The Challenge

Bathhouse was trapped on the paid advertising hamster wheel. While ads were bringing in customers, the true costs were staggering—and mostly hidden.

The problems:

• Paid Media Burnout
  
  • Rising CAC on paid channels with diminishing returns
  • Natural ceiling on paid search due to limited keyword volume
• Operational Overhead No One Calculates
  
  • Massive hidden costs: content production, creator management, analysis, A/B testing
  • Influencer partnerships and event costs that silently inflate CAC
  • Organic word-of-mouth happening without systematic activation 

Customer surveys revealed the opportunity: people were already recommending Bathhouse to friends. The question wasn't whether word-of-mouth was happening—it was whether they could systematically activate it.

The Solution

Bathhouse partnered with Friendbuy to launch referral and loyalty programs that would tap into their naturally social, community-driven brand experience.

Referral Program Strategy

• Stackable rewards for advocates (refer 10 friends = 10 discounted passes)
• First-visit incentives for referred friends
• Seamless integration with their industry-specific booking system
• Zero cash payouts — all service-based rewards

Loyalty Program Design

Bathhouse discovered their customers were surprisingly siloed—some were "day pass people" who sauna’d regularly, while others were "treatment people" who only came for massages on special occasions. The loyalty program was designed to drive product discovery and break down these silos.

Strategic reward structures:

• Cross-product incentives — 5 day passes = 1 massage credit (regular sauna-goers try treatments)
• Reverse incentive — 2 massages = 1 free day pass (treatment customers discover the bathing ritual)
• Experiential rewards — birthday bonuses, anniversary recognition, social engagement points
• Earned rewards philosophy — no arbitrary discounts, everything must be earned through participation

The messaging component: "There's a messaging component to it," Jason explained. "We're noticing you, we want you to come. And when you do come, we care about that."

Technical Execution

Unlike e-commerce brands on Shopify, Bathhouse needed a custom API integration with specialized booking software. Friendbuy provided:

• Full-service technical implementation
• UX design aligned with Bathhouse's brand
• Business logic consultation and program strategy
• Ongoing optimization support

The Results

Acquisition Impact

20% of new customers now come through referrals

22% conversion rate on referred friends

1-2 months to profitability (covering all integration costs)

$70,000 in referral sales from a single advocate

The Super-Advocate Discovery

When Bathhouse analyzed their top referrers, they discovered something remarkable:

• One NYU student generated $70K in referral sales (~250 new customers)
• Multiple advocates generated $5K-$30K+ in referrals each
• Zero cash paid out — all rewards were service credits
• These advocates already existed — the program simply activated them

Unexpected Benefits

Better Inventory Utilization
Referred customers disproportionately visit during off-peak times (early mornings, weekday evenings), helping optimize capacity without aggressive discounting.

Product Discovery Through Loyalty
The loyalty program successfully broke down customer silos. Day pass regulars began trying treatments. Treatment customers discovered the bathing ritual. Result: increased lifetime value and fuller product adoption.

Improved Product Adoption
Advocates act as onboarding ambassadors, coaching friends through the proper sauna/cold plunge protocol. Result: more customers experience the "Sauna Glow" and become repeat visitors.

Deeper Brand Connection
Both programs make customers feel recognized and valued. "We're noticing you, we want you to come," as Jason put it. Customers feel like part of the team when they're rewarded for sharing and participating.

Evergreen Engine
After the initial setup, the programs run largely on autopilot. No constant content creation. No monthly checks to ad platforms.

Key Takeaways

​​​​Partnership Quality Matters

For non-standard tech stacks, expertise and execution quality matter more than feature lists or price alone.

Calculate Your TRUE CAC

Include operational costs like content production, creator fees, team time, and testing. The real cost of paid media is often 2-3x the media spend alone.

Your Best Advocates Already Exist

Word-of-mouth is likely happening organically. Build systematic programs to activate and amplify what's already working

Use Loyalty to Drive Product Discovery

Don't just reward repeat purchases—design reward structures that encourage customers to explore your full menu and increase lifetime value.

Make Rewards Feel Earned, Not Given

Customers value recognition and achievement more than arbitrary discounts. Build programs that let them feel like they're earning something special through participation.

Look for "Sea Change" Opportunities

Stop chasing 2% improvements. Focus on strategies that can deliver 20%+ impact and fundamentally transform growth trajectory.

Referral Solves Multiple Problems

Beyond acquisition, it improves retention, customer quality, inventory optimization, and brand loyalty.

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The Bottom Line

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Bathhouse transformed their growth strategy by building two complementary programs: referral for acquisition and loyalty for retention and product discovery. Together, they created a self-sustaining flywheel powered by customer advocacy.

The referral program delivers 20% of new customer acquisition with minimal ongoing investment—customers who are better qualified, visit during off-peak times, and are properly onboarded by their advocate friends.

The loyalty program breaks down product silos, drives lifetime value through cross-product discovery, and deepens emotional connection through recognition and earned rewards.

As Bathhouse expands to new markets nationwide, these programs provide a scalable, efficient foundation for growth that doesn't require feeding the paid media beast month after month.

The result? A marketing engine that compounds over time rather than depleting budget with each campaign.

Ready to activate your own customer advocates?

See how Friendbuy can help you build referral and loyalty programs that turn customers into your growth engine.