There is a lot of money to be made off referral programs. Referral programs are affiliate programs (for all intents and purposes). The way I differentiate referral programs from affiliate programs, is that referral programs usually offer a rev-share (hopefully lifetime) while affiliate programs seem to be more commissioned based.
A good example of referral programs, is the affiliate programs offered by all the various ad networks (pretty much everyone has one). These ad networks will usually pay a percentage of each referred publisher.
Are Referral Programs Profitable?
Yes, referral programs can be very profitable. However, in order for these programs to be profitable, all your referrals need to be profitable. With every referral program, there’s going to be users who signup under your link, but never use the product or service. These users are completely useless. Someday, you will land a whale though. And that whale will make you residual income indefinitely (or until they switch networks, platforms, ect).
It’s important to remember that the number of referred affiliates will increase over time. Although the income might start out small, it’ll eventually grow overtime. In theory, the earnings should always be ramping up, as you’re constantly referring new people.
Referral Programs Vs MLMs
Referral programs are very similar to MLMs (multi-level-marketing) in the aspect that all the money is being generated by people that signup under you. The main difference is that MLMs are usually very shady in nature; you have to pay for the opportunity. Usually the service is completely ignored (although they have to have one to avoid being a pure pyramid scheme) and the “business opportunity” is what’s really being promoted.
Referral programs are usually free to join. With referral programs, the program is built up around the service, and is secondary. With MLMs, it’s usually a product that’s created as an excuse to have an MLM created around it, with emphasis on the opportunity to make money.
Referrals As Supplemented Income
I usually try to only use referral programs for networks and services that I use personally. For example, if I’m making money using a specific ad network, I’d be more likely to promote that network over other ad networks. Why? Because I’m already making money off it. Therefore, it consolidates the income and I don’t have to worry about cashing out 50 different networks.
The other great benefit of doing this, is that you know the programs you’re enrolled in are of value. If it’s valuable enough he service, all the referred webmasters should find value in it as well.
And last but not least, it makes content curation easier. If you’re constantly using the product or service, you know a lot about it. This makes it much easier to review and generate content that will convert referrals. This leads to better rankings (more content), more referrals, more conversions and more income. Score!