Find a job - The Money of Marketing (continuation)

What are some of the ways a company could get their customers talking faster and more frequently? Give them incentives. Yes, discount coupons and free products might do the trick. But how about a part of the profits from the referral of these new sales? Again, this refers to satisfied customers simply referring new customers through conversations. Nothing new here. We do it all the time.

There’s a little catch phrase among network marketing professionals: “There are two types of people in this world. Those who receive a commission check for their referrals and those who don’t.” Each one of us, as a consumer, networks on a regular basis. We share our opinions on what product/service we like and what we don’t like. But the majority still let the companies keep all the profits, while a small percent of the crowd are now also gaining tax advantages and earning increasingly larger checks for these same endorsements.

(Why tax advantages? Because as a network marketer, you are an independent contractor and in business for yourself. That business entitles you to tax deductions for a variety of activities. Check with your local tax professional, but the meal you have with a friend (if you mention the product/service which you are contracted with) becomes tax deductible, the ink for your printer, percent of your internet usage, percent of your phone bills, and much more can become tax deductions. Yet you aren’t doing much that’s different. You are still basically just saying “Here, check this out. This is what I’m using and this is what I like about it”… meaning you are still recommending products and services as you always have been, but now have a business and new income stream based around this.)

Take a friend who is a realtor here locally. He knows that I would (and do) send him referrals as they come up in conversation. If I know someone is in the market to buy a home or looking to sell and needs a realtor, I refer them to him. Yet he passed on a financial incentive that if one of the customers I refer buys, he will hand over $500 as a thank you. Again, he’s setting up an environment that really fosters word of mouth by providing this financial incentive.

Now, if I refer someone it won’t be because of the $500, it will be because he’s a friend but also a professional at what he does and I know that my colleagues would be in good hands working with him. But having this extra “thank you” and incentive allows me to make sure that I have his contact information and business cards on hand.

Network marketing does the same but with more structure and often very advanced tracking systems and compensation programs that allow customers and “associates” to gain as much of the profit for their direct and even indirect referrals as possible.

What's involved in word of mouth recommendations that you're likely used to?

• A product or service manufactured by the company.

• A consumer who had a positive experience on that product/ service.

• Communication of this positive experience to another individual. Think about that. Pick anything you've told a friend or associate about. It can even be how the Brand A printer is better than a Brand B for their home office. What was involved there?

• The manufacturer (in this case “Brand A”) created a printer that in your opinion is superior.

• You had a great experience with this printer for some reason or another.

• And now you had a conversation on the phone when your friend told you he's looking to buy a Brand B printer.

Imagine that for your legitimate word of mouth recommendation (in this case for that Brand A printer), it's not just the manufacturer that gets paid (through their profits from the sale)... but so do you if your friend now buys one of their printers. Why do you get paid for a simple recommendation? Because you were a temporary marketer for their product. You were the one who took the time and explained what you liked about the Brand A printer vs. the Brand B printer and educated your friend on what to look for. Although you weren’t selling (as you genuinely wanted to help and were simply providing your experience), you did a better job in assisting to create that sale than a salesrep likely could have (since your friend trusts your opinion) and you certainly did more than an advertisement could have done. Meaning, it wasn’t Brand A’s sales reps or expensive print advertising that created this new customer, it was you. You were a "word of mouth marketer" or "network marketer" for that product.

Take it a bit further though (to now really see how network marketing organizations get built).

You established a long term customer for this printer manufacturer, so now every time your friend buys their products (including ink for his printer), you earn 10% of that sale, yet you don’t do the selling, the delivering or the customer service. You do nothing in the equation. You simply brought a customer to the manufacturer. And you did this because you genuinely felt that your friend (and others) would benefit more through using this manufacturer’s products.

Now, here’s where I’ll really cook your noodle… If your friend later in life has a conversation with somebody else about printers and that person too buys a Brand A printer... you earn a portion of that sale too. Why? Because it was your indirect referral that brought this business to them. Had you not told your own friend about this printer line, he would certainly not have told his friend, etc.

Below is a diagram of one common referral-genealogy structure called “The Binary” because of how the tracking and payments are setup on two (hence binary) teams or “legs”. You’ll notice how from the original person, a few direct referrals occur, but from those new customers more referrals occur and so forth. When any of these customers makes a purchase, the original referrer earns a commission (based on the compensation plan’s payout structure).