13 Sep Referral Marketing – Power and Promise
Referral Marketing is the future. But please don’t confuse it with MLM (multi-level marketing), also
known as Network Marketing. Sure, there are similarities, but there are significant distinctions. And
these differences make a great deal of difference to those who are involved in these business models.
Both Referral Marketing and MLM use a direct form of marketing which bypasses expensive advertising
and promotion. And both encourage building a team for mutual support and revenue sharing. But the
similarities end there.
The most important differences between Referral Marketing and MLM’s are:
1. In MLM’s those who market are called distributors and, in most cases, they buy and resell
products to consumers. This can result in the distributor maintaining high inventories. Referral
marketers are just that, they refer people to a company, which then serves and supports the
individual. All the referral partner has to do is help set up the new person’s account.
2. MLM’s often have a big ‘buy-in’ in terms of fees or products on the front end. Referral
marketing is different – there is no huge up-front expense. It is simple and easy to become a
3. MLM cost of goods and services are often inflated to provide big commissions to the
distributors. It is expected and understood that goods are priced above what other similar
products cost in the retail marketplace. On the other hand, Referral Marketing has competitive,
if not less expensive, pricing.
4. MLM attrition rate is high, as inflated claims of profits are not realized and costs to be involved
can be extreme. Many distributors leave, unhappy with their results. Referral marketing enjoys
remarkable retention for several reasons. First, the products are excellent and appropriately
priced. Second, products are guaranteed, so risk to the consumer is covered.
5. Finally, an important distinction is how government defines an MLM, for these companies have
strict guidelines as to how they operate. Recently, some have come under scrutiny and received
major fines for non-compliance.
Considering getting involved? Ask about these issues before you decide. You will find Referral
Marketing is superior and offers the greatest benefit to you and your family.