8 Pros and Cons of Referring Friends to Product

Most people purchase goods or services based on referrals they receive from their family and friends. When close associates have a positive or negative experience with a product, then this information has value that can inspire a purchase or stop one cold in its tracks. What is unique about this process is that 3 out of 4 people treat an online review as if it came from a close family member or friend. That’s why evaluating the pros and cons of referring friends to product choices is so important.

What Are the Pros of Referring Friends to Products?

1. It provides information that is based on a level of trust that is already established.
The entire point of referring a friend to a product is that you want them to benefit from the goods or services in the same way you did. You might also want to let people know that you’ve had a poor experience and that your friends should save their money. This trust is an extension of the friendship and communicates that you want to duplicate success.

2. There can be financial incentives.
Many companies will pay for customer referrals when your friends join a program or purchase a service. Sometimes your friend can also receive free goods or services when they list you as the referral source. The only thing better than receiving a high quality product is to receive more of that product for free, right?

3. It expands economic opportunities for a proven business.
Businesses are starting up in every community almost every day. New and innovative ideas are hitting the market consistently and many of them provide an excellent value proposition. By referring friends to product choices that are local in nature, the economic opportunities expand for everyone locally. Local dollars have almost double the value as international dollars and this helps your neighbors experience more success over time.

4. The information that you’re providing others is considered a reliable source.
Everything is accurate and honest on the internet today, right? Of course it isn’t. Reviews can be outright lies, purchased positive reviews, and other forms of inaccurate data. Instead of relying on this information, referring friends to your preferred products can give people an honest evaluation of goods or services that can spread the old fashioned way: by word of mouth.

What Are the Cons of Referring Friends to Products?

1. You can be in a lot of trouble if the value proposition is incorrect.
Just because you’ve had a fantastic experience with a product doesn’t mean that your friends will have the same experience. You might love satellite TV, but your friend might get terrible reception. If you tell your friends about your awesome experience and that experience isn’t duplicated, it can actually affect the integrity of the friendship.


2. Your friends might ask for their money back.
Think about this for a second: you recommended it a product. Your friend purchased it based on your recommendation and it did not live up to its expected levels of satisfaction. Now your friend is stuck with a worthless product that they paid good money to obtain based on your recommendation. Don’t be surprised if your friend might want that money back. They might not ask for cash directly, but they might want you to grant a favor in the future for the poor recommendation.

3. What happens if you profit from the referral and your friend does not?
If you’re going to get money thanks to the investment your friend is making, then there is a good chance they’re going to want a piece of that action. After all, if they didn’t purchase something based off of your recommendation, then you wouldn’t be getting that reward, would you? A good rule of thumb here is to split any single reward 50/50 to make sure everyone comes away with a little something extra from the experience.

4. Other friends might tell their friends and leave you out of the loop.
Even when there is a close knit group of friends, there are always relationships that occur outside of that close circle. When you make a recommendation to your circle of friends and everyone has a positive experience, that chain will continue outward to other friends. This means your buddies could be rewarded for your recommendation when they refer their friends to products and leave you out of the loop for good with the incoming rewards.

The pros and cons of referring friends to product choices generally provide for a positive experience. There are always exceptions to every rule, so it becomes important to evaluate the potential negatives so that the best possible outcome can be achieved.

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