Referral marketing is one of those web marketing techniques that seems to be one of those techniques that people use either when they don’t really have much of a marketing strategy, or when they have let their current strategy slide a bit, and have to catch up. Fortunately, referral marketing has the power to bring a business back to its regular level success, and sometimes even exceed where it has ever been.

Look at what Microsoft did under Bill Gates. They set up Hotmail – a tremendous free email service – in order to make a mark on the web after previous failures. This strategy allowed them to quickly catch up to such internet superpowers as Yahoo! and see the successes that they knew were out there.

Similarly, Google has used this exact same strategy with their Gmail free email service launch.

In fact, many different companies owe the success of their ventures to referral marketing.

The secret to referral marketing is that it corrects the problem that is inherent to today’s free services. Since free services are now considered to be standard on the internet, with free samples, shareware, and services for which money is never required, people have come to expect that certain parts of the internet should be free to them.

However, when the market becomes saturated with free services and items that really aren’t needed, they tend to lose their value. This has become very true with online services, since they are considered the norm these days, and people expect nothing less.

However, when a service isn’t widely available, a free service becomes extremely valuable, especially when the only way to obtain it is through a referral. This was the difference in Google’s technique with Gmail.

They created a free email service – something quite common – and gave it a very large storage capacity, and made it so that only people who are referred can receive this service. This builds an enormous perception of value in the minds of the users. People actively sought out to refer or receive a referral for Gmail.

To use this technique yourself, you need to follow Gmail’s example. Find a free service that is relatively easy to provide, but build the perception of value through techniques such as referral marketing. Soon enough, this perception will transfer over to your entire business.