Have you ever seen Shahrukh drive an Hyundai i10? asked my friend.
I replied 'Yes of course. he drives the same red Hyundai i10 daily in my TV'
He persisted 'No No I mean do you really believe Shahrukh drives an i10??'
I quipped 'What Nonsense !!! why would he do that? He probably drives around in a Rolls Royce (which he incidentally owns)
'Ahhh there you are.... Can you see that? He drives around in a Rolls Royce but advertises for an Hyundai i10'
'But Dude. he is using his brand image to promote a product'
'Do you know he gets crores paid for that' my friend persisted.
'Yup.. that is the price to pay for his image and popularity..so what are you trying to tell me?'
'Will you buy a Hyundai i10 just because Shahrukh endorses it?' My friend was unrelenting.
'Nope, I wouldn't' I said and continued .. 'I would rather ask around my friends for their recommendation, then have a test drive the shortlisted cars and then choose one that I liked most'.
'Got You !!!!!!' my friend grinned from ear to ear. 'See there you are...Let me tell you some interesting fact.. More than 90% of what you buy is because your friend recommended it or you asked your friend about it and not from the TV ADs or the hoarding on the road side.. this is called Word of Mouth marketing or referral Marketing'
He went on 'Did you know that word of mouth is a very powerful way to influence a friend to buy certain product more over than the ads in TV because you trust your friend more than Ads in TV or Magazine?.
He had a valid point and I said Yes
He continued ..'My Company works on the same principle of Word of Mouth marketing. We cut down on Marketing and Advertisement expenses as you, Our Customer is our walking talking marketing and advertising :) We remove Shahrukh from our Business model and pay the amount to you directly( albeit a very tiny fraction by means of commission).
'Now this works like this.. when you buy a product from our company directly through their web portal you bypass the Marketing, Advertisement and Distribution costs and so you get a product at a discounted price. Further when you refer our unique and wonderful products to your friend or family, they will buy it on your trust and word of mouth and you again cut down the Marketing, Advertisement cost to the company and now the company pays you a hefty commission for the same.
I thought 'This is so cool'
then my friend went a little further 'If you like a restaurant and refer it to your friend who visits the restaurant and enjoy the food as well, will the restaurant owner pay you anything ? or if you like a movie and refer it to a friend who goes and enjoys the movie, will the theater owner pay you?'
I said 'No.. never heard anything like that'
'Ahhh... there you see. all the time you have been referring a restaurant or a movie to a friend or family, but neither the restaurant or theater owner bothered to pay you something for the extra business that you bought them. They made money at your cost and did not bother to even acknowledge it or reward you' he started mocking me.
I started thinking ' Yes. if I refer a customer to a restaurant or a movie, I should get paid or should I' I was in a dilemma.. who ever thought all this ...
He said 'This is how our network marketing company pays you. You refer a product to a friend or family the company pays you a commission, then your friend refers the product to his friend then both you and your friend get commissions, then your friend's friend refers to his friend, then you, your friend and his friend gets paid... this is the network you build and you and your downlines will get paid every time when some one further downline (a person under you in your network) buys product. so it is a multiple residual income for which you don't have to work for always. So if you see, word of mouth marketing can bring you a life long residual income'
'This is good' I thought. my brain was working fast. but then wait a minute. Did you say every time anyone in the downline ( like your friend's friend's friend's friend buying product by word of mouth starting from me) you get paid?
So let us assume that Paradise Hotel in Hyderabad pays Rs. 25/- for every person who refers their Biryani o their friend. Let us work it out. A Chicken Biryani at Paradise Costs Rs. 220/-. Let us assume that the actual production cost is Rs. 70/- and Paradise Keeps a margin of Rs. 150/- per plate of Biryani.
Now I, Ashok, visit Paradise, enjoy the Biryani so much that I refer the restaurant to my friend Benjamin.
So this guy Benjamin visits Paradise and enjoys a Biryani. Now I get paid Rs. 25/- as commission.
Next Benjamin refers the restaurant to his friend Carlos and Carlos visits Paradise and enjoys a Biryani.
Now I get paid Rs. 25/- and Benjamin gets paid Rs. 25/- as referral commission
Next carlos too loves the Biryani and refers his friend Daniel who visits the restaurant to enjoy the Biryani.
Now again I get paid Rs. 25/-, Benjamin gets paid Rs. 25/- and Carlos gets paid Rs. 25/-.
Now the Biryani is so good that Daniel recommends it to his friend Eddie who comes to paradise to enjoy it.
Now. I get paid Rs. 25/-, Benjamin gets paid RS 25/-, Carlos gets paid Rs. 25/-, Daniel gets paid Rs. 25/- because when Eddie eats his Biryani all above him will get paid referral commission.
Let us take it further.
Eddie refers the Biryani to Felix who visits Paradise to enjoy the Biryani.
Now again I get Rs. 25/-. Benjamin gets paid Rs. 25/-, Carlos gets paid Rs. 25/-, Daniel gets paid Rs. 25/-, Eddie gets paid Rs. 25/-
Let us drag it further.
Felix enjoys it and recommends to George who really relishes the food.
Now again I get paid Rs. 25/-, Benjamin gets paid RS. 25/-, Carlos gets paid Rs. 25/-, Daniel gets paid Rs. 25/-, Eddie gets paid Rs. 25/-, Felix too gets paid Rs. 25/-
so cool every one is enjoying and having a great time and making money.
Wait a min. Let us look at the Paradise owner. when George eats his Biryani, the restaurant owner has shelled out Rs. 150/- as referral commission to all those who referred him.
Now if George refers the wonderful Biryani to his friend, Harry, the restaurant owner has no option but to shut down the shop as he has to dig into his pocket to pay all, forget making any profit at all.
This is an inherent flaw in the network marketing model where every person from bottom to top like George to Felix to Eddie to Daniel to Carlos to Benjamin to me, Ashok gets paid when some where down Harry eats a Biryani. This is handled by putting a cap on payment. but that is another discussion altogether.
So a normal transaction. the profit or commission is made at the most 4-5 levels (distributor, wholesaler,retailer et) or a single profit like a hotelier or a theater owner which any business can sustain.
But any referral commission pay out on recurring basis over and over again ( above 15 steps or more) is a sure recipe for going burst.
And now when you refer your friend a good movie or a restaurant there is no ulterior motive / personal interest ( read financial gain) for you in that recommendation but just that you care and love them and you would want them to have a good time. When there is no such ulterior motive seen in your action, your friends embrace the recommendation fully. They trust you.
Now do the similar referral of a MLM product to a friend of you. As soon as he understands that you stand to gain personally ( financially-referral commission) from this referral, the first seeds of doubt are sown on your very action of referral. From then on it is only the Trust that he carries upon you sees you through to a successful transaction else you stand to loose your friend.
So if someone tries to draw a parallel with the hotel or movie referral where you don't get paid, but for just referring the MLM product, they pay you commission and over that all your downlines who refer the product, you continue getting the referral commission, tell them that there is a basic flaw in their understanding of the whole mechanism and explain them the difference....
and do that over a Biryani at Paradise :)
I replied 'Yes of course. he drives the same red Hyundai i10 daily in my TV'
He persisted 'No No I mean do you really believe Shahrukh drives an i10??'
I quipped 'What Nonsense !!! why would he do that? He probably drives around in a Rolls Royce (which he incidentally owns)
'Ahhh there you are.... Can you see that? He drives around in a Rolls Royce but advertises for an Hyundai i10'
'But Dude. he is using his brand image to promote a product'
'Do you know he gets crores paid for that' my friend persisted.
'Yup.. that is the price to pay for his image and popularity..so what are you trying to tell me?'
'Will you buy a Hyundai i10 just because Shahrukh endorses it?' My friend was unrelenting.
'Nope, I wouldn't' I said and continued .. 'I would rather ask around my friends for their recommendation, then have a test drive the shortlisted cars and then choose one that I liked most'.
'Got You !!!!!!' my friend grinned from ear to ear. 'See there you are...Let me tell you some interesting fact.. More than 90% of what you buy is because your friend recommended it or you asked your friend about it and not from the TV ADs or the hoarding on the road side.. this is called Word of Mouth marketing or referral Marketing'
He went on 'Did you know that word of mouth is a very powerful way to influence a friend to buy certain product more over than the ads in TV because you trust your friend more than Ads in TV or Magazine?.
He had a valid point and I said Yes
He continued ..'My Company works on the same principle of Word of Mouth marketing. We cut down on Marketing and Advertisement expenses as you, Our Customer is our walking talking marketing and advertising :) We remove Shahrukh from our Business model and pay the amount to you directly( albeit a very tiny fraction by means of commission).
'Now this works like this.. when you buy a product from our company directly through their web portal you bypass the Marketing, Advertisement and Distribution costs and so you get a product at a discounted price. Further when you refer our unique and wonderful products to your friend or family, they will buy it on your trust and word of mouth and you again cut down the Marketing, Advertisement cost to the company and now the company pays you a hefty commission for the same.
I thought 'This is so cool'
then my friend went a little further 'If you like a restaurant and refer it to your friend who visits the restaurant and enjoy the food as well, will the restaurant owner pay you anything ? or if you like a movie and refer it to a friend who goes and enjoys the movie, will the theater owner pay you?'
I said 'No.. never heard anything like that'
'Ahhh... there you see. all the time you have been referring a restaurant or a movie to a friend or family, but neither the restaurant or theater owner bothered to pay you something for the extra business that you bought them. They made money at your cost and did not bother to even acknowledge it or reward you' he started mocking me.
I started thinking ' Yes. if I refer a customer to a restaurant or a movie, I should get paid or should I' I was in a dilemma.. who ever thought all this ...
He said 'This is how our network marketing company pays you. You refer a product to a friend or family the company pays you a commission, then your friend refers the product to his friend then both you and your friend get commissions, then your friend's friend refers to his friend, then you, your friend and his friend gets paid... this is the network you build and you and your downlines will get paid every time when some one further downline (a person under you in your network) buys product. so it is a multiple residual income for which you don't have to work for always. So if you see, word of mouth marketing can bring you a life long residual income'
'This is good' I thought. my brain was working fast. but then wait a minute. Did you say every time anyone in the downline ( like your friend's friend's friend's friend buying product by word of mouth starting from me) you get paid?
So let us assume that Paradise Hotel in Hyderabad pays Rs. 25/- for every person who refers their Biryani o their friend. Let us work it out. A Chicken Biryani at Paradise Costs Rs. 220/-. Let us assume that the actual production cost is Rs. 70/- and Paradise Keeps a margin of Rs. 150/- per plate of Biryani.
Now I, Ashok, visit Paradise, enjoy the Biryani so much that I refer the restaurant to my friend Benjamin.
So this guy Benjamin visits Paradise and enjoys a Biryani. Now I get paid Rs. 25/- as commission.
Next Benjamin refers the restaurant to his friend Carlos and Carlos visits Paradise and enjoys a Biryani.
Now I get paid Rs. 25/- and Benjamin gets paid Rs. 25/- as referral commission
Next carlos too loves the Biryani and refers his friend Daniel who visits the restaurant to enjoy the Biryani.
Now again I get paid Rs. 25/-, Benjamin gets paid Rs. 25/- and Carlos gets paid Rs. 25/-.
Now the Biryani is so good that Daniel recommends it to his friend Eddie who comes to paradise to enjoy it.
Now. I get paid Rs. 25/-, Benjamin gets paid RS 25/-, Carlos gets paid Rs. 25/-, Daniel gets paid Rs. 25/- because when Eddie eats his Biryani all above him will get paid referral commission.
Let us take it further.
Eddie refers the Biryani to Felix who visits Paradise to enjoy the Biryani.
Now again I get Rs. 25/-. Benjamin gets paid Rs. 25/-, Carlos gets paid Rs. 25/-, Daniel gets paid Rs. 25/-, Eddie gets paid Rs. 25/-
Let us drag it further.
Felix enjoys it and recommends to George who really relishes the food.
Now again I get paid Rs. 25/-, Benjamin gets paid RS. 25/-, Carlos gets paid Rs. 25/-, Daniel gets paid Rs. 25/-, Eddie gets paid Rs. 25/-, Felix too gets paid Rs. 25/-
so cool every one is enjoying and having a great time and making money.
Wait a min. Let us look at the Paradise owner. when George eats his Biryani, the restaurant owner has shelled out Rs. 150/- as referral commission to all those who referred him.
Now if George refers the wonderful Biryani to his friend, Harry, the restaurant owner has no option but to shut down the shop as he has to dig into his pocket to pay all, forget making any profit at all.
This is an inherent flaw in the network marketing model where every person from bottom to top like George to Felix to Eddie to Daniel to Carlos to Benjamin to me, Ashok gets paid when some where down Harry eats a Biryani. This is handled by putting a cap on payment. but that is another discussion altogether.
So a normal transaction. the profit or commission is made at the most 4-5 levels (distributor, wholesaler,retailer et) or a single profit like a hotelier or a theater owner which any business can sustain.
But any referral commission pay out on recurring basis over and over again ( above 15 steps or more) is a sure recipe for going burst.
And now when you refer your friend a good movie or a restaurant there is no ulterior motive / personal interest ( read financial gain) for you in that recommendation but just that you care and love them and you would want them to have a good time. When there is no such ulterior motive seen in your action, your friends embrace the recommendation fully. They trust you.
Now do the similar referral of a MLM product to a friend of you. As soon as he understands that you stand to gain personally ( financially-referral commission) from this referral, the first seeds of doubt are sown on your very action of referral. From then on it is only the Trust that he carries upon you sees you through to a successful transaction else you stand to loose your friend.
So if someone tries to draw a parallel with the hotel or movie referral where you don't get paid, but for just referring the MLM product, they pay you commission and over that all your downlines who refer the product, you continue getting the referral commission, tell them that there is a basic flaw in their understanding of the whole mechanism and explain them the difference....
and do that over a Biryani at Paradise :)
Good one... :-) more of the same pls.
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