Referral Program Design and Reward Economics
Referral or affiliate program spec: reward sized from your margins, payout rules, attribution, fraud controls, and a funnel fix.
Before & after
Same prompt, same agent — the only difference is the skill.
A referral program can be a great growth channel for a SaaS product. Here's a framework to consider: **Incentive structure**: Consider offering both the referrer and the referee a reward. Double-sided incentives typically perform better than one-sided. **Reward types**: You could offer account credit, a free month, cash, or a discount. Credit tends to work well for SaaS since it keeps users in your ecosystem. **Mechanics**: Give each user a unique referral link they can share. Track conversions and automatically apply rewards. **Promotion**: Surface the program in your app, in emails, and after positive moments like a successful project completion. Don't forget to set clear terms and conditions to prevent abuse. Would you like help with any specific part?
REFERRAL PROGRAM — $29/mo PM app
THE CONSTRAINT THAT SETS EVERYTHING
LTV at $29/mo and 4% monthly churn = ~$725. You can spend up to ~$180
per referred customer and stay at a 4:1 ratio. That's the budget the
incentive has to fit inside — design down from it, not up from "what
feels generous."
INCENTIVE — double-sided, credit not cash
Referrer: $29 credit when the referral's 2nd payment clears
Referee: first month free
Why credit: cash attracts people who want cash, not people who want
your product. Credit keeps CAC inside the ecosystem and extends the
referrer's own tenure.
Why the 2nd payment: gating on signup buys you fraud; gating on the
2nd payment buys you customers. Costs ~30 days of attribution lag.
Total cost: $58 against $725 LTV.
THE TRIGGER MOMENT — this matters more than the reward size
Do NOT put the ask in onboarding. Nobody refers software they've used
for four minutes. Fire it after the user completes their third project
— the point where they've felt the thing they'd describe to a friend.
Same offer, same copy: roughly 3× the share rate.
MECHANICS
• One link per user, cookie 60 days (PM tools have a long consider cycle)
• Attribution: last-touch, referral beats organic
• Self-referral block: same card fingerprint or same email domain +
same IP
• Cap 10 rewarded referrals/user/month — above that it's affiliate
behavior and belongs in a different program with a contract
SURFACES, IN ORDER OF YIELD
1. Post-third-project in-app modal
2. Persistent nav entry (low volume, high intent, never annoying)
3. Invoice email footer
4. Quarterly campaign to users with 5+ months tenure
MEASURE
Referral rate = referrers ÷ active users. Under 2% the program is
broken; 5%+ is working. Watch referred-user churn separately — if it
runs above organic, the incentive is buying the wrong people and the
fix is the trigger moment, not the reward.About this skill
Most referral programs choose a reward because it sounds right, pay out at signup, and get gamed in the first month. Or they launch and get almost no shares, and someone raises the reward when the real problem is that customers never see the offer. This skill designs the program the way a growth lead would if they had to defend the budget. Every dollar traces back to your margins, and every payout has a rule behind it.
What it does
- Works out the reward from first-year gross profit and target CAC, with the formula shown so you can plug in your real numbers
- Picks one-sided, double-sided, credit, or cash rewards based on your margin, how often customers buy, and whether you sell to consumers or businesses
- Sets the event that makes a referral count (first payment past the refund window, not signup) and the payout hold
- Writes fraud controls before launch: self-referral matching, normalized emails, caps, no stacking with other discounts, leaked-code handling
- Finds where an existing program leaks, from seeing the offer through to reward redemption, and fixes the real bottleneck
- Covers what's different for affiliates: commission sizing, cookie windows, brand-keyword bidding bans, disclosure, and tax forms
What you get
A one-page program spec: economics, rewards, qualification and payout, attribution, fraud rules, where to ask, and target metrics for each stage. Assumptions are marked and it ends with the few questions that would change the design. Quick questions get a quick answer with the math.
Best for
SaaS, e-commerce, and subscription founders and growth marketers who are launching a refer-a-friend or affiliate program, or fixing one that isn't paying off.
SKILL.md preview
---
name: referral-program-design-economics
description: Designs or fixes customer referral and affiliate programs. It sizes rewards from gross profit and CAC, sets qualification and payout rules, attribution, fraud controls, and where to place the ask, and diagnoses underperforming programs stage by stage. Use when the user says "design a referral program", "how much should we pay per referral", "set up an affiliate program", "double-sided or one-sided reward?", "our referral program gets almost no shares", "people keep gaming our refer-a-friend codes", "what commission should affiliates get".
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# Referral Program Design and Reward Economics
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