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
referral partner.
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.

Is Your Company Next?

The Federal Trade Commission is on a rampage. Why? MLM (multi-level marketing) companies are
coming under scrutiny for improper and illegal practices. In fact, two large established companies have
been fined $200 million and $238 million, respectively, in the past year. This is more than a slap on the wrist.
Other companies across the nation are scrambling – some to cover their tracks and others are genuinely
seeking compliance with the FTC. The simple truth is that people invested in these programs are at risk
– not only for the money invested, but for future earnings. Then how do you avoid getting trapped in one of these schemes? Consider these warning signs…
1. Does your company or distributors suggest that people quit their jobs and go full time in the
MLM business?
2. Does your company require large purchases to qualify for bonuses?
3. Are less than 33% of purchases of products made by those who are just customers versus
business builders?
4. Are the products priced significantly higher than similar products sold in the marketplace?

5. Do you see the company’s products being sold of eBay or Amazon for discounts?
6. Does your company market a miracle product that cures or prevents diseases or ailments?

7. Does your company or distributors suggest the ability to live a lavish lifestyle?
These are just a few of the negative signs you may be in the wrong company – one that may be subject
to government oversight and fines and, more importantly, loss of livelihood.
Your best bet is to seek an established referral marketing company. This is a company with an
established track record and excellent, well-priced products.
Also, make note of the difference between an MLM and a referral marketing company. While the
structuring may seem similar, the referral business is the way to go. You do not need to make excessive
purchases or keep inventory. And your products are good, without higher than market pricing.
If you feel you have to make extra purchases to qualify for a bonus or if you have to hold inventory, then
you are likely in the wrong place. Good companies have a substantial (66%+) customer only base and
keeps track of sales to customers, separate from business builders.
Unfortunately, this business model has been misused by some. And it has cast a shadow over the entire
industry. This kind of marketing is legitimate and affords the individual the opportunity to make passive
income – an essential in creating any kind of ongoing wealth. Just make sure you are with an honest and
compliant company, preferably one that does referral marketing.