Understanding Product-Led Growth
In the rapidly evolving business world, Product-Led Growth (PLG) has emerged as a game-changer. PLG prioritizes product experience as the primary driver of growth, focusing on delivering value directly through the product itself with low entry barriers. Typical go-to-market (G2M) strategies are Freemium or Free-Trial.
This approach has led to higher customer satisfaction, increased loyalty, and, ultimately, accelerated business growth. To double down on PLG, user-led growth is the next evolution. But what are good benchmarks of B2B referral programs, and how do I calculate my business case? To provide you an answer to these question we created the Referral ROI Calculator.
Introducing Cello's PLG Referral ROI Calculator
In a first teardown, Cello provided a glimpse at the first B2B referral benchmarks ever (→ link). To help you navigate and capitalize on user-led growth, Cello now introduces an addition to the benchmarks: The Cello Referral ROI-Calculator. This tool is designed to quantify the potential returns from adopting a B2B referral program strategy, tailored to your business's unique metrics and market context. Especially for those companies with a freemium or free-trial G2M strategy.
How does the Referral ROI Calculator work?
Disclaimer: The data below is based on real-world, state-of-the-art referral programs that use best-practice integrations and activations through Cello. Not every program performs equally well in every stage of the referral funnel Each product and referral program is unique and requires appropriate adjustments.
1. Provide business context
Cello's referral ROI Calculator allows you to input in a first step key business metrics:
- G2M (Go-to-Market Strategy): User's current strategy for reaching customers (e.g., freemium or free-trial).
- Yearly ACV (Annual Contract Value): Average annual revenue from a single customer contract.
- MAUs (Monthly Active Users): Number of unique users engaging with the product or service each month.
Based on this input different industry data and benchmarks are provided.
2. Design your referral program
Based on your ACV input you will get industry data on how other companies have set up their referral program. Now it’s your turn to enter your referral campaign data. You are asked to enter:
- Monthly ARPA (Average Revenue Per Account): Average monthly revenue earned per account or customer.
- Reward Incentive: Monthly % of subscription revenue passed onto the referrer for every successful referral.
- Reward Cap: Maximum reward or benefit given to a referrer.
- Event-Based Reward: One-time reward given to the referrer for specific actions or events, like generating a new sign-up
- % Referee Discount: Percentage discount offered to new customers (referees) referred by existing customers.
- Period Referee Discount: Time duration for which the referee discount is valid.
3. Get a first indication of your referral program success
What sets Cello’s calculator apart is its integration with industry-specific data and Cello benchmarks. Based on your G2M strategy (e.g. free trial and freemium) Cello leverages benchmark data from over 1.500.000 MAUs using Cellos referral programs. Based on this data you will receive predicted monthly results, containing:
- Monthly Active Users: Number of monthly users actively opening the referral program
- Sharing Users: Number of users who share or refer the product or service to others.
- Unique Views: Count of referees who clicked on the referral link.
- New User Sign-Ups: Number of users who clicked the referral link and register or create an account for the first time.
- New User Purchases: Quantity of purchases made by users who have recently signed up.
- Referral MRR (Monthly Recurring Revenue): Total predictable revenue generated by a business every month.
Experience the referral ROI calculator yourself
Now it’s your turn, you can explore the potential of user-led growth for your business. Access the free Cello PLG ROI Calculator here and begin crafting your own success story.
Embrace the power of referral programs and make informed decisions with Cello's Referral ROI Calculator. Whether you're a startup or a fast growing scale-up, Cello provides the insights needed to steer your referral strategy towards sustainable growth and increased profitability.
Go get your free template here.
Learn all about the power of referral marketing and how it can help your business thrive.
Learn all about the power of growth marketing and how it can help your business thrive.
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