Can Refer-a-Friend Programs Really Help You Save Money?

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When you’re getting ready to make a big purchase, how do you make your decision? If you’re like many other people, you probably ask friends and family for their recommendations. These testimonials from real-world people you trust are valuable, after all — there’s a perception that they’re not coming from marketers who are only out to make a sale. According to Nielsen, the average consumer places a large amount of trust in recommendations from family and friends. This word-of-mouth advertising is the best advertising money can’t buy...or can it?

Many companies encourage recommendations by offering refer-a-friend discount programs. Refer-a-friend programs are common at almost every type of store you can think of, from neighborhood coffee shops to large ecommerce retail stores. They sound appealing in theory — they help you and friends save money — but it’s important to learn how these programs work, along with whether they actually do work, before you sign up.