Referrals.com Develops New Lead Generation Model

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As the newest lead generation model on the block, Referrals.com practices what it preaches. By offering cash rewards to staff members who successfully referred names and leads, the start-up company recruited its vice presidents of marketing and product development and subleased new office space.


Using the Internet and e-mail, Referrals.com's controlled viral marketing encourages person-to-person online soliciting among friends, colleagues and alumni for a sizable finder's fee -- a key difference from traditional word-of-mouth where the bounty may not be high and the personal contacts limited.


The service is in preview release mode and is being tested for recruitment, followed by leads for sales, real estate and fundraising. Woody Chin, president/CEO of Referrals.com, New York, is confident his company fills a market need.


"Three things," Chin said, "there's always three things. One is, you pay only on success. Two is that they are high-quality leads, quality not quantity. And three, you're empowering your network to think and act on your company's behalf."


The focus now is on companies. To participate, the firm opens an account, builds a corporate profile and creates a referral request on www.referrals.com. The request is then e-mailed to people in the personal or professional network.


For example, Vindigo, a directory listings service on hand-held devices, is offering $1,500 to the e-mail recipient and his or her circle of contacts to help find a software developer for mobile technologies.


The Vindigo e-mail offered the recipient three options. One, refer a successful candidate and earn $1,500. Or, if the recipient doesn't know a potential candidate directly, he or she can pass the e-mail on to others who might know the right people and earn part of that reward. Lastly, the recipient could respond to the opportunity, apply for the job and collect the fee.


A link directs the reader to a private-label page on the Referrals.com site. This is the only way the reader can collect a reward. Referrals.com clearly states that forwarding the Vindigo e-mail offer through a regular e-mail system does not qualify the referrer for the incentive.


An interested candidate responds to the offer on the Referrals.com Web site. If accepted, the person closest to the selected candidate gets the bulk of the reward. The incentive then gets halved with each degree of separation from the accepted candidate.


"The reason we do that is, just because there are two people ahead should not make this any less attractive an offer for me," Chin said. "If I go find the right person, I should still get the maximum reward."


The sponsoring company pays the reward, a percentage of which goes to Referrals.com. This is its primary source of revenue.


Funded by Impact Venture Partners and Hearst Interactive Media with $6.5 million, Referrals.com publicized its arrival through trade shows, high-end account sales, telemarketing and ads in trade publications.


The company will also use what it calls SuperAgents -- experts with proven referral track records in various industries, regions or niches. A SuperAgent will help a Referrals.com client find, buy or sell services or products. If the client is trying to recruit someone, the SuperAgent will earn the reward if the candidate he or she has found is hired.


Referrals.com is designed to stand out from regular job boards. With job boards in general, the access is open, and bounty hunters simply peruse job descriptions that offer a cash incentive for referring other people -- an invitation for them to send unsolicited, unqualified resumes, Chin said.


"In general, the reason why we're different and the reason why people don't like job boards is that you have to kiss a lot of frogs to find a prince," Chin said.
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