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Elimination of the Referral Program

Elimination of the Referral Program

MilesMD88 | 18 januar 2019

Mr. Musk tweeted that this program will come to an end Feb 1st. It was inevitable that the Model 3 changed things. I had one referral for an S, then in a span of 2 months last fall, got 3 referrals for the 3.

I look forward to my new wheels & the wall charger. I also “sold” 4 Tesla’s for Elon, coworkers & a friend who had absolutely no interest in Tesla until I convinced them to take a test drive. Think of it as a multi level marketing program. Since Tesla does not advertise in print or media, they rely on us owners to sell for them. There is a “customer acquisition cost” that Tesla has to pay, whether it be advertising or to their owners.

I hope that Mr. Musk doesn’t abandon this strategy. While he claims the current program is to expensive, there are simple alternatives. I propose he pay every owner a 2% referral fee based on the cost of the referee’s purchase price. This Money would be put in our accounts for anything. Service, shopping, new car purchase, insurance (future) etc. and he could eliminate the YouTube channel accounts that seem to bother him.

As for the MLM, the more the owners are motivated knowing that their efforts will be rewarded, the more cars Tesla will sell, and it grows exponentially. Eliminating the referral program will eliminate the motivation to push Tesla on our friends & coworkers for the most part. Sure, we will still talk about our cars..

Thoughts?

reed_lewis | 18 januar 2019

I would be very happy if the program's rewards were something of small value instead of the wheels or the like. Perhaps a $25 or $50 service credit, or something like that. Even something exclusive like a T-Shirt that is unavailable anywhere else would be enough for most people.

But I figure that one of the reasons that it is going away is the same reason that Tesla just cut 7% of their full time workforce. They are cutting costs as much as they can, and having the referral programs costs a lot of money. the fact that a few youtubers are getting 2-3 Roadsters probably did not help also.

But as to whether the program is needed... Most people who own a Tesla are brand ambassadors and would talk up and sell the product to others independent of having a financial bonus coming to them.

DTsea | 18 januar 2019

Milesmd, 2%? What are you smoking? The company makes 4% net profit and you want half for a referral? Sheesh.

carlk | 18 januar 2019

I have no problem with programs that reasonably rewards people who actually put efforts to refer friends to buy the car. I have a hugh problem with those bloggers and Youtubers who did very little for those sales but could reap unreasonably high rewards with click baits. Fred Lambert, one of those free loaders, of Elektrek said there are 80 founder's edition Roadsters to be giving away under the program and he's getting two. That just went way out of control.

Tesla-David | 18 januar 2019

As a 6 year owner and TSLA stock holder, I am perfectly ok without the referral program. I have always been an advocate for Tesla and will continue to be. The referral perks are nice but for me not necessary. I firmly believe in Tesla and its mission and will continue to be an advocate for all their products. Best cars on planet earth, and I love our Powerwalls.

stevenmaifert | 18 januar 2019

I don't think the cost of 6 months of free Supercharging is going to break Tesla's bank, but giving away Roadsters to referrers might. Referrers are a de facto sales force and so far has been a big factor in not having to advertise. If you look at the extreme, a 30 second Superbowl commercial runs around $5 million these days, so perhaps the referral program is more cost effective then they realize.

MilesMD88 | 19 januar 2019

Good comments..
The 4 referrals I have made are worth $240K. The wheels, charger, & kids car are probably worth 7K, or 2.92%. A 2% payout for customer acquisition cost would have been $4,800. So yes, according to Elon, the current, now past referral program is to expensive & I agree with him.

I don’t agree with @Reed that a few dollars or t-shirt is adequate for a referral. Referrals take a lot of effort & put our reputations on the line. I’m also not smoking anything that dictates a 2% figure. 1%, or less would be fair. This Super Bowl Sunday, hell, every Sunday, is Ford & GM’s stage to barrage us with commercials about their products, along with the Asian manufacturers. There is a cost to acquire a customer & Tesla’s owners are the best advertising for Elon at a very critical time in his company as he tries to transition to the low cost M3 & show a profit from it.
I hope he reconsiders his decision on the referral program.

The MLM comment, I referred a coworker to the product, convinced him to take a test drive, next day he purchased a 3. Then a friend of his drove his new 3 after delivery 2 weeks later, loved it, & ordered a 3 himself. Point is that the car sells itself, but the owners push friends, family, & coworkers to experience a Tesla & should be compensated accordingly since we are the primary source of advertising.

As for Supercharging, I really believe that if anything, the referral program should continue just to give 6 months of free Supercharging. My “3” Model 3 referrals are all using the free 6 months Supercharging while coordinating and interviewing electricians to install an outlet. Unlike my 8 week wait for my S where I had time to accomplish this, the M3 is arriving under 2 weeks from order to delivery in GA.

Thoughts

bp | 19 januar 2019

The reward program made sense when there were very few Tesla's on the road, and owners were the Tesla's best sales tool.

Tesla shouldn't need that now with many new S/3/X vehicles on the road plus the other manufacturers helping to market Tesla by referencing Tesla when they talk about their coming EVs.

If Tesla reaches 500,000 vehicles per year and the average cost of the referral is $750 (reward to current owner plus 6 months of free Supercharging for the new owner), that's an annual savings of $375M!

Though, if Tesla reaches a point where they don't have enough customers to take all of the vehicles they're selling, wouldn't be surprised to see some form of the rewards program come back.

Yodrak. | 19 januar 2019

When trying to achieve sustainable profitability, every little bit helps.

In other posts I have questioned the wisdom of cancelling the S and X 75D models, admittedly without knowing anything about the profit margin on those vehicles. Now, with the layoffs, cancellation of the referral program, and Musks tweets about needing to achieve sustainable profitability, I think we're seeing some pieces of a Tesla financial jigsaw puzzle.

Many companies that developed outstanding and popular products have gone out of business by expanding too fast, they could not ultimately afford the cost of the rapid expansion. Tesla is apparently recognizing the risk and is taking what it considers to be necessary steps to avoid such a fate. We should all wish them success in that effort, even if the steps we can see don't seem to make sense to us as outsiders.

SO | 19 januar 2019

I think we are going to have to trust Elon.

After all, it his HIM, not any of us, who has busted their butt and put a large chunk of their own money on the line for Tesla to succeed. After all of that work, I really don’t think he wants to see Tesla fail.

Could he do things better? Perhaps. But none of us are in the board room nor privy to the information he has access to.

DanFoster1 | 20 januar 2019

I just can’t get over how our boy at electrek.co is getting TWO free Roadsters. I would trade a kidney/shoulda started a website…

carlk | 20 januar 2019

What pisses me is he is also the one who complained the M3P price descrease and made Tesla to refund $5K to everyone. Elon was just too nice but I loved it when Elon yanked pontential future incomes from him. He should have learned don't bite the hand that feeds you. If Tesla wants to spend money it should just do commercials. Ad agencies would never do this to you.

TeslaTap.com | 20 januar 2019

I've helped many people get Teslas, even before there was any referral program. I've have benefited from a few referrals (1 in the last year to a friend). I do think the referral process has gotten way out of hand with so many scams and plugs that I'm on the side of getting rid of them. I'm happy to tell friends of the benefits and negatives of my Tesla, but just like any car I've purchased over the years, I don't expect to get anything for it other than knowing someone else sees the value in what Tesla offers.

Full disclosure, I do have a low-key referral link page on my site, where I recommend using a referral from a friend they may know rather than mine. Probably the reason it's rare for me to get a referral through the site :)

jimglas | 20 januar 2019

Fine with me, it always seemed silly giving away expensive things when your friend bought a car.

Tesla-David | 20 januar 2019

Totally agree @TeslaTap.com and @jimglas

Tesla2018 | 20 januar 2019

I got a $200 referral fee for each person I referred when I bought my Lotus.The dealer I ordeted from was selling at mdrp with no markup. The other dealer in the area was a slimeball and screwed over a lot of people by trying to charge them 5k over list or telling people that they they were number 3 or 4 on the waiting list when they left their deposits. Then when they went to place their orders it was by whoever was willing to pay the most over list.
After I got a few referrals I decided to tell the dealer that since I was one of the first people getting the car, that I would have a party at my house with the referral money so I could meet other people who ordered cars from them based on me telling them to go to them instead of the other dealer.
I felt bad about taking money for just telling thrm how to avoid being lied to and ripped off by the othet dealer so I told the people to just mention my name and that I referred them on the corporate forum and have the dealer give them the $200 instead. I made a bunch of friends at the party and we still hang out 15 years later.
The dealer who was trying to rip everyone off got a bad reputation and was stuck with a bunch of cars that no one would buy. Lotus almost took the dealership away from him. He died a few years later and his son took over the business. I have friends who know him and he is running the dealership properly and about 5 friends have bought cars from him at once. But he would probably kill me if he knew that me and my friends gave the dealership a bad reputation in the past.

wisam.alrawi | 20 januar 2019

I wish they had kept Tesla unveil events invitation or beta testing stuff. Something of not a monetary value but more symbolic to keep us excited including hats or T-shirts.
Maybe Tesla can do something like that.

JayInJapan | 20 januar 2019

Bye bye referral program