joined extra free storage, not cash, and gave users built-in tools to invite friends. Founder Drew Houston told the Startup Lessons Learned conference in April 2010 that the two-sided programme had permanently increased sign-ups by 60%, that users had sent 2.8 million direct referral invitations in the previous 30 days, and that 35% of daily sign-ups came from referrals.
Dropbox went from 100,000 registered users in September 2008 to four million in January 2010 (Houston's slides, 23 April 2010). He said the idea came from PayPal's sign-up bonus.
Consumer apps, SaaS, e-commerce, subscriptions and fintech with customers who already recommend them.
Referred customers keep the chain going: in a 2024 study in the Journal of Marketing Research, referred customers went on to make 31% to 57% more referrals than customers who were not referred, after controlling for purchases (Gershon and Jiang, 2024).
Timing matters as much as the reward. In a study of 400,000 users of a ride-hailing platform, each week without using the service was associated with users being 9% less likely to refer (Fernandez-Loria, Cohen and Ghose, Information Systems Research, 2023). Ask at the moment of success, not in a monthly newsletter.
Self-reported. Dropbox's figures from its founder's own slides (April 2010). Verified. Gershon and Jiang (Journal of Marketing Research, 2024) and Fernandez-Loria, Cohen and Ghose (Information Systems Research, 2023).
Cost to test. The cost of the rewards, paid only when a friend joins, plus a few days to build.
Kill it if after two months fewer than one in twenty active customers has sent an invitation.
A referral programme amplifies a product people love and does nothing for one they tolerate. Cash rewards attract fraud and the wrong customers. In the US, people who post publicly about you in return for a reward have a material connection that must be disclosed (FTC Endorsement Guides, 2023), and some sectors restrict referral bonuses outright: the UK's FCA banned them in cryptoasset promotions from October 2023.
The Waitlist Launch, The Customer Community, The Review Engine
A 30-minute call first. If it fits, two calls in one week and a written growth plan you keep.