# Referral Program Examples

Real-world examples of successful referral programs.

## Dropbox (Classic)

**Program:** Give 500MB storage, get 500MB storage

**Why it worked:**

- Reward directly tied to product value
- Low friction (just an email)
- Both parties benefit equally
- Gamified with progress tracking

---

## Uber/Lyft

**Program:** Give $10 ride credit, get $10 when they ride

**Why it worked:**

- Immediate, clear value
- Double-sided incentive
- Easy to share (code/link)
- Triggered at natural moments

---

## Morning Brew

**Program:** Tiered rewards for subscriber referrals

- 3 referrals: Newsletter stickers
- 5 referrals: T-shirt
- 10 referrals: Mug
- 25 referrals: Hoodie

**Why it worked:**

- Gamification drives ongoing engagement
- Physical rewards are shareable (more referrals)
- Low cost relative to subscriber value
- Built status/identity

---

## Notion

**Program:** $10 credit per referral (education)

**Why it worked:**

- Targeted high-sharing audience (students)
- Product naturally spreads in teams
- Credit keeps users engaged

---

## Incentive Types Comparison

| Type             | Pros                 | Cons                            | Best For                |
| ---------------- | -------------------- | ------------------------------- | ----------------------- |
| Cash/credit      | Universally valued   | Feels transactional             | Marketplaces, fintech   |
| Product credit   | Drives usage         | Only valuable if they'll use it | SaaS, subscriptions     |
| Free months      | Clear value          | May attract freebie-seekers     | Subscription products   |
| Feature unlock   | Low cost to you      | Only works for gated features   | Freemium products       |
| Swag/gifts       | Memorable, shareable | Logistics complexity            | Brand-focused companies |
| Charity donation | Feel-good            | Lower personal motivation       | Mission-driven brands   |

---

## Incentive Sizing Framework

**Calculate your maximum incentive:**

```
Max Referral Reward = (Customer LTV × Gross Margin) - Target CAC
```

**Example:**

- LTV: $1,200
- Gross margin: 70%
- Target CAC: $200
- Max reward: ($1,200 × 0.70) - $200 = $640

**Typical referral rewards:**

- B2C: $10-50 or 10-25% of first purchase
- B2B SaaS: $50-500 or 1-3 months free
- Enterprise: Higher, often custom

---

## Viral Coefficient & Metrics

### Key Metrics

**Viral coefficient (K-factor):**

```
K = Invitations × Conversion Rate

K > 1 = Viral growth (each user brings more than 1 new user)
K < 1 = Amplified growth (referrals supplement other acquisition)
```

**Example:**

- Average customer sends 3 invitations
- 15% of invitations convert
- K = 3 × 0.15 = 0.45

**Referral rate:**

```
Referral Rate = (Customers who refer) / (Total customers)
```

Benchmarks:

- Good: 10-25% of customers refer
- Great: 25-50%
- Exceptional: 50%+

**Referrals per referrer:**

Benchmarks:

- Average: 1-2 referrals per referrer
- Good: 2-5
- Exceptional: 5+

### Calculating Referral Program ROI

```
Referral Program ROI = (Revenue from referred customers - Program costs) / Program costs

Program costs = Rewards paid + Tool costs + Management time
```

**Track separately:**

- Cost per referred customer (CAC via referral)
- LTV of referred customers (often higher than average)
- Payback period for referral rewards
