PYRAMID SCHEME

Referral Marketing is word of mouth marketing. Word of mouth referrals are the life blood of any business.

If a company annoys you, chances are you tell other people to avoid that company, and they may say to others they heard that....

TRADITIONAL BUSINESS MODEL

If a company provides you with an excellent service, and high quality products at a good price, (and pays you for referring other people to them!), then the chances are you will refer that company to others!

The cost of most retail products include huge marketing costs (advertising, PR, distribution channel establishment etc). A well known example is your pint. The cost of the pint is composed of VAT, marketing costs, distribution costs, staff costs, premises costs, and profits for the brewery and the publican.

REFERRAL MARKETING BUSINESS MODEL

With Referral Marketing, there is zero money spent on traditional marketing channels, the money that normally is spent on advertising, PR etc goes to the customers who refer other customers. A significant proportion of the cost price of the products goes to the customers.

Sometimes customers say - "This is just a pyramid scheme". Click on the links below to see popup images that explain the difference between the three models: