When you hear the words “referral-based direct marketing,” you might think of Tupperware parties or Avon ladies going door-to-door. However, referral-based marketing encompasses a lot more than just direct sales. And, according to a 2013 Nielsen Trust Study, referrals are still the most trusted form of advertising.

So, how can referral marketing be strategically used to help you earn more money in your online and affiliate businesses?

What is referral-based direct marketing?

In referral-based direct marketing, there is a major focus on making sales through targeted messaging. That targeted messaging is directed mostly at current and past customers who have purchased the merchant’s goods and/or services. This is why such an approach is called direct marketing. In contrast, general or broad marketing sends out a generic message to a large audience composed mostly of non-customers.

Several strong offers are presented to these customers to encourage them to refer people to the merchant in exchange for an incentive. When referred prospects make a purchase, the referring customer is rewarded with that promised incentive.

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While it sounds simple in theory, referral-based direct marketing is often plagued by lackluster interest and/or complaints from prospects about being spammed and/or downright harassed to make a purchase. And there is also the association of referral-based direct marketing to network marketing companies (i.e., MLMs).

So, how can you take advantage of referral-based direct marketing without resorting to MLM-style schemes and/or creating an army of referral-harassing customers who end up tarnishing your online and affiliate brand? Alternately, how do you create targeted messages that are actually directed at your customers and induce them to take action?

How to create effective referral marketing for your online business

When it comes to effective referral marketing, you can’t just put a single incentive offer out there and expect massive conversions. To create effective referral marketing, several key elements must be in place:


Referral incentives aren’t developed in a vacuum. A successful referral program typically incorporates surveys and questionnaires to assess customer needs and wants. Following that, research is conducted on ideal referral channels, including blogs, news outlets, social media channels, and even a customer testimonial page on the referring or affiliate website.

Once your referral offer is in place and emailed out or showcased on your website, don’t forget to conduct A/B tests to better understand which messages and outlets work and which ones are detrimental to your offer.

A strong offer

Uber offers its partners a $5 credit for every new rider that they refer; for referred drivers that complete their first batch of rides, the partner bonus is at least $100. Powur/Solar City, which helps sell solar power equipment to homeowners, offers its referral partners a significant 20% residual earnings package on any sales they generate.

Creating a strong affiliate or online offer requires forethought and imagination. If you are selling affiliate products, consider what incentive(s) would inspire customers to recommend those products to their friends and family. Could the offer be just about earning X amount of dollars, or could it include a chance to make a residual income?

Alternately, should referring customers earn other benefits, such as a mention on your website, or a blog post about their own businesses?


If you learn that 63% of your customers are willing to refer your products, but only 15% do, then it’s time to find the source of the disconnect.

In many cases, the cause of that disconnect is that the site doesn’t ask for referrals, or at least not directly. To solve this problem, publish a simple landing page on your site that defines your referral program and what current visitors must do to earn that referral commission. Outline the exact steps that referring parties must take in order to collect their incentive.

Be sure to target all platforms with your offer, regardless of whether they be online, offline or mobile.


Any referral offer must be flexible. In other words, it must come with the opportunity to be swapped out for marketing message, offer type, incentive percentage, etc. It should also be broad enough to work on offline, online and mobile channels.

How do you create an offer with “swappability?” The key is to create several dozen discrete elements that can be incorporated into a sales page, banner promo or ad. Such elements often include images, buttons, copy, incentives, etc. These elements should remain “stored” on your website or hard drive until they are brought out and used in place of other elements.


Many customers are shy about referring their friends and family members and don’t wish to appear “salesy.” Others have no idea how to recommend a product and/or service, no matter how good its referral offer. In such cases, you won’t induce these customers to market your products and/or services unless you create an easy to follow, common sense script for them to use.

To this end, you can create a few pages of copy that explain your products/services and their respective benefits. You can place such copy on your affiliate website or onto other platforms, such as social media. Encourage easy shares, uploads and likes of your posted content by including PDFs, share/download buttons, and social media share icons. Consider creating a DVD or zip file of your collateral and sending it to your referring customers via email or other means.

Referral marketing doesn’t have to be hard or sleazy

You can increase your affiliate and online sales significantly by implementing referral marketing elements into your website, social media platforms, and even into your daily discussions with customers and influencers (e.g., bloggers). The best offers create a motivated audience that is more than willing to recommend your products and services to others without resorting to hard sells or underhanded tactics.

If you’re not sure which incentives will work with your business, the following list provides several dozen successful examples.

Have you taken advantage of a great referral program? Or, have you created a referral offer that generated results for your online business? Leave a message in the comments below.

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