By : Nidhi Gupta

Referral programs are a brilliant viral marketing strategy because of their explosive growth potential. There are many kinds of referral programs, but they all are systems of benefits for service users that recruit new users. The benefits are sometimes cash, or commissions, sometimes account upgrades.

The explosive growth comes from the fact that each referred user may become a referrer himself. Assuming just five active users are referred by each user; a single user will end up recruiting 3905 users (five to the power of five) after five levels.

Referral Programs as a Marketing Strategy

Exponential growth is a good reason to create a referral program to market a service. The potential to grow is so enormous that everyone should at least try it. This is also a form of viral marketing, since users are doing the actual marketing work. The advertiser does not need to do anything once the ball gets rolling.

The important thing to keep in mind, when launching a new referral program is that most of the users should be of the type that will refer others. This is effectively used in the Get Paid To market, where users, who are trying to earn money online, are likely to try the referral program to add to their revenue.

Another related issue is that the program needs to have enough incentive. If the gains are not high enough, the referral program will not get enough attention. Ways to make it more appealing without risking too much money include adding multiple referral levels, and giving a percentage commission from recurring sales. The potential gain for the referrer is so much higher for these kinds of programs that they are very likely to get noticed.

Potential for Referring

If you have a large network of online contacts, referral programs are a good way to monetize it. When recruiting other it is important to have a good idea of the service through using it yourself first. Then an honest review of it may convert long term users.

The programs to choose are the ones, which offer multiple levels of referral commission, because you also benefit from the exponential growth of the downline. Also those programs with recurring commission instead of a flat referral fee have more potential in the long run.

It is important to choose referral programs with the correct theme to market. If you are marketing them in your blog, or a website, choose ones that fit the theme. Otherwise readers will rarely be interested. It is important to use all channels at your disposal, when you market a program. Don’t just stick with a blog post, but contact any email and IM contact that might be interested.

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