Referral Program Design

Purpose

Design a referral program that turns existing users into an acquisition channel. Define the incentive model, sharing mechanics, copy, and launch plan. Focus on programs that actually get used — not "refer a friend" links that collect dust.

Reads

• brand/audience.md — Personas, what they value, their networks
• brand/positioning.md — Value props, pricing context for incentive sizing
• brand/voice-profile.md — Brand voice for all referral copy

Brand Integration

• audience.md — Incentive type depends on audience. B2B audiences prefer account credits. B2C audiences prefer discounts or free months. Developer audiences prefer swag or extended trials.
• positioning.md — Referral messaging reinforces the brand's positioning angle, not generic 'share with a friend' copy. If positioning is around simplicity, the referral CTA is 'Know someone drowning in complexity?'
• voice-profile.md — All referral copy (dashboard prompts, share text, emails) should match the brand voice. A casual brand writes "Your friend's gonna love this" while a professional brand writes "Share a professional recommendation."

Workflow

Step 1: Choose Referral Model

Evaluate and recommend the right model:

One-Sided (Referrer only gets reward)

• Best for: High-value products, enterprise, low-frequency purchases
• Pros: Simple, lower cost per referral
• Cons: Less motivation for referee to convert
• Example: "Give your friend our link, you get $50 credit"

Two-Sided (Both get reward)

• Best for: SaaS, marketplaces, subscription products
• Pros: Higher conversion (referee has incentive), feels fair
• Cons: Higher cost per referral
• Example: "Give $20, get $20"

Tiered (Rewards increase with referral count)

• Best for: Products with power users, community-driven products
• Pros: Creates referral champions, gamification
• Cons: Complex to communicate, top-heavy rewards
• Example: "1 referral = 1 month free. 5 = premium forever."

Milestone (Unlock rewards at specific counts)

• Best for: Products wanting viral moments
• Pros: Creates sharing bursts, clear goals
• Cons: Can feel like a grind
• Example: "3 friends = swag. 10 friends = lifetime access."

Selection criteria:

• Product price point and margins
• Customer lifetime value (can you afford the incentive?)
• Network effects (does the product get better with more users?)
• Purchase frequency (one-time vs recurring)

Step 2: Define the Incentive

#### Incentive Types

#### Incentive Sizing Rules

• Referrer reward should be 10-25% of first-year LTV
• Referee reward should lower the barrier to first purchase
• Two-sided: referee reward can be smaller than referrer reward
• Always test: the "right" incentive is discovered, not guessed
• Stack with existing promotions cautiously — don't train discount hunters

Step 3: Design Sharing Mechanics

#### Sharing Methods (Offer All, Optimize for Top 2)

Unique referral link (required, baseline)

• Personal URL: product.com/ref/[username] or product.com/r/[code]
• One-click copy button
• Auto-populated share text

Referral code (supplement to link)

• Short, memorable: 4-6 characters
• Personalizable: user's name or custom code
• Easy to share verbally

Email invite (high-intent channel)

• Import contacts option (Google, Outlook)
• Or manual email entry
• Pre-written message, editable by user

Social sharing (volume channel)

• Twitter/X: Pre-populated tweet with link
• LinkedIn: Professional framing for B2B
• WhatsApp/SMS: Direct message with link
• Platform-native share sheet on mobile

In-product prompts (highest conversion trigger)

• Post-success moment: "You just [achievement]! Share with a friend?"
• Milestone celebration: "You've been using [Product] for 30 days!"
• Team detection: "Looks like [colleague] could use this too"

#### Friction Reduction Checklist

• [ ] One-click sharing (no extra steps)
• [ ] Pre-written share text (editable)
• [ ] Referral link visible in dashboard at all times
• [ ] Mobile-optimized sharing flow
• [ ] No login required for referee to see the offer
• [ ] Referee landing page explains the incentive immediately

Step 4: Write Referral Copy

#### Referrer-Facing Copy

Dashboard prompt:

Give [incentive], Get [incentive]

Share [Product] with friends and you both get rewarded.
You've earned [X] so far from [Y] referrals.

[Copy Your Link]  [Invite by Email]

Post-achievement trigger:

Nice — you just [achievement]!

Know someone who'd love this too?
Share your link and you both get [incentive].

[Share Now]  [Maybe Later]

Email nudge:

Subject: You have $[X] in referral rewards waiting

You've been using [Product] for [X] weeks and
[specific achievement]. Know someone who'd benefit?

Share your personal link and you both get [incentive]:
[referral link]

[Share via Email]  [Copy Link]

#### Referee-Facing Copy

Referral landing page:

[Referrer name] invited you to [Product]

[Referrer] thinks you'd love [Product] — and they're
giving you [incentive] to try it.

[What Product Does — one sentence]

[Claim Your [Incentive]]

[Social proof: X users, rating, testimonial]

Referee welcome email:

Subject: [Referrer] gifted you [incentive] for [Product]

Welcome! [Referrer name] shared [Product] with you
and you've got [incentive] waiting.

Here's how to get started:
1. [Quick start step]
2. [Quick start step]
3. [Quick start step]

[Get Started with [Incentive]]

Step 5: Plan Launch Strategy

#### Pre-Launch (1 week before)

• Seed with top 10% most active users first
• Personal email from founder: "You're getting early access to our referral program"
• Goal: Get first 50 referrals to validate mechanics

#### Launch (Week 1)

• In-app announcement banner for all users
• Email blast to full user base
• Social media announcement
• Add referral link to user dashboard permanently

#### Sustained Growth (Ongoing)

• Trigger-based prompts (post-achievement, milestone, NPS 9-10)
• Monthly referral leaderboard (optional, for tiered/milestone)
• Seasonal boost: "Double rewards this month"
• New user onboarding: mention referral program during setup

Viral Coefficient Calculation

Viral Coefficient (K) = i x c

i = invitations sent per user
c = conversion rate of invitations

K > 1 = viral growth (each user brings >1 new user)
K = 0.5 = healthy referral supplement
K < 0.2 = program needs work

Example:
- Average user sends 5 invites
- 15% of invites convert
- K = 5 x 0.15 = 0.75 (strong, not viral)

To improve K:
- Increase i: More sharing triggers, easier sharing mechanics
- Increase c: Better referee landing page, stronger incentive

Referral Program Metrics

Anti-Patterns

• Referral link buried in settings — if users can't find it, they won't share. It needs to be visible in the main dashboard, not hidden three clicks deep.
• Requiring both parties to be paid users before reward triggers — this kills conversion because the referee has no incentive to sign up, and the referrer waits forever for credit.
• Complex reward rules nobody understands — if the incentive takes more than one sentence to explain, participation drops. Simplicity drives sharing.
• Rewards that expire too quickly (<30 days) — referrers who discover the program after a few weeks feel cheated. Give at least 90 days.
• No tracking dashboard for referrers — without visibility into "how many people clicked, how many signed up," referrers lose motivation to keep sharing.
• Generic share text that sounds corporate — "Check out this tool" gets ignored. Pre-written text should sound like something a real person would say.
• Making the referee create an account before seeing the product — the referee should see the value (and their incentive) before being asked to commit.

Edge Cases

• B2B enterprise: End-users often aren't the buyers. Referral must target decision-makers. Consider "recommend to your network" framing instead of "invite a friend." Reward the referrer's company, not just the individual.
• Marketplaces (two-sided): Design separate referral programs for each side (e.g., rider referral vs. driver referral). Each side needs different incentives and copy.
• Pre-launch / no existing users: Use waitlist-style referrals (Morning Brew model). "Refer friends to move up the waitlist" or "Unlock early access by inviting 3 friends."
• Low-price products: Cash incentives may exceed product value. Use product-based rewards (extra storage, extended trial, feature unlock) instead of money.

Launch Measurement Milestones

• Week 2: Check participation rate (target: >5% of active users sharing) and shares per user (target: >2). If below, the prompt timing or incentive needs adjustment.
• Month 1: Evaluate invite conversion rate (target: >10%) and K-factor (target: >0.3). If conversion is low, the referee landing page or incentive needs work.
• Month 3: Full program review — referral CAC vs. paid CAC, referred customer LTV vs. average LTV, fraud rate. Decide whether to scale, adjust incentives, or restructure the model.

Output

Each referral program design produces:

• Recommended model with justification
• Incentive structure (type, size, trigger conditions)
• Sharing mechanics spec (channels, copy, UX flow)
• Referrer and referee copy for all touchpoints
• Launch plan (pre-launch, launch, sustained)
• Metrics dashboard spec
• Viral coefficient projection

Quality Checks

• [ ] Incentive is ROI-positive (reward < LTV margin)
• [ ] Sharing flow is 2 clicks or fewer
• [ ] Copy provided for both referrer and referee touchpoints
• [ ] Anti-fraud measures defined (at minimum: email verification, delayed payout)
• [ ] Referee landing page has clear incentive + product value + CTA
• [ ] Referral link is visible in user dashboard, not buried in settings
• [ ] Copy matches brand voice (if voice-profile.md exists)
• [ ] Launch plan includes measurement milestones with specific targets