Referrals

Referred customers retain better, pay more, and cost less to acquire. Most businesses get some referrals; few engineer them.

Non-programmatic

Some products generate referrals organically (Slack, Dropbox). Most don't.

Referral programs

• Incentive both sides (referrer + referee)
• Make referring easy
• Time limits drive action
• Track attribution

B2B referrals

Ask explicitly after delivering value. Structured ask: 'who else do you know who has [X problem]?'

Measurement

• % new customers referred
• CAC of referred vs other
• LTV of referred vs other

What to do with this

• Build referral into the core value delivery (shared docs, multi-user features), bolted-on "refer a friend" programs rarely move the needle
• Track referred-customer LTV separately, referred users typically have 2-3x the LTV of paid-acquired and different CAC economics
• Two-sided incentives beat one-sided, reward both the referrer and the new user, friction drops on both sides
• Monitor the K-factor explicitly, assumed virality without measurement almost always overestimates real contribution
• Don't oversize the reward, $50 for a referral that costs you $30 to acquire through paid is a structural loss, cap the spend