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  Post #1 (permalink)   11-04-2010, 11:15 PM
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Just wondering if any of you out there have set up a referral plan or program for your customers? If you have, what's been successful, what's worked?

thanks,
Nedra
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  Post #2 (permalink)   01-07-2011, 04:27 PM
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Hi,

Well I am all about rewarding my customers for referring other people over. I just started, so I don't have a success story. What you need to establish is a simple way to track it. With my billing tool, I can create "coupon codes". A code gives a specific discount for the service ordered. What I do, is I create one matching the username of my members. So they can refer people and leave their username as coupon code. This enables me to track who refered who and able to do the cash out correctly. I offer 1$ per referral and on special dates or campaigns I offer a little more. Since my hosting service does not cost that much, users can use the credits to pay for their account or for upgrades.

what do you think ?
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  Post #3 (permalink)   01-07-2011, 11:31 PM
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Hello Nedra,

In order to have a successful Referral/Affiliate program you need to have a large client base for things to really kick off and work. In addition, one factor that may entice individuals to refer your service would be a residual commission.

For example, a hosting package for $5.95/mo is sold via a referral/affiliate link and now your client would receive a residual 30%, 40% commission from the $5.95/mo package which was sold for as long as that new hosting account is active. There are web hosting providers that offer 10%, 20% but the ones that workout best offer a higher pay out such as 40%, 50% and I have even seen a 60% recurring commission.

Another way to get your referrals to work for you would be to provide them with marketing material such as banners, flyers which they would use with their affiliate/referral id. I hope this helps provide some insight into the topic. Also, there are many other things that need to be considered with referral/affiliate programs such as minimum payouts, methods to dispense their earnings etc.

Best Regards,
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  Post #4 (permalink)   01-08-2011, 10:05 AM
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The majority of our business comes from client referrals. When we first started 100% of our business was referral based, but these days about 80% is referral.

One of the things that we cling to one our referral program is that each of the people who recommend us, have an active account with us. Many clients are more than happy to spread the word even without the recurring comission.

Remembering to ASK for the referral is something many people forget to do. There's no shame in asking if they would recommend you to a friend. If they're getting good service, and they want better service with more staff, more features etc, then spreading the word to generate more business yields a "win-win" situation for everyone involved.

Also, a lot of hosting companies restrict their affiliate program in that the client can not refer themselves. Why not? If you're generating a new hosting package, why not make it that EVERYONE can participate. We've found that by opening the doors to everyone, even existing customers to open second and third hosting accounts, yields to higher profits all around.

As Matthew stated above, providing the marketing materials vastly increases the chances that users will post information about you.
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  Post #5 (permalink)   01-08-2011, 10:20 AM
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When I originally posted my message there was a few things that I had not thought about.

I aggree that you need to post material in order for them to advertise your hosting service to others. Small banners and normal banners are the best. I offer to create one with their "coupon code" embedded into the banner. So they only need to post the banner and voila, it's done.

The commission payout is something that I don't really have a clue how to measure. I thought putting a dollar amount instead of a percentage gave a clearer message on how it works without the complication of calculating it for every referral based on a percentage.

I believe that extra incentives like a draw for the best sellers. This does however require a large amount of customers willing to participate.

Does anyone have a specific and successful referral program that would like to share how they came with the idea ?
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  Post #6 (permalink)   01-08-2011, 05:27 PM
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From our own research, a dollar amount works best if it's a single payout system. Refer a customer, get $25. When you advertise a percentage it allow you to place a higher value on the client- Get 25% commission for the life of the customer!

The nice thing on the commission setup is that you can define it as follows (as quick math to your customer);
$35/month * 25% = $8.75/month
$8.75 * 12 months = $105.00/year
$105 * 5 years = $525 (5 years is the average that we use for how long a customer stays with us)

Coupons DO work, but just as in cold calling, if you tell someone to go to "X" and signup rather than saying "give me your card number and I'll take care of it", you can lose the sale. Invest in a reliable program to handle your affiliate commissions. The client gets a unique URL and a cookie is tracked on the future clients machine for 30/60/90 days. The payouts are then instantly tracked.

We use a mix of both percentage and straight fees on our payouts. Our Dedicated Servers for a long time have been a payout fee of up to $200, however we've found that our clients are happier to promote our services for 10% commission and make their $200 within 5 months and then continue to make commission on a sale.

While the custom coupon is great for a low number of affiliate users, your goal is to have your affiliates doing the promotion - so anything you can do to make their life easier is what you'll want to do. And like anything else that is program related, if you have to do the task more than twice, automate it!
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  Post #7 (permalink)   01-08-2011, 05:33 PM
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All of our customers are able to activate their affiliate account right through the billing system so there is no added registration.

You can't beat a referred sale.

The billing system we use makes this easy however when we weren't using this billing system it can be very costly to purchase an affiliate/referral solution.

We don't see alot of closed sales from referrals but we do see alot of visitors. It beats when we advertised with ppc campaigns and our ads ended up on sites like thepiratebay. Nothing against tbp but I don't think the vast people visit tpb to buy things
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  Post #8 (permalink)   01-09-2011, 10:14 PM
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Something that might also help James is automatically activating the affiliate program upon signup. We implemented this a few months ago and we found that partcipation in the program rose significantly as there was nothing that the user needed to do in order to signup.

Many of the hosting companies are doing this now. Once the client is active, their affiliate program is active and they can instantly start receiving referral credits.

Compound this with the sending of the Affiliate Credit Report each month, a monthly "tips" on how to get the most out of the affiliate program, and if you have the manpower, a monthly (or bi-weekly) webinar for your users to communicate in realtime with an affiliate representative on how to maximize their sales.

We've found that just having something available is only half the step - pushing people into using it generally means a higher return.
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  Post #9 (permalink)   01-10-2011, 05:20 AM
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Great idea HandsOnHosting ! Thanks :-)
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  Post #10 (permalink)   01-10-2011, 07:07 AM
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We have done it, at 15%.

It has gained quite some Clients, word of mouth is the best advertising, and we have a town were our name is booming because of it.

It does work.
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  Post #11 (permalink)   01-11-2011, 12:55 AM
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Hello Conor,

Thank you for the supplementary details. It's really pleasant to hear about affirmative results from an existing web host who in reality received successful results through referrals. Also, I must agree about a dollar amount working best if it's a single payout system. When I was an operations manager for a medium sized ISP in Toronto a winning marketing venue for us was an amount figure for referrals sent through which resulted in a single payout Vs recurring.

In regards to the hosting industry and affiliate programs, I would also like to restate that providing the marketing materials such as the banners, creative material, backend portal to help manage and view live statistics etc will increase the opportunities that users will work with due diligence to promote your services specially with residual commission .

I believe HostGator has done an amazing job at building their affiliate program. Also, from what I read their organization generates quite the revenue thanks to their affiliates who endorse their services like mad. Of course, this goes hand-in-hand and they are rewarded well for their efforts.
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  Post #12 (permalink)   01-11-2011, 08:32 AM
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Hostgator has an amazing referral program in place and they pay out in excess of $300k each month to affiliates (at least that was the figures in late 2009/early 2010). If you're looking to model your business after someone, they have a great model - just be aware they also have very deep pockets!
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  Post #13 (permalink)   01-15-2011, 12:06 PM
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I will definetly look into it. Thank you all for answering. It gave me great insigh on what to do next.
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