Tie referral rewards to the moment customers run out
Growth leader Matt Swulinski says the best time to ask for a referral is right before customers hit a limit, and the best reward is more of what they were about to lose.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch · 20Growth: How to Build a $100M Growth Engine: Lessons from Wispr Flow and Superhuman | Why You Should Do Paid Ads Today and How To Do Them | How to Build the Best Referral Programs and How to Crush UGC with Matt SwulinskiMatt Swulinski, a growth leader who has run growth at Superhuman, the paid email app, and Wispr Flow, the voice dictation app, builds referral programs around the moment a customer is about to run out of something valuable. At Superhuman, the offer was a free month for the sender and a free month for the friend, shown front and center in the product so sharing was effortless. Swulinski says they had people with hundreds of referrals and hundreds of months, who "were never going to pay for the rest of their lives."
The method is to link the bonus to a usage limit. At Wispr Flow, the trigger was the 2,000 word dictation limit. Just as a user was about to hit it, the app suggested sharing it with a friend to get the next month free. He designed it that way to be tactile, timely, and easy to discover, so a user could take five seconds to invite one friend. He calls that spreading effect the K-factor, and says it is what makes or breaks a referral program.
His rule is to ask what customers would want more of that would not frustrate them. At Victor, his current AI assistant for office work, the product runs on token credits. When a user nears a limit, the app shows a simple decision tree for earning more. One path pays credits for posting about Victor on LinkedIn. Another pays a monthly share of a referred company's plan in credits, for example 20 percent of a friend's agency spending about $5,000 a month. He says they are willing to spend $1,000 to $2,000 to acquire a customer, and "We'd rather have our customers finding those best customers for us."
The failures sit at two extremes, he says. One is vague, with no clear reward beyond refer your friends, or a prize like swag that most people do not value. The other is a complicated, 20 tier game that no one wants to use because it is a pain. The sweet spot is in between: one clear action, one valuable payout, offered right before you need it.
To start, find the limit your best customers hit, and put one sentence there that trades more of it for one invitation.
Questions people ask
What is K-factor?
K-factor is the average number of new users each existing user brings in through invites. If 10 users invite friends and 5 of those friends join, the K-factor is 0.5. The higher the number, the more invites drive growth on their own.
You say the offer should be front and center, where does that actually go in the app?
Swulinski says the program should be front and center and easy to discover in the product, so sharing is effortless. In his examples, the offer appears at the Wispr Flow word limit and as a decision tree near the Victor credit limit.
Is giving away free months expensive?
At Victor, Swulinski compares credit payouts to the $1,000 to $2,000 he says they would willingly spend to acquire a customer. The idea is to pay existing customers in product, rather than paying more to find strangers.