Blog Friday Q&A

Friday Q&A: The Best Customer Referral Strategies For SaaS Companies

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Every Friday, we’re answering your questions about business, startups, customer success and more.

Happy Friday!

This week’s question comes from James McBryan, who asks:

Referrals are absolutely critical to the growth of just about every successful business I’ve seen.

Customers who are referred by loyal customers tend to become loyal customers: they trust you more from day one, they stay with you longer and they spend more over their lifetime.

This is a challenge that we’re continuing to explore, test and learn more about. One of the most important strategies, we’ve learned, centers around the timing of when you ask for a referral.

I’ve written about referral timing in the past, but it’s worth repeating:

If you ask at the wrong time, you’ll either get ignored (if you ask when they’re simply not thinking about you) or worse, you’ll get an angry customer (if you ask when they’re actually dealing with an issue with your product).

Aside from the built-in referral buttons that we have on Groove customers’ support widgets—which are static and not time-based—we do ask our customers for referrals from time to time.

What I’ve found to work best here is to make the ask when the value that you deliver is most apparent to them.

That will be different from business to business, but for us, that might mean:

It’s not something we’ve perfected yet, but it is something that we’re continuously working on.

The idea here is to make the ask when they’re most likely to give you the best, most positive (and effective) referral.

As for SaaS-specific strategies, I’m not sure that they differ too much from the Dropbox/Uber approaches that James mentions in his question.

Now, you probably won’t excite many B2B customers with a $20 credit, but the principle remains the same: show your customer how they can win by referring you. In the case of Dropbox/Uber, the customer wins in two ways: by getting free product/credit, and by helping their friend do the same.

There are a number of ways you can apply this principle in B2B:

In terms of tools to make the process easy and seamless for your customers, while we haven’t used them ourselves, I’ve heard great things from people I trust about both Referral SaaSquatch and Ambassador.

I’d love to hear what others have experienced in their own testing. Let us know in the comments!

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About the Author

Alex Turnbull is the CEO & Founder of Groove (simple helpdesk software for small businesses) who loves to build startups and surf.

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