Referral Agreement Wikipedia

With a closely related recommendation, there are implications for the reference call when the product or service is not well received, given the higher value placed on a personal recommendation rather than an advertisement. It is therefore in the referrer`s interest to recommend a product or service that is useful not only to the person concerned, but also to something they have used. [4] Affiliate Marketing describes a partnership program in which cooperation between merchants and publishers is established. The external website is used for advertising purposes by incorporating banners or links to the online store. Depending on the agreement between the trading partners, the operator of the website receives a commission for the intermediation of interested parties. The commission depends on either the duration of the advertisement, the acquisition of new customers or the entry of orders. Affiliate marketing is a cost-effective alternative to relatively expensive banner marketing. The referee should not be impartial if the compensation is based on the person who joins the client, and not just for the recommendation. Incentives can place an ulterior motive on the reference, which can introduce a „sell“ engine of referrals to get compensation. This can create uncertainty for the customer who is loyal to the customer and reduce trust in both the existing customer and the company, regardless of the product sold or the service sold. This is not done with pure WOM, as there are no incentives for speakers recommended by a company. [1] There are three basic elements that help define and distinguish the recommendation programs from the organic (word of mouth) WOM.

They are motivated by the company because they are actively managed by the parent company, unlike the organic WOM, which includes the unsolicited recommendation for a company`s products or services through external interaction, without any corporate influence. Second, the overall goal is to transform an existing customer`s networks into new customers. Finally, it is a reward or incentive that the company gives to the existing customer for the successful conversion of its network to its products and/or services. [4] A 2010 study by the University of Pennsylvania and Goethe University in Frankfurt aimed to establish the link between the value that a customer brings to a business through online recommendation marketing, answering four questions: this study followed a bank`s online recommendation program in Germany and found that each transfer by an existing customer would result in a reward of 25 euros. The results showed that customers were both more profitable and more loyal than regular customers. Clients had a higher hedging margin, a higher retention rate, and were generally more valuable in the short term than in the long run – 16% more profits and 25% more value. A returned client had an 82% chance of being an active customer after 33 months, compared to 79.2%.

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