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Help me with this referral algorithm!

Discussion in 'Making Money' started by Qai88, Jun 20, 2013.

  1. Qai88

    Qai88 Newbie

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    OK So I got this idea about giving a small percentage coupon to both the referral and referrer. But the problem was when I tried to do that on Excel to see the potential behind this idea, it got a loss after 10 referrals. Maybe I'm not using my formula correctly. Here's how it works:

    1. Bob comes to the website, signs up for the membership programme for $50/mo.
    2. There's an offer where he can refer a friend for a 10% coupon in which he can use for his membership payment fee and a 10% reward coupon to be given to his friend.
    3. So let's say he referred it to Sally, so they both have their 10% coupons.
    4. If Bob refers 9 more people, he can be a member for free (because its 10*10% = 100%). But if he did that, I would get 9 new sign ups ($45*9 = $405) plus Sally (with her 10% coupon, it would be a $45 sale; so altogether, its $450) they all pay the 90% fee if they used the coupon upon sign up.

    This referral system I'm building only works as a 1-tier thing. Meaning on the 2nd tier, Bob won't get any coupon. Also, I'm putting a limit here that each member gets 10 successful sign-ups only. So I won't be losing money or have to ask each member for their Paypal or Bank details to transfer the money (<== More WORK!).

    Hope that is clear. If so, can anyone draft it up on Excel to see how this works with the following variables:
    • Each member refers to 2 friends
    • 2 friends successfully signs up and refers to 2 friends
    • Basically, its always going up by 2
    • Limit to 100 members in this programme.
    • Price per signup is $50
    • Coupon rewarded to each successful signup and the referrer gets 10% coupon
    • Referrer has a limit of 10 successful signups (i.e. the referring link is only valid for that much)

    Appreciate if you guys can help me out on the potential of this idea. If its unclear, please ask. Thanks.