A referral program is also called an affiliate program. This is a kind of cooperation between the company and partners, where the partner sells the services or goods of the company and gets rewarded in return. This kind of cooperation allows the company to increase profits, minimizing costs, and the partner - to get their percentage of sales.
The principle of the referral program
If it is simple. When, by your recommendation, a person does some kind of action, for example, buys something. And you, in turn, receive a commission for bringing this person. The commission may be in the form of interest or some kind of value.
Participants of the referral program
- a company (website, service) launching its referral (affiliate) program;
- a referral - a person who has used the service or bought something by recommendation;
- an affiliate (referrer”) - the one followed referral’s recommendation.
Types of referral programs
Most often, the referral program is distributed using coupons (promotional codes) and/or referral links. The referral link contains information about the account of the affiliate, who will receive a reward for attracting a newcomer (referral).
In the case of promotional codes (coupons), the affiliate becomes the owner of a special promotional code, which he distributes. And the person who takes advantage of such a promotional code when buying becomes the referral of the distributor of this code. Often, a referral who uses a promotional code receives additional benefits (for example, a discount).
One-level and multi-level referral programs
Referral program can be one-level and multi-level. One-level means the affiliate receives a reward from the purchase of goods made by referrals/buyers attracted by him. In a multi-level program, you can get a reward not only for the purchase of your referral but also for purchases made by people who use the referral link of your referral.
Let's take a look at an example of this kind of affiliate program.
Following your referral link, your friend Mark bought the product and also wanted to participate in the affiliate program. He gave his referral link to Mary, who made the purchase. Thus, Mark is your referral of the first level. And Mary is the second level referral.
This example illustrates a multi-level referral program, which consists of two levels. In this case, you also earn on attracting new referrals. But there also can be three levels, when Mary can sell the product to someone through her referral link, and so on.
Thus, the referral system, like a snowball, brings profit to a whole network of partners who may not even be aware of the existence of each other, but at the same time bring profit to their higher affiliates.
Ways to attract referrals
It remains to figure out how to attract referrals. There are two ways to attract.
This is a method of attraction, in which the affiliate places his referral links in his publications, in comments, forums, signatures in the mail, banners and other advertisements in order to interest potential referrals to follow his affiliate link. This method is especially useful for owners of resources where there is a lot of target audience.
This method requires the affiliate to look for potential referrals, communicate with them, talk about the benefits of the product and encourage them to purchase the product through the affiliate link.
It is difficult to say which method of attraction is the best since it depends on many factors, but, of course, it is most effective to use two methods simultaneously or to combine.
A referral program is a great opportunity for additional income for all its participants.
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