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Should Tesla have finished their Referral Program?



Tesla's long-term and generous referral program came to an end on February 2, and CEO Elon Musk cited too much cost for the company's vehicles, especially Model 3. The system that rewarded so many with so much It finally ended, but should I do it? Has been?

Teslanomica host and Tesla owner enthusiast Ben Sullins said in a recent video that the electric car manufacturer, perhaps, perhaps made the wrong decision when it withdrew its referral program. Tesla's benchmark program actually compares favorably with the initiatives of other automakers like General Motors when it comes to the return on investment, Ben points out in his analysis. Case in point: GM spent around $ 3.24 billion on advertising in 2017 compared to its car revenue of $ 146 billion during the year. This translates into a 45x return on investment, which means that for every dollar that the automaker spent on advertising, GM earned $ 45 in revenue.

Tesla, on the other hand, has not published the actual costs of the reference program, but considering the price of the approximately 160 next-generation free Roadsters that Tesla will deliver, the Teslanomica The host estimates that the program cost Tesla around $ 32 million, at least considering the costs associated with the program's most prolific award. Compared to the $ 17.63 billion in car revenue that Tesla reported for 2018 in its recent Upgrade Letter, the company's $ 32 million cost for free Roadsters actually offers a ROI of 550x. This means that for every dollar that Tesla spent on the highest award of the benchmark program, the company received $ 550 in return.

Ben also pointed out that among the automakers in the United States, Tesla ranks among the least advertising costs per vehicle sold, at only $ 106. This is lower than Porsche's advertising spend of $ 161 per automobile, and well below the Volkswagen expense of $ 1,211 per vehicle sold.

Ultimately, the Tesla owner enthusiast concluded that it would probably be better for the electric car manufacturer to retrieve its reference program, albeit in a more balanced way. This would really be a good idea, considering that the history of Tesla's reference system is a classic story of a good idea that eventually became unsustainable in the face of growth. A good way to illustrate this would probably be a survey that Teslarati He ran after Elon Musk's announcement last month. Based on the results of our survey, the majority of voters were actually on board with the retirement of the referral program.

It should be noted that Ben and other influential people in social networks have helped lead Tesla's tremendous word-of-mouth sales, while also taking advantage of his followers as a way to obtain the references needed to win the next supercar. Some twice. Apart from this, the Teslanomica the host calculations for the reward system only include the price of the Roadster and do not take into account other factors related to the program, such as logistics, development costs and other costs of time value involved in production and compliance of the prizes.

It would be easy to point out who or what is really responsible for the end of Tesla's generous referral program. It could be influential people who used their platforms of choice to refer dozens or even hundreds of new clients. They could also be the owners of Model 3, whose low-margin vehicles practically flooded the system, making it unsustainable. In general, the fall of the reference program is simply due to Tesla's inability to balance his reward system. Perhaps having solved the limit of the prizes in a point (to stop in a Roadster would have been a great idea, or to grant prizes of inferior level for vehicles of smaller margin) would have solved the problem. However, it would depend on Tesla now if it decides to implement a similar and more balanced program in the near future.

See Ben Sullins' opinion on the removal of Tesla's reference program in the video below.


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