It's not necessary to roll your own affiliate software just for privacy reasons. There are plenty of products out there where you buy an owned license, install it on your server, and integrate with it using an API instead of using a third party system. Post Affiliate Pro and iDevAffiliate are the two most well-known ones.

There are quite a few differences between referral systems and affiliate systems, most affiliate systems are using cookies and are geared towards online marketing, a referral system can use different methods as well, such as email, print and other media.

Referral marketing uses your existing customerbase as marketing vehicle, affiliate systems tend to focus on other businesses that send you customers in return for a split, and as a rule you would find far fewer affiliates than you would have potential referrers in a referral marketing situation. Referral marketing usually centers around discounts, where as affiliate marketing centers around profit sharing, splits or one time fees for a sale.

The differences, even though there are many are subtle enough that it may be possible to use the one for the other.

Here's how I would do it...and I grant that this may be overcomplicated.

1) Set up a script that spools all existing customers into Post Affiliate Pro (PAP) and gives each of them a unique ID

2) Set a similar script to run when a new customer places an order (enter new customer into PAP database and generate referral ID)

3) Set up a page on my customer portal that allows each customer to see his/her referral ID and gives a bunch of choices to refer friends (email with a plugin that finds all friends in address book for services like Gmail/Yahoo; banner ads; text link). Pull the link by sending an auth token with the customer ID to the PAP API.

^ In #3 above I'd do this instead of referring them to the PAP customer portal, which seems overkill for this scenario, and would set up a multiple login nightmare.

4) Integrate PAP and my shopping cart/customer database so when a customer refers another customer and that referral is approved, it shows up as a credit in their account.

Of the above, #4 is the tricky part, and depends on their shopping cart/billing software. It may be easier to hire a VA to manage this, at least at the beginning, esp. if the customer database is homegrown.

Disclaimer: PAP or iDev may have easier ways to do this; this is based on my own experience with PAP, which was admittedly a different integration. But as a programmer, this is the working thesis I'd start from.

I agree completely. Rolling your own is just a day or two of work and you can customize it however you want. If you're using rails, I'd be happy to summarize the nuts and bolts for you. Email is in my profile.

I've thought about writing a plugin, but haven't found the time yet. I'm travelling with infrequent connections, so I might not get back to you for a day or two if you send an email.