It’s a marketing strategy in which the customer (or partner) is rewarded for bringing in new customers. When a friend tells you about the benefits of a product, you’re more likely to trust them and buy it, right? That’s why it works so well.
This strategy can be taken to a higher level by creating affiliate programs, areas of the website to manage their commissions; the affiliate can turn this system into a business by creating their own channels of dissemination..