Referral Program
Also called: refer a friend, referral scheme
What is Referral Program?
A referral program rewards existing customers for introducing new ones, usually with a benefit for both sides. It converts satisfaction into acquisition at a known cost.
Why Referral Program matters
Referred customers typically convert better, spend more and stay longer, because they arrive with a recommendation attached. The cost per acquisition is also fixed and known in advance.
Referral Program formula
Referral CAC = Total reward value paid ÷ New customers referred
Compare with paid channel CAC before scaling either.
How Referral Program works in practice
Make the reward worth mentioning, the mechanic simple, and the ask well timed — right after a good experience. Track referral CAC against paid channels to see which is genuinely cheaper.
Frequently asked questions
Usually yes. A two-sided reward removes the awkwardness of asking and gives the new customer a reason to act.