Referral & Affiliate Programs

Before Starting

1. Program Type

• Customer referral program, affiliate program, or both?
• B2B or B2C?
• What's the average customer value (LTV)?
• What's your current CAC from other channels?

2. Current State

• Do you have an existing program?
• What's your current referral rate?
• What incentives have you tried?

3. Product Fit

• Is your product shareable?
• Does it have network effects?
• Do customers naturally talk about it?

Referral vs. Affiliate

Customer Referral Programs

• Existing customers recommending to network
• Products with natural word-of-mouth
• Lower-ticket or self-serve products

Affiliate Programs

• Reaching new audiences
• Content creators, influencers
• Higher-ticket products

Referral Program Design

The Referral Loop

Trigger Moment → Share Action → Convert Referred → Reward
       ↑                                            │
       └────────────────────────────────────────────┘

Step 1: Identify Trigger Moments

• Right after first "aha" moment
• After achieving a milestone
• After receiving exceptional support
• When they tell you they love the product

Step 2: Design the Share Mechanism

1. In-product sharing
2. Personalized link
3. Email invitation
4. Social sharing
5. Referral code

Step 3: Choose Incentive Structure

• Simpler to explain
• Works for high-value products

• Higher conversion rates
• Creates win-win framing

Incentive Types

Incentive Sizing

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

Viral Coefficient & Modeling

Key Metrics

K = Invitations × Conversion Rate
K > 1 = Viral growth
K < 1 = Amplified growth

Referral Rate = Customers who refer / Total customers

• Good: 10-25%
• Great: 25-50%
• Exceptional: 50%+

Program Optimization

If few customers are referring:

• Ask at better moments
• Simplify the sharing process
• Test different incentive types
• Make the referral prominent

If referrals aren't converting:

• Improve the landing experience
• Strengthen the new user incentive
• Ensure referrer's endorsement is visible

Output Format

Program Design

## Referral Program Design

### Incentive Structure
- Referrer gets: [Reward]
- Referred gets: [Reward]
- Timing: [When rewards are given]

### Mechanics
- Trigger moments: [When to prompt]
- Share methods: [How they share]
- Tracking: [How it's tracked]

### Launch Plan
1. [Step]
2. [Step]
3. [Step]

### Success Metrics
- Referral rate target: X%
- K-factor target: X
- CAC via referral: $X

Related Skills

• launch-strategy: For launching referral program
• email-sequence: For referral nurture campaigns
• marketing-psychology: For understanding referral motivation