I think the analysis here is close but perhaps slightly off. 1. Your company has to have freemium pricing. - This is a factor that affects conversion rate. It

I think the analysis here is close but perhaps slightly off. 1. Your company has to have freemium pricing. - This is a factor that affects conversion rate. It's not so much about freemium as it is about friction. I think the idea here is that you have to have a more friction free offering for the referral, specifically the offer that the person being referred sees. If they get offered something a little extra than what they could get on their own it should be more appealing. 2. Your product has to have wide appeal. - I think what you really mean here is that your customers need to have people they can make referrals to. This is obviously a big factor in the number of referrals made. Who are your customers? A businessman learning Japanese on his own might just not know anyone that would use the product other than himself. Students might know lots of other students who might be interested - which are you dealing with? I also like the idea tomjen3 mentioned about incentives for both parties. This helps encourage people to make the referral, do it through the system , and helps the person being referred feel some form of obligation to the referrer and see that they can get something out of it. I'm not saying that "you're doing it wrong" or that if you make some changes it will work, just that maybe there are some deeper reasons as to why it won't work in your situation.