The Latest Buzz on Referral Marketing
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If you’re low on money, you might want to consider using referral marketing to promote your business. How does referral marketing work? Basically, you use the general public to help advertise your business.They would accomplish this through a separate referral site that they would share with friends and family.If someone converts to a sale through this site and/or signs up for the referral program, the original person who referred would receive an incentive.This incentive can be virtually anything, whether it’s cash, discounts, or give away merchandise.
Now, there are two ways you can achieve referral marketing. The first involves utilizing it as a secondary form of advertising, especially for time-sensitive promotions. You try to create as much buzz as possible before your promotion ends.The second method involves incorporating referral programs into your unique business model. If you do this, technically your company becomes an MLM, (which stands for Multi-Level Marketing).
Okay, I know what you might be thinking.Isn’t an MLM a pyramid model scheme? No, but MLMs can go in that direction if they’re not done properly. Specifically, this means that they rely solely on referrals for their business.No legitimate sales of products or services are incorporated.
12 Daily Pro is an example of such an entity.This was an autosurf website that was able to create profits in the millions of dollars during its heyday. However, over 95% of these profits came from referrals who invested their own money into the program; very little came from legitimate business transactions.As a result, older members were getting dividends from the new members’ investments.As the scheme moved forward, many new members weren’t getting paid because there weren’t enough leads to keep the pyramid strong.
And this is the ultimate fate of pyramid schemes… even those that last several years, (like the Madoff scandal).Of course, the Madoff scandal involved a ponzi structure, which is a bit more complex than a simple pyramid scheme. Either way, the concept is the same.
So, to avoid these problems, always make sure that you’re paying referrals from profits of your business makes.If this would be hard to do, consider compensating them only on an affiliate basis, meaning they would receive a commission only if their referrals actually buy something.
In conclusion, if you can’t afford an elaborate advertising campaign, consider utilizing referral marketing.Implementation is quite easy, and once it’s established, you’ll have literally hundreds of people promoting your business for you free-of-charge.