What is a referral program and how to make money on recommendations – how-wiki.ru
27.02.2024

What is a referral program and how to make money on recommendations

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What is a referral program and how to make money on recommendations

Konstantin Rybchenko

WebFly Project Manager

< img class="aligncenter" src="/wp-content/uploads/2022/05/chto-takoe-referalnaja-programma-i-kak-zarabatyvat-na-rekomendacijah-cf16bcc.png" alt="What is a referral program and how to make money on recommendations" />

Konstantin Rybchenko Project Manager of IT-company “Webfly”, expert in business automation recommendation of goods and services. It can be a discount, free service, points, gifts or money. Such programs are also called affiliate programs.

A person who recommends a product or service is called a referrer, affiliate, or ambassador. And new members of the program who followed a special link or used a promo code are referrals.

This is how it works: a marketplace user sends his promo code to a friend, he gets a discount on his first purchase. The referee is then awarded points. Another example: a beauty salon offers to bring a friend. If a person does this, he receives a 20% discount on a particular procedure.

Banks, online stores, marketplaces, cryptocurrency exchanges, airlines, pastry shops, nail salons, and so on have their own referral programs. And their goal is to encourage the client to recommend a product or service to other people.

What are referral programs

Referral programs differ in the form of recommendation, model of construction and method of obtaining benefits. Let's talk in more detail about each species.

According to the recommendation form

In this case, it all depends on what the recommendation includes: a clickable link, a code word, or a set of numbers and letters.

  • Referral link – contains a unique user ID, only used online. It can be used to track the partner program participant who brought the client. If you click on the link, but you don't like the offer and don't buy anything, then its author simply won't earn anything.
  • Promo code or code word– Can be used both online and offline. For example, it can be voiced when buying in a store or driven into a special field on the seller's website.

By model type:

The model determines the circle of referrals from which the program participant receives a reward.

  • Single-level model – the participant is rewarded only for those people whom he invited. For example, it could be a bank client who gets paid for having his friends become clients or employees of this organization.
  • Layer model(“pyramid”). The participant receives bonuses for those whom he personally attracted to the program, as well as for those who were invited by his referrals. This is how network marketing companies work.

By the method of obtaining benefits:

The type of program depends on who gets the promotion: only the referee or both him and the referral.< /p>

  • One-way program– only the referrer gets the benefit in it. For example, a patient at a dental clinic brings a friend and receives an additional discount on the next appointment.
  • Two-way program – both the referrer and the referrer benefit. Example: An online English school that sells courses in packs. The reward in the referral program is additional lessons. If a member shares a referral link with a friend and he buys an English course, then both of them will receive two additional lessons.

Who can participate in the referral program

Anyone can participate in referral programs. Most of them are aimed specifically at individuals.

Referral programs that can be used by legal entities are available for companies and services operating in the b2b field: domain name registrars, online business platforms, banks and other representatives of the segment .

How to make money on recommendations

To do this, you need to share your referral link or promotional code:

  • in publications and stories in social networks;
  • forums;
  • via email campaigns;
  • on your own website;
  • in private messages in instant messengers;
  • using advertising on the Internet, targeting those who are interested in the service or a product that participates in a referral program.

For example, bloggers talk on their pages about using a particular product, recommend it, and attach a referral link. The audience is interested in this product or service, starts using the link, and the referee benefits.

The reverse story also happens: a person sees that when paying for the goods there is an opportunity to enter a promotional code, and begins to search for it on the Internet in order to reduce the cost of the goods or receive a bonus. If you place such a code for another resource on your site, you will bring people to it for free who will take advantage of the offer. This will help you earn money and save them.

What are the pros and cons of referral programs

At first glance, it seems that referral programs have no disadvantages. However, this is not quite true. Moreover, the positive aspects are obvious, while the negative ones are more related to human perception.

Pros

As mentioned above, the one who recommends the service receives benefits: money, discounts, gifts, bonuses . At the same time, he may not take active actions, but simply place a link or promotional code in the public domain and receive passive income from participating in the program.

If we are talking about a one-way program, then the referral at least receives a recommendation to use a proven service or service. If he participates in a bilateral one, he also receives the benefit provided for by the rules: points, an additional product, savings, and so on.

Cons

Negative moments are more pronounced for the b2b sphere. For example, the company recommended hosting to its client, he registered, but he had problems with the service.

Automatically, the company will be associated with the referral with this difficulty, although it is actually not related to the operation of the site. And the client will put in his head the sign equal to “bad hosting = bad company”. This leaves an imprint on business reputation.

In the case of individuals, the downside is that a person is embarrassed to recommend a one-way program to friends. He thinks he's cashing in on them. With a bilateral program, there are no such doubts. True, in both cases, you can get a negative response if the referral's expectations are not met.

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