As I work toward building my online business, I think a lot about the marketing end of it. So I'm thinking about adding "incentives" for the customers that refer more paying customers to my site. I feel that this a stronger way of doing "word of mouth" promotion. When there's something in it for a person to tell someone else about a site, they're gonna tell as many people as possible and get them signed up so they can get the rewards. Anyone experimented with this concept before? If so, how did it turn out?
It was a time when people were less aware of referral or affiliate programs. But today even a 6 years old kid knows about it. So you can't take it as a "mouth of publicity" stunt. It can be helpful and it is for many more website or product owners. You should try it out with paying for every sale made by your affiliate.
A better method is to have an incentive for BOTH the affiliate and the referral. Word of mouth WHEN someone gets an incentive removes the actual power that word of mouth marketing achieves.