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If you’re low on money, you might want to consider using referral marketing to promote your business.How does referral marketing generate customers?In fact, you use the general public to help advertise your company.They would create this through a unique referral site that they would share with their friends and family.  If someone buys through this site and/or signs up for the referral program, the original referrer would receive an incentive.This incentive can be anything you can come up with creatively, whether it’s cash, discounts, or free merchandise. 

Now, there are two ways you can achieve referral marketing.The first would utilize it as a secondary form of advertising, time-sensitive promotions is a great example.You try to encourage as much buzz as possible before your promotion ends.The other method involves incorporating a referral program into your standard business model.If you do this, technically your company becomes an MLM, this stands for Multi-Level Marketing. 

Okay, I know what you might be thinking.Isn’t an MLM a pyramid model scheme?No, but MLMs can go in a downward spiral if they are not done carefully.  Specifically, this means that they rely solely on referrals for their business.Not one legitimate sale of products or services are incorporated into their business model.

12 Daily Pro is a good example of such an entity.  This was an autosurf website that generated millions of dollars during its heyday.  However, over 95% of these profits came from referrals who invested their own money into the program; very little came from legitimate business transactions.As a result, older members were getting dividends from the new members’ investments.As the scheme moved forward, many new members weren’t getting paid because there weren’t enough leads to keep the pyramid strong.

nd this is the sad fate of pyramid scheme, even those that last many years....just like the Madoff scandal.   Of course, the Madoff scandal involved a ponzi structure, which is a bit more complex than your everyday pyramid scheme.Any way you look at it, the concept is the same.

In order to prevent these problems, always make sure that you’re rewarding referrals from the profits of your company.If you find this is difficult to do, consider compensating them on an affiliate basis, where they would receive a commission only if their referrals actually convert into a sale or new customer.

In conclusion, if you can’t afford an elaborate advertising campaign, consider utilizing referral marketing.  It isn’t difficult to implement, and once it’s established, you’ll have hundreds of people promoting for you free-of-charge.