- Companies don’t have to hire a full time salesperson for their product promotion.
- The system helps companies to save money and resources spent on advertising.
- Customers are more willing to buy the product from a friend thus helps company to get loyal customers.
- This strategy can help company to reach out to a lot of customers.
- Referrals have to invest their money first and sometimes the referred persons may not wish to buy the product.
- Companies get their income from newcomers; hence there are no actual sales.
- The strategy can produce tentative results.