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Section 13 · Referral Systems
Referrals: The Lowest CAC Channel
Happy users are your best marketers. Give them a reason and a tool to share.
Users
Growth
Revenue
Why it works
Referred users have higher LTV, lower CAC, and faster activation. A working referral loop compounds.
Connects to
Users
Growth
Revenue
When to use it
Any product with happy users and a way to share the value.
When NOT to use it
Don't launch a referral program before product-market fit — you'll amplify churn.
How to use it
- Choose: give-get (Dropbox), credit (Airbnb), or commission (affiliate).
- Make sharing 2 clicks or fewer.
- Time the referral prompt to the moment of success (after a win, not on signup).
- Track sharing rate, click rate, conversion rate, and viral coefficient.
- Affiliate program for content creators / partners with bigger audiences.
- Partner marketing: integrations and co-marketing with adjacent tools.
Examples
Classic
Dropbox doubled signups overnight with 'get 500MB for you and your friend'.
AI app
Notion and Linear use referral credit to grow team adoption inside companies.