Sunday, April 14, 2013
What is Referral Marketing?
Referral marketing is also known as network marketing, and is by no means confined to the online world. In fact, it has its roots long before the World Wide Web. Some very large and successful companies were built, and continue to thrive, on a referral marketing model.
This is how it all works: a company sells products and services via a network of entrepreneurs instead of a traditional store. This means that the company is able to sell the products and services to customers at a reduced rate because of the lower overheads, as well as the ability for the company to grow at a rapid rate! The entrepreneur also has a much lower startup cost, with the benefit of the backing of an established company.
The company also encourages entrepreneurs to recruit other entrepreneurs, in order to increase the capacity of the company. The referring entrepreneur then also earns commissions on the products that the referred entrepreneur sells. If the new entrepreneur brings further entrepreneurs on board, the original entrepreneur also receives commissions on those sales – and so on. This is the multi-level or network component of the company