There are many ways for making a living these days. Some are rewarding, some are not, some are fulfilling and some are frustrating, some are exciting, some are risky but no matter what we choose, we all must do something that earns us money. We often focus on this so much that we forget that there are things far more valuable than money.
This is about time and how to separate it from earning money so that it can be spend on the things we value most.
A good way for achieving this is by building a source of income that keeps paying long after the initial work is done. Authors write books, artists write songs, investors invest into promising ventures etc... but there are other ways too.
On this page we will introduce an alternative way for building an income that is not directly dependent on the time put in and that can be realized casually on the side by anyone. First up is an explanation of how it works followed by an example to illustrate it's true potential.
Understanding The System
There are companies out there who share revenue with their customers. We will look at the way in which this is done by one such company. (And we would love to find out about others that work the same way)
In this particular company there are:
Because of this the most likely way that you would come to know about the existence of this company is through another customer.
Here customers can only buy products directly from the manufacturer for their own consumption. Prices are the same for everyone.
This form of distribution saves a lot of money. 40% and more compared to other forms of distribution.
Instead of being used for advertisements, paying sales people or maintaining retail stores these 40% are instead awarded back to customers for helping the business grow.
This form of distribution is called pure referral marketing.
Attention here. This is the most common misconception. There are many referral marketing or network marketing companies out there. They use similar terminology, however these terms refer to the marketing strategy of these companies, not the form of distribution. All companies we could find except one were using direct selling as their distribution method. Direct selling is tough business for professional sales people and can not be performed by everybody. (Read more about it in the FAQ section)
To further illustrate the difference of pure referral marketing compared to more common forms of distribution let's look at an example of how it works in practice...
Example: "A" is a happy customer at a pure referral marketing company. She has her own customer number and uses it to log on to the manufacturers website to go shopping there regularly. She buys products for herself that are delivered straight to her doorstep.
One day she talks to "B" about the existence of this company and how they return 40% of their turnover to their customers. "B" thinks that this is a neat concept and wants to try some products there too. On the manufacturers website he needs to give the number of an existing customer for reference to be able to make his first purchase.
Because he heard about the company from "A", he gives "A's" customer number for reference. The company now knows that "A" referred him and with his first order "B" gets his own customer number that he can use to log in from now on.
Hence forth, a small percentage of all turnover that "B" generates through his purchases is transferred to "A's" bank account as a thank you from the company for bringing new business.
"A" does not need to handle money, products or support at all. "A" also doesn't need product knowledge or engage in any selling activities. The only thing that "A" communicated was the above concept.
Essential Product Properties.
What properties would products of a pure referral marketing company such as this need to generate a recurring turnover?
The True Potential
At this stage one may think that one would need to refer a LOT of people to be able to see any sort of interesting returns here but that is not the case.
In this particular model of pure referral marketing the 40% profit share for customers is split into 3 fragments of 25%, 10% and 5% over three levels.
To understand what this actually means in numbers we will postulate 100$ as an average monthly order amount per customer.
Example: Let's recap: Customer "A" is a regular customer at our little pure referral marketing company. She spends around 100$ a month on products that she likes to use herself. She tells "B" about the inherent referral concept.
"B" uses "A's" customer number to become a regular customer himself. The manufacturer now knows that "B" was referred by "A" and "A" will receive 25% of all turnover that "B" generates hence forth.
When "B" goes on to refer "C" and "C" then refers "D" and both become regular customers as well, then "A" will receive 10% and 5% respectively of their turnover as well since all this sprang from "A's" initiative.
"B" and "C" don't go out empty handed either as they played a part in forming this lineup of their own. If the line continues to grow and "E" and "F" and more join in, "A" will not benefit from it anymore because her 40% are already fully payed out over the first 3 levels.
Getting 40$ every month as a thank you for a referral is nice but it can hardly be considered a sizable income. So what could "A" do to increase that number?
Let's assume that over the span of one year, "A" finds one person a month who thinks that this is a neat concept and so does everyone else in her downline (12x12x12). Then the equation looks like this:
After 3 months, "A" gets her own products for free (110$ per month income). After 12 months "A" retires from her activity with a monthly income of 2,060$ and after 3 years "A's" network has continued to grow to a total of 1884 regular customers. Together they generate a large turnover of which "A's" 40% is 10,380$ per month!
Growing a large network like this may seem like a lot of work but "A" has actually only referred 12 people herself over the course of a year and everyone else in her downline has done no more then that either.
More Essential Product Criteria
We have already established that the products must be consumable products that are bought regularly for this system to generate a recurring turnover and that they must be of high quality so that people like using them even without being compensated for it. But there are two more important criteria that the products should fulfill:
One Condition To Be Aware Of
Pure referral marketing works by building a consumer network. There are no contracts or commitments in this system. Everyone is a free customer. To build a reliable business without commitment from anyone there needs to be a mechanism for facilitating stability. So there is one condition.
To be eligible to profit from this network one must be part of it too. In other words: Anyone who wants to get a payout any given month, must also contribute in that particular month else they are skipped. This makes a lot of sense when you think about it.
That is basically all there is to it. By building an income source this way you...
- can wake up when you are done sleeping.
- can work when you want, where you want and what you want.
- can have more fun in your life.
- can follow your interests.
- can support important projects be it of philanthropic or other nature.
- can go on your dream vacations and really see the world.
- don't need to worry about your pension.
For Some More In Depth Reading...
Over the past thirty years, many people have made use of this system. Their stories are as varied as their backgrounds and there is quite a bit of literature about how anyone can build their own independence the same way they did. Here are only three of numerous books written on the subject:
- From Person to Person - by Gabi Steiner
- The 45 Second Presentation - by Don Failla
- The Process - by Todd Burrier
What you find on this website is essentially all one needs to know to build a stable, recurring income. For a deeper understanding it is advisable to read one of the above books.