What’s Wrong with Referral Scheme Programs?

PyramidIf you are familiar with pyramid based businesses like Pyramid schemes and MLM then you can surely understand what I mean by referral scheme programs. Well, they are all cousins because they posses a common property called the “triangle”. If we illustrate them on paper, you’ll see they all look like the shape of a triangle, or pyramid.

We all know that pyramid schemes are illegal. It is a fraudulent business wherein there is no product involved; only people just sending money. This system often crumbles when people at the base stop recruiting. As a result most members are unable to recoup their “investment”.

Multi-level marketing or MLM can be a legitimate business but people often relate it to a pyramid scheme because it has been misused and abused by some unscrupulous originators or operators.

Referral schemes are the common attributes of most work-at-home opportunities. You refer or recruit people to join who will also refer other people to join and so on. You will then earn extra commissions from every level of your donwlines.

Does this seem lucrative to you? Sure, it’s a lucrative business but only for the owners and few lucky marketers. For average surfers it may not. Why? Here are some of my observations:

  1. It’s hard to earn money on your own effort alone unless you got lots of referrals.
  2. Usually high pay-out requirements.
  3. Unstable business. It easily dies down because of high attrition. People tend to grab newer opportunities.
  4. Hard to maintain as many of your downlines become inactive.
  5. Very low payment per referral you made.
  6. Only few can really make substantial money while most of the masses are struggling to reach their first pay-outs.
  7. You have to continuously promote and advertise to maintain your monthly earnings.

Examples of Referral Scheme Programs

  1. Get-paid-to (GPT) programs such as paid-to-click, paid-to-read, paid-to-promote, and paid-to-surf
  2. Paying social networks such as Yuwie, Gizter etc.

Am I trying to say you should not join these kinds of programs? NO! I’m just pointing out that you should not expect too much from this money making schemes especially if you know you can’t bring tons of referrals under you. Making lots of referrals is where the money is.

Contrary to the hypes and lies that it’s easy to earn money online, you should actually take the time, effort and even spend some money in order to really make a decent extra income from the internet.

2 comments

  • Oldbuddy

    I only have one question for you, if by your own example a very few can make a significant return on the time they invest, exactly what is it that keeps the rest from achieving the same result? Only one thing my friend, they don’t believe in themselves so they don’t try. The paid to click and especially Yuwie that you mention are free to join and use, so what’s the risk? I don’t understand how that could qualify them as a scheme. However I do appreciate your bringing this into the light, so people who think it might be a scam will rush over to Google and enter Yuwie Scam which will put them on my website where they can see the evidence for themselves.

  • Hi Oldbuddy. Thanks for visiting and for the insights. Actually you’re familiar to me and you’re one of my most respected marketers on the net. If I remember it right, you’re my sponsor at TrueViewTraffic.

    Firstly, I don’t mean “scam” by the word “scheme”. Maybe it could’ve been more appropriate if I used the term “referral type program” instead of “referral scheme program”. I just realized that scheme is often related to scam.

    Secondly, it’s true that these programs are free to join and use and you’re NOT risking in term of money but sometimes TIME is as valuable as money.

    Thirdly, I congratulate you. You have the number one spot in the SERPs with the keyword “yuwie scam”. 🙂

    Of course Yuwie is not a scam, it’s just that you need more TIME and effort here to make money if that’s your primary purpose.