We are living in the digital era in which large numbers of entrepreneurs are constantly coming to the picture with their innovative and extraordinary business ideas. SaaS (Software as a service) has become a prominent business model, as it offers a set of extraordinary and outstanding platforms to both businesses, as well as customers.
Earlier, most of the SaaS startups used to face three main challenges – Consistent acquisition of customer, retention, and customer growth.
In that time, entrepreneurs were in a requirement of a powerful approach that could help them to overcome such troubles in a cost-effective way. During that time, Dropbox (a prominent SaaS product) came into news for making use of referral marketing to position its business. Although Dropbox’s strategy was simple, it was not a well familiar strategy at that time. For that reason, rest of others could not imagine the strategies, such as referral, sign-up-driven pages etc. Now, all of us are aware of the tremendous success of Dropbox, it holds a large number of users.
Today, no wonder lies in the fact that many SaaS startups have started implementing this approach after realizing its usefulness. Referral marketing has become a vital part of today’s marketing strategy.
Know the Difference – Referral Marketing and Affiliate Marketing
Many people are confused between two prominent marketing strategies – referral marketing and affiliate marketing. Referral marketing is a powerful approach to promote services or products to new prospects through referrals. It is not mandatorily involved with a monetary advantage always. Affiliate marketing is another concept that is completely involved with business and financial incentives.
Referral marketing provides a vast range of benefits and it is a more flexible strategy, that’s why it can be thought of as a significantly beneficial strategy to incorporate. Prior to initiating the strategy of referral marketing, you can analyze other known options relevant to this scenario. You can consider the following techniques:
One-Way Referral Technique:
The most usual and tremendously prominent strategy for acquiring customers is one-way referral technique. This strategy asks all the existing customers to refer their services or products to their acquaintances and friends. In exchange, they will get some kind of benefit from the company.
For an instance, one-way referral technique was implemented by Yesware (a popular SaaS product). It is offering a sales productivity suite containing analytics, email tracking along with other features. The Yesware referral model provides its users with a smooth system to refer, by offering an incredible auto-filled message. Thus, users can give the invitation to several friends and receive points by making the referral. The points can be redeemed by picking either an Amazon gift card (for 12,000 points) or a t-shirt (for 6,000 points).
The particular technique is sourced from another powerful concept – viral loop. It helps businesses to acquire more customers in an affordable and simple way. However, the theory behind this prominent approach is really simple that is based on the fact that most of the new customers execute the same strategy and make a profit.
While considering this approach, you need to remember that not each and every user might be interested in making a referral (product or service). Remember, you need to pick a simple approach for the referral.
Two-Way Referral Technique:
It is another prominent and heavily used approach by businesses nowadays. This incredible referral technique provides benefits to both the referee and the referrer. This technique involves an incentive. For that reason, a large number of people are more likely inclined to this technique than other ones. This technique is helpful to the referee, referrer, and the business as a whole.
Evernote operates one of the noted two-way referral programs. The particular program provides its users with a two-way incentive in which users can receive points for each referral. These points can be utilized in premium subscriptions and in various other ways.
Social Referral Technique:
Nowadays, most of the people have started to be acquainted with different brands by using social media platforms and this referral model is sourced from this concept. Although, most of the SaaS startups are dependent on email or referral links as their main source of referring, however, some others have become successful in acquiring mileage through Social Referral Technique.
LastPass is a company that is making use of this particular approach. It is a free password management tool, providing dual referral program to their users. This particular program enables socially active clients to place an invitation on their pre-specified Social Media Pages that, in turn, encourage their friends to go through the service.
After signing up for this particular service, both referee and referrer will receive a free month of premium subscription containing extra security attributes, priority support along with other benefits.
Third-Party Referral Technique:
Another prominent referral technique is Third-Party Referral Technique in which an association is made with a third-party. Through this approach, additional users can be brought into the particular network, even outside the range of online platforms. However, for SaaS startups, it may not be a simple process but you will be amazed to know that Evernote has implemented the same strategy along with its two-way referral method.
Referral Methods with Material Value:
Most of the referral marketing approaches have succeeded through powerful referral methods. If a product is useful and offering great value, then users will refer it in a happy mind. In the perspective of marketing and demanding customers, some of the SaaS products have adopted a unique technique of attracting people by offering a monetary edge to them.
We know that most of the startups are making use of the simple yet powerful referral method to position them in a higher place. However, first, it is very important to analysis the workability of this approach. You should also need to understand the power of word-of-mouth.
In a Nutshell
You might have understood that a referral marketing approach needs to be powerful enough for practical implementation. We are compiling some of the important points regarding referral strategy below:
Each and every marketing technique needs to be linked with a specific goal and monitored closely. The referral marketing approach should be optimized for the progress of the particular SaaS product.
Aside from a captivating incentive or plan, it needs to be featured with unique and outstanding visibility to the users. A strategy should also comprise of a robust follow-up plan. It signifies that aside from a powerful referral plan, particular strategies, such as reminder emails, as well as, a customer service should be implemented properly.
To grow your business, you need to invest energy and time alike, for the promotion of a specific referral program.
A great referral marketing strategy should have the characteristic of easy sharing. Some ways to fulfill that criterion are Social Media Channels, emails, and unique URLs. It will be advantageous to include multiple Social Channels.
You need to provide a set of directions to your users so that they can assess their specific referrals. These directions will encourage the users to stay with your product for a long time and refer at the same time.
You need to frame a powerful campaign or strategy for further incentivizing the top loyalists. It may improve their Lifetime Value (LTV) and pull more referrals.
It is true that marketing strategy’s success depends on the capability of demonstrating ROI, however, marketers can’t deny the benefits and importance regarding referral marketing. Now, customer incentivization via referral is helpful in bringing in more number of customers and building powerful brand identification for the SaaS startups.
Concept of Viral Loops
Viral loops are one type of popular marketing campaign utilized for the promotion of a product or company. It encourages a person to share some specific thing with as many people as he/she can. A proper viral loop is developed to achieve the goal of zero to a large number of viewers and that is too in a short span of time. It is able to spread exponentially because each new user or customer can share the particular content with as many friends as he/she want.
Companies that want to reach a new height of success, viral loops can be a budget-friendly and comparatively easy technique for building a name, as well as, a consumer base.
A key component of this technique is a high-quality service, product, or offer that will entice the target demographic.
Give and Get More
It is a prominent strategy, targetted to a viral product. After sharing the particular product with another (new) user, users receive some type of benefit or upgrade to their personal service utilization.
For an instance, Dropbox users hold storage space (limited amount), however, they are provided with the opportunity to invite their friends to start utilizing the service.
For every invitation, their personal storage space (also their friend’s) will be increased by 500 MB. It encourages people to a great extent. It has proved to be a great strategy for Dropbox because it offers a great, as well as top-class service.
Now, it’s on your hand how you will implement the correct strategy in your business.