Business Metrics
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Referral Program
A growth mechanic that rewards existing users for bringing new customers. Unlike paid media, it transfers trust.
Detailed explanation
Two-sided rewards (giver and receiver) usually beat one-sided gifts. The reward should relate to the product; cash is not always better.
Abuse (second accounts, coupon sites) needs rules. If reward cost is left out of CAC, growth looks fake-cheap.
This is the Referral rung in AARRR. If people do not like the product, a program will not glue it together—fix retention first.
Frequently asked questions
- When should you launch one?
- When users already recommend you. High churn plus rewards multiplies unhappy people.
- How do you choose the reward?
- Product credit or a feature that does not erase margin. Large cash rewards invite abuse.
Related terms
Internal links for the topic cluster — read these concepts together.
- AARRRPirate Metrics: Acquisition, Activation, Retention, Referral, Revenue. A five-rung growth frame that stops teams staring at one vanity number.
- CACCustomer Acquisition Cost: the average cost to win a new customer. If media is the only input, the number looks cheaper than it is.
- UGC (User Generated Content)UGC is the umbrella term for photos, videos, comments, and reviews created voluntarily by customers or followers rather than by brand employees.
- Word-of-Mouth MarketingDemand that spreads through recommendations, chat, and shares rather than bought inventory. Trust is high and control is low; a bad experience travels the same path.
- LTV (Customer Lifetime Value)LTV is the estimated total revenue a customer will generate for a company over the course of their relationship with the brand; it's a core metric for evaluating long-term marketing return.
- Growth HackingA discipline of fast experiments across product and marketing to find growth. It is systematic testing, not a bag of tricks.