Referral marketing is a rewards system for businesses existing customers to refer friends to the business, the customers use a referral link which enables the businesses to track the signup and reward the person who made it happen. It’s a low cost program for the company to run, when most of the hard work is done for freely by the customers. This type of marketing program will struggle to run if the the products aren’t that great or are too expensive when compared to other products in the same market.
With game server hosting it is now common practice for businesses to run a referral/affiliate marketing system alongside their normal operations, software such as WHMCS offers the best automation features in the industry for instant setups and billing management also offers a built in affiliate system which is tied to customer’s accounts. I think personally it is the most hassle free software out there for managing an affiliate program. There’s other software out there but none really work too well as they aren’t tied directly to customers making more issues linking accounts to accounts, passwords for this passwords for that. I don’t recommend using a publishing company such as commission junction as the fees will be much higher than running your own and you will not be targeting the audience you want, as gamers don’t use it.
Now to the questions you need to ask yourself..
Should my business run an affiliate program? As said previously it is a low cost program but to make your customers think it’s worthwhile throwing up banners on their clan websites or showing their friends you need to offer something good in return. A good return would be a minimum 20% of the signup cost and a holding period of no longer than 30 days. All you will do by offering a small amount and a long holding period is make your publishers angry, that’s if you get any with such low returns. I believe the user should be able to withdraw the earned affiliate credit as a payout using PayPal (or bank transfer etc) or be able to use it as account credit.
Another major issue with the current reward programs run by gaming businesses is that still to this day offer great referral programs but have very high payout minimums. You may earn some nice rewards but you’ll never see them in your pocket due to these payout requirements. I have seen it first hand where I have up to $90 in credit but have never seen a payout due to the minimum of being $100, just as an example. This is a type of fraud called bait-and-switch and in some countries is illegal and can end up very badly for those running these types of operations. In the United States it is clogging up the court systems with lawsuits for false advertising, including countries like Australia and most parts of Europe can lead up to jail time. So don’t do it!
To avoid any confusion I have experienced with being apart of affiliate programs in the web and gaming industry is that the terms and rewards for signing up are either poor or not clearly shown.
When compared to web hosting industry’s affiliate programs I believe the current gaming affiliate programs do not offer enough in return for the end customer in terms of rewards. Hosting giants such as GoDaddy and HostGator offer rewards up to $300 for a sign up! Amazon built it self to where it is today using referral marketing.
We recommend every business to run affiliate programs, for such a little time and effort creating some banners you have done the hard work.