Zerodha restarts referral program; Nithin Kamath highlights word-of-mouth growth

Kamath explained that Zerodha initially launched the referral program due to a lack of funds for advertising. Under the program, clients who referred new users received 10% of the brokerage generated by those referrals for as long as the referred customers continued trading. Before the program was discontinued in 2024 due to exchange regulations, nearly 30% of Zerodha's accounts were acquired through referrals.

However, Kamath noted that the true impact of word-of-mouth was likely higher, as many customers joined directly without using a referral link. He estimated that the real number of customers acquired through recommendations was well over 50%. Even after referral incentives were removed, 15-20% of new accounts continued to originate from recommendations.

The reinstated referral benefits will apply to both new referrals and customers who had previously referred users before the program was halted. This move comes at a time when customer acquisition costs are a significant focus for online brokerages in India, with many platforms investing heavily in marketing. Zerodha, in contrast, has often highlighted its reliance on organic growth and customer recommendations, building its business without external venture capital funding.