Learning how to make money with an online referral program isn’t rocket science.
As an existing customer, you refer people you know to become new customers. In return, they often receive a discount and you earn some kind of reward. Pretty simple stuff!
On the other hand, if you’re looking to make real money, there’s more to it than getting your friends to buy through your referral links.
In this article, I delve into this subject to show you what you need to know.
What Is An Online Referral Program?
Referral programs have been around for years.
A referral program encourages existing customers to spread the word about the company’s offer, in return for a reward. This ‘reward’ can include discounts, vouchers, redeemable points, prizes and cash.
An online referral program is essentially the modern, digital equivalent of this model. These programs strategically benefit the company, the person referring people, and the person being referred.
In contrast to traditional marketing strategies, the referral marketing strategy leverages word of mouth. The customer (referrer) encourages someone they know (referee) to signup to, or buy something, they personally use.
Does this ‘word of mouth’ style of marketing work? Yes. And it works very well.
Why? It ultimately comes down to trust.
According to the 2015 Nielsen Trust In Advertising Report, word-of-mouth is the most trusted form of marketing on the planet. Some 83% of respondents said they trust recommendations from people they know.
If your friend recommended something based on their own positive experience, versus an advertisement, what would you pay more attention to?
I’m guessing you’d listen to your friend! They use the product, you trust them, and they are recommending it. Makes sense.
How Do Referral Programs Work?
While each referral program is different, the way they work is very similar.
The first step is to become a customer or member of whatever you want to share.
Second, the company provides you with a unique referral link.
This is often a link to the page you want your referral to visit, such as a signup page or sales page. Your link is uniquely coded to you so the system can track who referred who. In some cases, you are given a ‘referral code’ which is entered by your referral somewhere during the account creation or checkout process.
The third step is to start getting the word out to people you know. This could simply be emailing your link to friends and family, sharing it on social media or any number of ways.
Note: Some referral programs stipulate how and where you can share your links. It’s a case of playing by the rules or risk getting booted.
Anyways, once people start clicking on your link and performing whatever action is required for you to earn, you earn the reward! Pretty simple stuff.
Two Main Types of Referral Programs
As mentioned, there are various ways a company will reward a referrer such as discounts, cash, or points etc. But there are also different types of referral programs depending on the individual program, or ‘ways’ you can earn.
Read on to see what I mean…
#1 ‘Earn Per Action’ Referral Programs
This model rewards the referrer when their referral completes an agreed action. This ‘action’ could be any number of things, but often involves the referral creating a free/ free trial account.
In other words, no money needs to change hands in order for you to earn the reward.
Examples of ‘Earn Per Action’ Referral Programs
Trello: This is a team collaboration software that helps people stay organized and keep projects on schedule. When your referral creates a free account, you get a free month of ‘Trello Gold’ which unlocks extra features within your Trello account. This is valued at $5 per month and the maximum you can earn is 12 months.
DropBox: A popular online storage and file sharing application. For every person you refer to the free basic account, both you and your referral earn 500 MB of free storage space, to a maximum of 16 GB. If your referral purchases a ‘DropBox Plus’ account, both of these numbers are doubled.
SwagBucks: Users can complete tasks, take surveys, surf the web and perform other tasks in order to earn ‘SwagBucks points’. These points can be redeemed for gift cards and cash back from PayPal. Creating an account is free, and you will earn 10% of whatever points your referrals earn for life, with no limit to how many people you can refer.
Digit: An innovative platform designed to help people save money automatically. This pays $5 per referral who creates a free 100 day trial account. There is no limit to the number of referrals you can have. The money goes into your Digit account and can be withdrawn into your bank account.
Evernote: A cloud based app designed to help people take notes and keep organized. When you invite someone to Evernote, and they log into their account, their account is automatically upgraded to premium for one month. When you refer your first three people, you earn 10 points, which is equivalent to a three month premium subscription. From that point forward, any referral who purchases a premium membership will earn you 5 points.
#2 ‘Earn Per Sale’ Referral Programs
This is a more common referral model. You are rewarded whenever a referral purchases something through your referral link. This could mean purchasing a product, service, subscription or anything requiring your referral to whip out their credit card.
Examples of ‘Earn Per Sale’ Referral Programs
Sprint: A popular internet service provider and retailer of mobile devices. Each new referral who activates a new line, can earn you $100 and the referral earns $50 for each new line activation. This is capped at $500 per year.
Bevel Subscription: Offers a monthly shaving kit subscription service. When you refer someone who orders a new subscription, you get $29.95 off your subscription and so does your referral. There’s no limit to how many people you can refer.
Thrive Causmetics: A beauty cosmetic company dedicated to supporting woman suffering from cancer or domestic violence. For every product you buy, one product is donated to these woman. Referrals receive $10 off their first order, and referrers get a $10 voucher.
Craft Coffee: This is a monthly ‘craft coffee’ subscription club. By sharing your unique discount code, referrals receive 15% off their order. If they purchase a craft coffee-at-home plan, you earn a free coffee delivery.
Erin Condren: This site sells unique life planners, stationary, and office related products. Each time you share your unique referral link with someone, they get $10 off their first order and you also receive a $10 gift certificate.
The cool thing about these kinds of referral programs is you don’t need to learn much about marketing to earn rewards. Not to mention, you get to offer your friends discounts on stuff they’ll love! Win win.
But there are much more lucrative ways to earn with referral programs, so this is only part of the picture.
An Alternative To The ‘Refer a Friend’ Model
It’s not all about referring friends and making a few bucks here and there. You can actually make some serious money recommending products to people online.
I’m talking about affiliate marketing.
This is very similar to what we’ve already discussed, but there are some key differences.
For one thing, an affiliate does not have to be a customer of the company they promote. Second, most affiliate programs pay out real money as oppose to discounts, prizes, points or other freebies.
Essentially, affiliate marketing is for people looking to build an actual business.
Rather than referring friends and making a few extra bucks, an affiliate is running a business and can potentially earn a lot more money.
Cool. But how do you get started?
The process is very similar to the referral programs I mentioned earlier. In a nutshell, you sign up to a free affiliate program and get your link in front of as many of the right people as possible.
The real work is in the latter part though, getting people to buy through your link. It’s not as simple as telling people you know and sharing it on social media though! At least, not if you want to make decent money that is.
There are many ways to do affiliate marketing successfully. Some better than others.
Personally, I recommend building a simple website and learning how to get free visitors through Google search. That way, you can promote relevant products as an affiliate on your website, without spending tons of money on advertising. When people buy through your affiliate link, you earn a commission.
Amazon has a program called Amazon Associates which pays affiliates up to 10% commissions on whatever people buy through your link.
The commission rates are not massive, but there are perks.
For one thing, people trust Amazon and buy there without question. Second, you earn on anything that person buys within a 24 hour period of clicking on your link. So, even if someone clicks on your affiliate link looking to buy a book, they could end up buying a high ticket washing machine while they’re at it and you’d earn that commission!
That’s an extreme example, but you get my point.
In any case, I make money as an affiliate so I know this works.
Like any business, it does take time and effort to get into profit so it’s not for people looking to cash in overnight. If you approach it like a business, and give yourself the time you need to succeed, you can absolutely make money this way.
If you just want to share some of the products you love with people you know, then there are many good referral programs worth getting into. Your friends and family get discounts, and you earn some pretty cool rewards in the process.
On the other hand, if you want to turn a serious profit, then it’s worth learning how to do affiliate marketing. This business model allows you to promote millions of quality products and services in virtually any niche you can think of. This allows you to go way beyond sharing stuff with people you know and earning discounts.
Whatever program you decide on, you absolutely can make money with an online referral/ affiliate program. How much you earn ultimately depends on how much effort you put into your business.
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