“Buy X, get Y free” promotions reliably increase sales conversions.

However, you’ll drive even more conversions by framing a customer’s target product as the free gift, instead of the other way around.

For example, if a customer searches for “fitness tracker” on your website, show them the offer “Buy a weighing scale and get a fitness tracker free,” rather than “Buy a fitness tracker and get a weighing scale free.”

Why it works:

• People don’t expect to see a product they actually want as the free gift.
• This makes them feel lucky—the promotion seems more attractive.
• And the novelty of the offer makes them more likely to buy.

Steps to implement:

1. Choose a target product (the free gift). This can be something your customers commonly search for or a known best-seller.
2. Choose a secondary item (the main product) of equal or similar value. If one product is significantly more expensive than the other (e.g., buy a printer, get a free laptop), people will either question the quality or think it’s a scam and refuse the offer.
3. Enhance the effect with messaging that makes customers feel lucky (e.g., “It’s your lucky day!”)

Should you offer a freemium plan or free trial?

It’s a tough call for many SaaS businesses. Here are the pros and cons.

Pros of freemium/free trials:

• They’re product-led growth tactics for customer acquisition. They can reduce signup friction and get users to experience your product’s job-to-be-done faster.
• They provide an opportunity to hook prospects by delivering value before any money changes hands. When done right, by the time the user starts paying, they 1) understand how the product solves their problem, and 2) have developed a habit around product use.
• By analyzing data from thousands of SaaS and subscription companies, the ProfitWell team found that freemium cuts customer acquisition cost (CAC) by nearly half, and free trials had 15% lower CAC.
• The ProfitWell team also found an almost 20% improvement in net retention and a twice-as-good Net Promoter Score (NPS) for freemium vs. non-free.

Cons:

• Freemium and free trials are tough to get right. Unless you understand exactly what to charge for and how customers value your product, you run the risk of giving away either too much or not enough value in your product’s free version. It takes a lot of data to know how to strike the right balance.
• Those promising stats from ProfitWell notwithstanding, there is the potential for freemium/free trials to result in an increase in CAC and a drop in retention. If you decide to offer freemium or a free trial, make sure it works with your CAC and average revenue per user (ARPU) and provides a clear conversion path.

There are a few indicators that freemium/free trial could be a fit for your business. As you implement or refine your pricing strategy, consider:

• Low product friction: Your product is easy to get started in and experience value from.
• Product stickiness: The value of your product increases the longer someone uses it, making them less likely to leave for a competitor—and giving you more time to convert them to paid.
• Network effects: Your product’s value increases as more people use it. Both stickiness and network effects help maximize user retention. And the longer someone is retained, the more likely they are to upgrade eventually.
• Product virality: Your product has pull virality and word-of-mouth potential.
• Self-service: You don’t need to put many resources toward supporting self-service users. They can experience product value without extensive training or support.
• Market competition: You’re offering an alternative to a well-entrenched competitor or introducing a totally new concept. Both might benefit from a freebie nudge.
• Market size: Your product would be able to convert enough people to make the economics work. Which means either a bigger market or a higher conversion rate.

91% of B2B buyers rank webinars as their favorite content format.

But webinars have grown stale over the last several years. The problem isn't the format—it's that marketers have allowed the medium to become boring.

Try these tactics before, during, and after your webinar to get more out of the event:

Before: If partnering with guest speakers, create a joint promotion plan that leverages their network to increase attendance.

• Don't make it a one-off event. For greater impact and longevity, cover the topic from different angles over the course of a series. People who show up to multiple events become prime SQLs.
• Ask your audience to help define the agenda. Instead of assuming you know what your audience wants, survey them to find out what topics they're most interested in. Curate your webinar sessions accordingly.

During: Choose a personable moderator. Someone who can comfortably manage the ebb and flow of the conversation and get the audience involved.

• Turn your speech into a discussion. Use live giveaways, Q&A, and breakout groups to turn passive listening into active participation.
• Take advantage of the chat feature. Webinar chats panels either feel like ghost towns or they’re filled with sales pitches. Task a colleague with acting as the host—have them engage in discussions, ask and answer questions, and get feedback in real-time.

After: Follow up. Include a link to the webinar recording, thank them for their attendance, and encourage sharing (a one-click tweet works well).

• Repurpose and distribute: Repurpose the webinar into assets for your marketing channels to drive traffic back to the original (i.e., blog post, Twitter thread, podcast, YouTube clips, LinkedIn post, etc.).
• Consider avoiding the word "webinar" in your promotion. It's boring. Masterclass, Seminar, or Expert Talk are better alternatives.

Webinars should feel more like live courses than product demos. Keep tabs on how top internet creators are building live courses. They usually nail “edutainment”—the sweet spot between entertainment and education that leads to high engagement and high perceived value.

Shoppers don’t perceive prices or buy rationally.

Because of this, seemingly minor pricing tactics can have an outsized impact on conversion.

Take a look at this example:

The product on the right should convert better than the one on the left.

Why? Simple pricing tactics proven through behavioral psychology studies:

1. Use a smaller font for the reduced price. It makes the item feel less expensive compared to the original price.
2. Place the prices horizontally, not one on top of the other. And show the higher price on the left and the lower price on the right. Since we read left to right, this helps shoppers understand the price reduction.
3. Choose prices so that the sales price's right-most digit is lower than regular price's right-most digit. For example, £295 should be reduced to £250, not £249. Because shoppers read numbers to themselves, the lower right-most number makes the whole reduced price seem lower.
4. Separate the two prices physically by a distance—don’t include them right next to each other. This separation helps shoppers internalize the difference between the two prices.

While creating pricing pages and ads, consider testing these tactics to see if they increase conversion.

Keyword optimization helps people discover your app in the App Store. Screenshot optimization entices them to download it.

Last December, Apple launched a new A/B testing feature for mobile apps. If you sell an app that’s already getting decent traffic from search, consider A/B testing your screenshots' messaging, sequence, and design to increase download conversion rate.

1. First, log in to your App Store Connect account. Navigate to My Apps > Product Page Optimizations and click the "+" in the header.
2. Give your test a name and choose the number of variants to test (Apple calls them "treatments").
3. Select how much traffic each treatment will get. For a true A/B test, we recommend splitting traffic 50/50.
4. Click Create Test and upload your screenshots. Click Start Test to launch.

Let your test run for one to four weeks; until it reaches 90% Confidence (statistical significance).

• Once you have data back, compare conversion rates from impression to download.
• When you can determine a clear winner, end the test and choose the top-performing treatment.

Some successful Amazon advertisers get about 60-70% of their sales from organic traffic, with the rest coming from pay-per-click (PPC) ads. Even if you have a great Amazon ad profile, it pays to spend time improving your products’ organic rankings in Amazon’s search results.

Amazon SEO ranking uses the same two factors as Amazon PPC ad ranking: performance and relevance.

Performance:

• Amazon wants to know that your product is buyable. If your conversion rate is solid, your organic rankings will prosper. Besides an optimized PPC program, other elements that improve conversion include strong product imagery and good reviews.
• Pricing and inventory factor into performance too. You’ll lose out to competitors if your product is priced too high or your stock runs out.

Relevance:

• You’ll rank more highly for a search term if your product page proves you’re relevant to it. If you’re running PPC ads, use the keyword insights you get out of them to optimize your product pages.
• Tactically place high-converting keywords from your campaigns on your product page. Add them to your product title (including your brand name), product description, and image metadata. Another element that will help with relevance is the search term field (Seller Central > Inventory > Edit Product > Keywords). Use up all 250 characters with a string of keywords that differ from those in your title.

Most brands source their influencer content like this:

1. Reach out to a bunch of different types of influencers.
2. Send them some products.
3. See what comes back.

But that quantity-over-quality approach rarely works out—the resulting videos don't capture what the brand needs.

The best TikTok creators know how to make engaging video content, but they need direction to promote your products well. That's where a creative brief comes in.

A creative brief is a set of instructions that helps you maintain quality control and minimize costly reshoots. Here’s what we recommend including in a TikTok brief:

1. Specify deliverables: Define your advertising goal, and specify the number of videos you want. We suggest asking for 5-10 different openers per video so you’ll have plenty of hooks to test.

2. List talking points (value props): Tell creators how to talk about your product. The best way to do this is by listing your value props.

3. Storyboard: A storyboard is a graphic representation of how you want your ad to go, shot-by-shot. Answer these questions to map out a linear, product-focused storyboard:

• Situation: When and where is your product used? Who is it supposed to help?
• Problem: What problem(s) does your product solve?
• Process: How does your product work? What does it do?
• Solution: What results can the customer expect? How does the product improve their life?

4. Set content guidelines: List any do's and don'ts you have around language, phrasing, competitor mentions, or buzzwords related to your brand.

• Make sure the creator knows how to use your product correctly so they look comfortable with it on camera.
• If the creator is responsible for editing, provide direction on text overlays, video effects, and other post-production details.

5. Share examples: Browse TikTok's Ad Library (open link in new tab) and include links to a few of your favorite ad examples. Note specific shots, visual effects, or content types you want to recreate (e.g., unboxing, TikTok made me buy it, X reasons why).

You’re hiring quality creators because they’re great at engaging their audiences. Your brief sets the guardrails so that creators understand and pitch your product in the best way possible.

Most business experiments—around 90%—result in so-called failure.

Example: an A/B test in which the status quo ends up being the winner.

But those results are just as important as “successes.” They support startup growth by providing insights into:

• Why the experiment variant “failed”
• What you can learn for your next experiments
• How risky your experiments are. Too many small wins may mean you're not focusing on the most high-leverage opportunities.

Instead of defining “failure” and “success” based on test results, here are the definitions we recommend.

Failure: the act of creating 1. an undisciplined test, like one with an untestable hypothesis 2. a test with low impact on your business, or 3. a test your team won't learn from

Success: the act of developing, launching, and learning from a rigorous test with the potential for high business impact

Basically, a sloppy test is a fail. An inconsequential test is a fail. A well-designed test is a win. And any test that gives you useful new information is a win.

So go ahead and “fail.” Encourage your team to do the same. Disproven hypotheses are part of a healthy growth culture.

Here's an underrated SEO technique that can improve click-through rate: schema markup.

Schema markups (also known as structured data) are snippets of code that, when added to your pages, help Google represent your content in search results.

Image: Hubspot

For certain search types, adding schema can get you more clicks. By giving visitors more insight into your content, it can encourage them to click on your site vs. other search results.

For example, someone shopping for a specific product might click on the result that’s labeled “in stock” based on product schema.

Besides product schema, here are three other types worth adding to your pages:

• FAQ: Consider adding this markup to your actual FAQ page, plus your product and service pages. You’ll be able to address objections right on the results page.
• Ratings and reviews: Use this schema as social proof. A search result with strong ratings and reviews is more enticing than one without.
• Video: Since this schema enables a video thumbnail in SERPs, your content gets a visual element that text-only search results lack.

You can find more details about each type of schema on schema.org.

To create your schema markup, use Google’s Structured Data Markup Helper or another free online generator like TechnicalSEO.com. These tools walk you through the markup process and then provide a code to be added to a specific page’s HTML code.

People tend to value items more when they own them.

That’s the endowment effect—the psychological phenomenon behind why someone is more likely to buy a car after taking it for a test drive. When we feel like something is already ours, we place a higher value on it.

Here are a few ways you can use the endowment effect to convert warm prospects into paying customers.

Reframe promos. Instead of standard promos (and free giveaways), frame them as if they already belong to users.

• Example: “Get a 20% discount on camping gear” → “Claim your 20% off new camping gear”
• Livongo, a health management company, replaced the generic copy “Join the program” in its email marketing with “Claim your welcome kit” and drove a 120% increase in registration.

Adjust cart abandonment copy. Consider using the endowment effect in cart abandonment emails. Use language like “your [product] can’t wait to come home” to help shoppers feel as though they already own the items in their carts.

Create interactive content. Help users visualize products as theirs by adding an interactive component to your site, app, or socials.

• For example, IKEA’s Place app lets people see how furniture fits in their home, endowing them as owners.
• You can do something similar by creating custom Snapchat or Instagram filters with your products, like filters for trying on sunglasses or makeup.

Try this copywriting framework to create more compelling product descriptions:

1. List all of the product’s features.
2. For each feature, explain its benefit(s).
3. For each benefit, explain its value. In other words, translate each benefit into its real-life implications—state why customers should care about it. For extra punch, inject emotionally appealing language at this step.

Here’s an example of this framework applied to a reusable water bottle.

Feature → Benefit → Value

• Wide bottle mouth → Faster refills → You can spend less time standing at a water dispenser—and more time running, hiking, etc.
• Straw lid → Easy sipping → Since you don’t have to twist off a bottle lid, you can drink with just one hand—perfect when you’re on the road.
• Double-wall vacuum insulation → Protects liquid's temperature for hours → You can be refreshed for any adventure with your drink either as cold or hot as you’d like.

Some companies make customers jump through hoops to cancel their subscriptions.

Instead of offering easy, online cancellation, they force customers to cancel by phone during business hours. Or if they do offer an online cancellation option, they make it difficult to find.

But these tactics are unethical and, in some cases, can even lead to legal action from the Federal Trade Commission (FTC).

You should make it easy and straightforward for customers to cancel your service. Remove the friction.

Customers aren’t necessarily lost forever when they cancel. Some might return at a later time. Others might reconsider and decide to stay. Whatever the case, a smooth offboarding flow should accomplish two things:

• Allow customers to leave, easily, on a positive note.
• Without adding friction to the cancellation process, entice users to stick around.

Here are five tips for creating a smoother offboarding experience:

• Make cancellation as easy as the method used to buy or sign up. If customers can sign up easily online, they should also be able to cancel easily online. Simple as that.
• Remind users of your product’s key benefits. Consider how Canva (left) reiterates the features users will miss out on by canceling—it even shows an example image comparing its free and pro plans. This is more likely to persuade users to stay than Otter.ai’s approach (right).

• Give users an option to pause their subscription or skip a month. Sometimes the reason customers want to leave is a matter of timing, or something else outside of your control. By offering the ability to pause or temporarily deactivate their accounts, you can stop customers from leaving altogether. And if you note that you’ll save their data, there’s a better chance they’ll return later on.

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• Include a “salvage” offer to retain customers. If you sell a subscription, offer a discount to renew customers’ contracts. Or, depending on your product, offer users an extension of their trial (e.g., for another 60 days) or the ability to swap out a product for another one. Just be sure to present your salvage offer alongside your cancellation option—you don’t want customers to feel cornered.
• Make it easy to identify the cause of cancellation. Set up a quick, one-question survey with options like “Too expensive,” “Technical issues,” or “Switching to another product.” Include an optional field where users can add any comments. Don’t ask for a phone call to collect feedback—it can feel like a burden and further sour unhappy customer experiences.

Referrals are like adding fuel to your existing word of mouth (WOM) fire. They encourage WOM by offering an incentive for recommending your business to others.

While you’re investing in building a referral program, do some research to see if people who are already referring you organically want to do so formally.

Two ways to find organic referrals: 1) Check your site analytics, and 2) dig into your social media.

1. Site analytics

Check which sites are referring significant traffic to yours. In Google Analytics, navigate to the Acquisition tab > All Traffic > Source/Medium.

If a source in your list is reputable and speaks fondly of your product, reach out to them. See if you can form a relationship and test a formal referral program.

Set up goal tracking in Google Analytics to measure the number of new users who visit your site from a referral source. Use that as a source of truth when negotiating compensation or other forms of incentives with partner websites.

2. Social media

To find out how customers are talking about your business organically, do some social listening.

• On Twitter: In the advanced search window, type your product and business’s name in brackets in the “any of these words” section. This will show you all the public tweets that mention your business or product name. You can also use Tweetdeck to track mentions. Engage with high-quality posters. See if they’re willing to join your formal referral program.
• On LinkedIn: In the search bar, type the name of your business. Then click Posts > Date Posted. Set the time frame to “past month.” Click Show Results > Sort By > Latest > Show Results. You now have a filtered list of all the posts from the last month that mentioned your business. Search the results for any that speak highly of your brand. Reach out to see if they’d be willing to join your program.

For more on referrals, check out our process for launching a program here.

When users start struggling with a service or an app, they often get discouraged and stop using it entirely.

People don’t tend to continue using things they feel bad at.

For example, a user might stop playing a game if they’re stuck on a single level for many days.

But this struggle is a great opportunity to use personalization to retain users.

By providing personalized support—helpful tips, links to resources, or, in some cases, discounts on helpful upgrades—you can retain users who otherwise churn out of frustration.

You can automate this tactic based on event triggers specific to your service or app. A few examples:

• Mobile games: number of games / levels failed
• Dating apps: number of matches per user
• Educational apps / services: number of failed quizzes

Here’s how this personalization might play out:

The dating app Tinder could calculate the number of matches each user receives and then compare it against the average number of matches across all users. Then it could identify users receiving a relatively low number of matches and deliver personalized content like tips on how to improve their profile. Alternatively, it could offer a discount on an upgrade or special feature that could solve the frustration.

Providing support to struggling users ultimately motivates them to stay.

Most list posts (listicles) are utilitarian, boring, and easily copied by rivals.

They have titles like:

• The Top 10 DSLR Cameras
• The 5 Best CRM Products
• The Complete List of SEO Tools
• And so on

These types of posts may generate a ton of pageviews—but they rarely generate revenue (a common goal of listicles).

You can transform your listicles from generic, copycat content into unique, defensible, revenue-generating assets in five steps. Here's how.

1. Choose novel selection criteria. Most listicles are “Google research papers.” The writer searches a target keyword, skims the search engine results page (SERP), and grabs an assortment of popular things to include in their article. This isn’t effective since you’re recycling the same information as everyone else.

To differentiate your listicle and pique the reader's interest, you need a strong hook.

• Ditch the "best" qualifier and try something less common (e.g., Overlooked / Foundational / Overrated…)
• Target a specific reader or use case (e.g., X for Content Marketers / CMOs / Ad Specialists…)
• Pick a specific product trait (e.g., X Overlooked Browser-Based / Freemium / No Code…)

2. Surface your thought process. Even though you’re curating objective information, your writing still needs to persuade. You are the expert and your job is to persuade the reader that your list is worth trusting. To do that, share your thought process and selection criteria (why you chose what you chose).

• Why did you include it? "It's the most recommended…" or "It's the lowest-priced…"
• Why not other options? "We excluded apps that don't offer a free trial…"
• Is there something novel or unexpected about it? "Though not a conventional SEO tool, this AI content app offers the same keyword research data at a lower price."

3. Share personal experience to demonstrate credibility. Readers can tell when a writer doesn’t have firsthand experience. So even if your articles rank for their target keywords, readers won't trust your advice. If you want your listicles to convert readers, you need to prove to them that you have firsthand experience with the things you're writing about. Here are a few ways to do that.

• Take screenshots of software you're reviewing (any part that can't be accessed without logging in).
• Take your own product photos—even better if you include yourself in the photos.
• Share personal anecdotes about your experience that only a real user could have.

4. Lean on the experiences of others. If you can't experience the product or service firsthand, base your listicle on the experience of people who have. That means surveying and quoting audiences and synthesizing firsthand experiences from users.

• If you have access to a large audience (i.e., email list or social media following), survey them and share your research in the listicle.
• If you don't, interview a subject matter expert and share their insights to lend credibility to your list.

5. Make a single, opinionated recommendation. Listicles are meant to help readers make a decision. Most listicles are good at collecting things but usually go overboard with too many choices. This only makes it harder for the reader. Great listicles go out on a limb and make a strong recommendation. And readers trust it because it was written based on firsthand experience and clear selection criteria.

• For example, the product review site, Wirecutter, reviewed over 250 wine glasses and still managed to come up with a single final recommendation for its readership.

Can you guess which of these two headlines did better than the other?

• 2 reasons why the price of silver will rise steeply
• 2 reasons why the price of silver may rise steeply

You might expect the first to perform better because it’s bolder. It makes a definitive claim: the price of silver will rise.

But according to copywriter Gary Bencivenga, the headline that used “may” outperformed its counterpart by 200%.

Why?

The one-word difference qualifies the rest of the statement—it’s a condition telling readers that the claim being made isn’t 100% certain. So it feels more realistic. Even credible.

Here are some examples of how companies use conditional claims to build more trust:

• "A/B testing can transform your business—if you do it right” (headline on VentureBeat)
• “Zoom is probably the most well-received collaboration tool that we’ve seen...in 20 years.” (the first testimonial shown on Zoom’s homepage)
• “When it’s time to get granular regarding competitor traffic stats, the Top Pages report in Traffic Analytics is hard to beat.” (an announcement from Semrush)

Note the italicized phrases that create a condition—they ground the claims and make them feel more believable—they’re not absolute statements.

To build more trust with readers, try using* conditional claims in your own copywriting.

One easy way to do it: use an “if... then” statement. Define a clear requirement (if), and then write your promise (then).

*See what we did there? In most of our tactics and recommendations, we use conditional language—we can’t say with 100% certainty that growth will follow.

Repeat customers spend ~67% more than first-time buyers. And it costs 6-7x more to turn a new visitor into a customer than it does to retain an existing customer.

Improving retention can fix a leaky-bucket business, yet only 18% of companies focus on it.

To increase profitability and lower marketing costs, consider implementing the following four retention strategies.

1. Start a loyalty program. Loyalty programs incentivize customers to return to your site to buy, reengage with your product, and promote your product on your behalf.

Tools like Loyalty Lion or Smile.io can get you started.

Here are a few loyalty models to explore:

• Free newsletters: Encourage sharing in exchange for premium content or shoutouts.
• Paid newsletters: Reward your top advocates with comped subscriptions.
• B2B: Offer training, tools, and invitations to members-only events.
• Ecommerce: Create a tiered membership program that rewards customers with points, perks, or discounts. For example, Sephora's Beauty Insider has over 25 million members, and those members account for ~80% of Sephora's annual sales.

2. Collect feedback throughout the sales process. When implemented, customer feedback can help lower CAC, improve your marketing's effectiveness, and improve retention.

How to implement:

• Collect feedback from on-site forms, social media, email and post-purchase surveys, and heatmaps.
• Look for repeat questions and complaints about your product or website, as well as requests for new features and products. Apply the most common feedback.

3. Follow an omnichannel engagement strategy. Compared to single-channel marketing, an omnichannel approach can improve retention rates and engagement by 90%.

Quality engagement always starts with quality content. Here are a few ways to encourage omnichannel engagement via content and community:

• Reply to social media and blog comments.
• Host special events (webinars, workshops, AMAs, interviews).
• Start and maintain a well-organized Slack or Discord channel.
• Personalize email as much as possible.
• Involve your audience in content creation (crowdsourcing).

4. Provide exceptional customer support. Anticipate all the different ways someone might need support (see point #2), and implement as many as make sense for your business.

• Add a prominent live chat to your website that shows when your team is available and ready for questions.
• Create a well-organized knowledge database that lets customers search for answers themselves.
• Create and moderate a community forum that allows users to help each other.
• Write comprehensive blog posts addressing common issues and questions.
• Create video tutorials or educational courses about your product or service.

Keep track of what you learn, and make gradual changes that address your target audience's goals, pain points, and interests. Accomplish that, and you'll have no problem boosting your retention rate.

Check out this Patagonia ad:

(Image source: @dailyadcoffee)

Copywriter Jon Morrow defines power words as “persuasive, descriptive words that trigger a positive or negative emotional response. They can make us feel scared, encouraged, aroused, angry, greedy, safe, or curious.”

If you “sprinkle in a few, … you can transform dull, lifeless words into persuasive words that compel readers to take action.”

What’s remarkable about this ad from Patagonia isn’t that it uses power words. All great copywriting does.

The remarkable thing about it is that those power words tap into different emotions depending on the order you read them in.

Reading from top down, they cause anger and fear: screwed, it’s too late, we don’t trust anyone, we don’t have a choice.

From the bottom up, the emphasis changes entirely, to hope and encouragement: choice, livable, imagine, healthy future.

Brilliant.

The poem is followed by that kicker of a tagline: “Buy Less, Demand More.” That’s shocking from a retailer—and extremely affecting.

The takeaway? Appeal to your readers’ emotions. We tend to think of decision making as being connected to the rational part of our brain, but the opposite is true. Decision making is emotional.

Feelings dictate decisions. Emotional responses are why we share things that go viral, why we donate to causes, and why we buy what we buy (or don’t buy what we don’t need, in the case of Patagonia).

Refer back to Morrow’s list as you write your copy. Consider how your writing instills fear, encouragement, arousal, anger, greed, safety, or curiosity. If, instead of triggering a high-arousal emotion, it makes you feel merely content, a little bit sad, or just kind of bored, it’s time for a rewrite.

That Patagonia ad is one in a collection of the strongest copywriting examples we’ve come across. You can check out the full article here.

Referral programs have three phases of maturity. Understanding yours will help you maximize your referrals ROI.

• Phase 1: Test—when your referral program is starting out
• Phase 2: Prove—when you’re optimizing it
• Phase 3: Scale—when you’re growing and streamlining it

Phase 1: Test. The point of this phase is to test your referral program incentive as quickly and cheaply as possible. Iteration is the action, profitability is the goal.

Here’s what this phase might look like:

• Find your top 10-20% most engaged customers. Run a pilot with them by sending them individualized emails describing your referral program.
• Fulfill the incentives manually. Engage with new prospects 1:1 and learn from them.
• Refine your messaging, incentive, and process over time.

Spend time on this phase. Early-stage referral programs are not yet “set it and forget it.” Just like any other marketing channel, they must be actively monitored and improved before you start scaling up.

Test, then invest.

Phase 2: Prove. Once you find an incentive that converts and messaging that resonates, start removing friction from the process.

• Optimize the experience to make it as few clicks as possible (for the customer first, then the prospect, then your internal team). Start using low-cost automations for repetitive tasks.
• Continue to refine your messaging and learn from your new customers.

Phase 3: Scale. When your referral program is predictably generating prospects—and the economics still make sense—it’s time to invest in referral program software, like Rewardful, GrowSurf, or Referral Rock.

Create feedback loops so your referrers know their efforts are paying off. Even if their sharing doesn't yield a referral, seeing that their friend clicked and viewed is still encouraging (and might spur another referral).

Keep an eye on your economics to make sure customer acquisition cost (CAC) is comparable to your other acquisition channels. Monitor the quality of your prospects to keep out any fraudulent gaming of the program.

How much should you charge, and how should you charge (e.g., subscription, usage-based, flat rate)?

When establishing your business model and answering those questions, be sure to factor in friction.

Your product’s friction should align with your model’s friction. A low-friction product should have a low-friction business model. A high-friction product should typically have a higher-friction business model.

• A low-friction product is easy to use to accomplish a product’s job-to-be-done. It’s easy to get started in and stick with. Examples: TikTok, Gmail. Those have low model friction, too—they’re free. Free trials, freemium, or just plain free often align with simple products.
• A high-friction product has a more complex onboarding and use process. Experiencing full product value and forming a product habit take longer. Examples: Salesforce, Palantir. They have high model friction, too, such as higher pricing, add-ons, and variable pricing.

When product and model friction don’t align, there’s a risk that your product’s value won’t get realized, your unit economics (CAC and ARPU) won’t work, and growth potential will be stymied.

• Low product friction and high model friction: Not competitive. You’ll lose out to competitors who make it easier to pay or offer a more affordable solution. Because of the pricing barriers to entry, you’ll limit the number of users who experience your product’s job-to-be-done—and limit growth. Hypothetical example: if Instagram were to start charging a monthly fee.
• High product friction and low model friction: If you have a highly complex product, it probably can’t be learned during a free trial or freemium use. Users wouldn’t get the maximum value from your product. If you were to offer onboarding services to help free trialers get the most out of your product, your CAC would go up and could become unsustainable.

Because of the importance of aligning product and model friction, successful low-ARPU products tend to be low-friction (like social media apps), and successful high-ARPU products tend to be high-friction (like enterprise B2B SaaS).