Tesla Motors had to tweak its new referral program in Virginia after facing opposition from state-appointed regulators, according to Bloomberg News. A nationwide referral promotion program was launched by the EV firm recently to reach customers in states where its direct sales model is banned.
Virginia law against “bird-dogging”
Under the new referral program, a Tesla Model S owner is rewarded $1,000 as a bonus for referring others to Tesla. This incentive program was the first of its kind by Tesla, but unfortunately the automaker ran into trouble in Virginia.
Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
Virginia has a long-standing law that makes sure deceitful dealers are not allowed to sell cars in the state, and Tesla was found guilty under this law. The referral program by Tesla not only offers referred buyers a discount of $1,000, but the existing buyers also benefit from it. Tesla owners who refer a new customer get benefits worth $1,000, which can be used either in the form of a discount on the next Tesla purchase or in the form of a service credit.
Using the Tesla program, people who were not licensed to sell vehicles are eligible to get paid, and this violates the Virginia’s mandate against what they call “bird-dogging.” When a person making a referral is supposed to benefit from it, then people become suspicious about if the proposed good or service is actually good enough or if it is being recommended for the sake of the benefit attached to it. And this is what the Virginia law is aimed at preventing.
Tesla owners happy and contented
Tesla had to make necessary changes in its program after it got to know of the violation to make sure it complies with Virginia law. Now the program offers bonuses only to the buyer of the new car, but the amount has been doubled to $2,000. A social media contest is still being run by the company, under which the first person to make 10 new referrals receives a Tesla Model X from the company.
Tesla does not enjoy a big presence in Virginia as it only has one showroom and one service center there. So modifying its referral program to meet the local laws is a smart move from the EV firm. Owners of Tesla cars are much happier than owners of other cars, therefore, with or without a bonus, they are likely to recommend the car to others.