Previously, every now and then I would get an email from one of the providers I was using – a credit card, a SaaS app, a subscription service – letting me know that, for a limited time, I was could make quick money for referring a new client.
I’ve never dug into my personal contacts once, copied the jerky text example that they carefully pasted for me to use, or even gave the idea another thought.
But lately I’ve been getting all kinds of referral offers from almost every third-party service I use. In fact, I am now making a sizable amount of Medium from their new reader referral program. I haven’t even had time to look into the program yet, let alone send an email or put a link somewhere. The money has just arrived.
It seems like overnight, every business on the planet suddenly realized that the best place to find new customers was through their existing customers. Or maybe they suddenly decided to start paying for those referrals.
When does a customer referral program make sense?
I’ve had the idea of ââclient referral programs for my business, Teaching Startup, for some time. I’ve already set up a partner program for organizations to give discounts to their own members, and it works well, not great.
I haven’t done anything yet where my clients get paid to recommend their peers. It seems like it’s about time. The plan is established and it would be fairly easy to implement, especially since I already have the structure in place.
At Spiffy, the mobile on-demand vehicle servicing and maintenance startup where I’m product manager, we’ve been running a customer referral program since before I arrived (I was busy helping create another startup, that I finally left). This referral program works great, but it’s a different business model.
Multi-level marketing or the concert economy?
The real reason I haven’t implemented a client referral program for Teaching Startup is because I just need to get beyond the Amway aspect of it. For those of you who aren’t as old as me, Amway is a multi-level marketing company that sells beauty, health, and home care products.
It was pretty popular in the 1980s, so much so that he had his own 1980s version of a meme: “How would you like to make money just by getting your friends to buy household products that they already use every day? “
Everyone knew this pitch and the company behind it.
Amway still exists today, now called direct selling, and it has probably influenced most modern direct selling businesses.
Today’s customer referral program doesn’t look like an MLM, but rather an outgrowth of the gig economy and the creator economy.
Most of the referrals, in fact the vast majority, are probably making a few bucks a month, the kind of quick “thank you, I didn’t even see that money” like I get from Medium.
But there are almost always hardworking people who will work in the system as a second job and earn a lot of money, and that’s what drives the program. A business only needs a few dozen super customers to match the output of a less than stellar salesperson. And automation costs less than commission.
So yeah, maybe it’s time to dive into customer referrals as a legitimate sales channel, build my own little army of super entrepreneurs, and continue my mission by reaching the people who probably need it the most. product than most. Entrepreneurs tend to hang out with other entrepreneurs, and our startups all have Teaching Startup issues to solve.
But there is still a small catch, which in fact stems from the economy of odd jobs. And as an entrepreneur, you need to be aware of this.
Are your referrals clients? Or sellers?
I’m currently working on an article explaining why it’s never a good idea to suggest that sellers in your two-way market can make a living by being your seller. Businesses from Uber to Fiverr to Clubhouse have been burned by blurring the line between a side gig and a full-time gig, and this has resulted in issues that are both small (creators publicly complaining that they have been tricked into error) or large (contract employee limits legislation).
So be sure to explicitly state that your referral payment is a thank you, not income.
Because again, money for nothing is always enough of a lure – even if it only attracts 1 in 100 or 1 in 1000, people think they can make money by being a amateur influencer for your product. You won’t hear from them until they’ve done a lot of work, hit a wall, and get angry. They will blame you, which like I said can lead to anything from bad publicity to lawsuits.
What most hobbyist influencers won’t realize is that when there are enough people breaking their butt to push a particular product, there simply aren’t enough customers at the end of the day. day for everyone to earn decent money, let alone get rich.
I’m not saying this will happen with something as innocuous as your referral program, but the same kind of headache in an inferior form might come over you.
Draw the line between thank you and income
So if I end up doing a client referral program for Teaching Startup, and I probably will, I’ll start by taking some of a client’s subscription fee off until they get a free membership (because what show me the entrepreneur who does not like free).
Then I could pay them for what they bring. But this remains a special case, because my clients are entrepreneurs. They are already working on their own to make money so I can be sure they won’t be relying on my program to make money.
Can you say the same? If this is the case, a customer referral program can be a very good thing. Just make sure you don’t lean too much into the gig economy, otherwise you might end up with volunteer amateur influencers without even realizing it.