Posted in: Business, Digital Marketing

Referral Marketing Vs Affiliate Marketing: What Is The Difference?

What is referral marketing vs affiliate marketing? This is a question that many marketers struggle with. Some marketers believe that they have the same marketing techniques since both target advocates (the existing customers). Why not treat them the same way? They both have the same goal in mind: to attract more clients.

However, although sharing the same goal and strategy, there are significant differences between the two, such as the clients they target and how they engage them.

In addition, we will learn about the similarities and differences between the two in this article so that you can pick which is best for your business.

Before I get into the comparisons between the two, let’s take a quick look at what referral and affiliate marketing are.

What is Referral Marketing?

Referral Marketing Vs Affiliate Marketing: Differences between Referral Marketing and Affiliate Marketing
Referral marketing

Referral marketing works together with word-of-mouth. After using your products or services, your current clients love it and tell their friends and family members about them. Customers are not paid to promote your brand. Instead, you use the referral campaign to reward or incentivise them for referring you. Customers receive discounts, free products, or cash back as a reward. The best method to motivate your consumers is to reward them.

You can read our article on how to promote your business online so that you can also see other means of getting more customers to your business.

Let’s say I own an online television channel where people subscribe for a monthly fee of $50. I can tell my existing customers that for every person they invite to my television channel, they will get a 5% discount. So, if customers start telling their friends about your TV channel, for every person he brings, he gets a discount of 5% for the next payment i.e: instead of paying $50, he pays $45. If he brings two people, he pays $40 for subscription instead.

In referral marketing, your customers will share a referral link and a unique code with their friends as part of a referral program. The advocates can redeem their prize after their friends sign up for your service.

ALSO READ  The Best Search Engine Optimization Plugin For WordPress
Referral Marketing Vs Affiliate Marketing: Differences between Referral Marketing and Affiliate Marketing

What is Affiliate Marketing?

Affiliate marketing is similar to referral marketing. However there are no incentives for promotions. You pay the influencers in cash instead. You pay an affiliate to sell your products to others on your behalf. Your affiliates do not have to be your customers. Their main goal is to sell or advertise your products in exchange for a commission.

A popular medium for affiliate marketing is through blogs. In this method, you must first own a blog, then you sign up for a company’s affiliate marketing program, then you create content relating to the products. For instance, if you run an insurance blog, then you sign up for an insurance company affiliate program. The deal might be that you will receive $50 for every customer that pays for their service through your link. You can write contents on, for instance: “Best business insurance company in the UK”, a link will be given to you after signing in, then you will insert it in a call to action keyword in the article.

However, you need a lot of traffic to get customers. However, if you’re having trouble getting people to visit your website or selling your products/services, you may always employ an affiliate to help you. Once an affiliate has achieved the necessary outcomes, you can pay them a portion of your earnings.

Now that you know the meaning of affiliate and referral marketing, let us begin with the key differences between them. Below, i mentioned the four major points of the difference between affiliate and referral marketing:

ALSO READ  General Liability Insurance For Contractors

Affiliate Marketing vs. Referral Marketing

1. Relationship with the audience

Affiliate: Although the Affiliate marketer does not know the customers personally, the customer may be a strong follower of the affiliate. An influencer, a celebrity, or any other online business that people follow or trust can be an affiliate.

Referral: Referral marketing relies on word-of-mouth referrals from friends. Since there is a sense of personalisation, there is always a high level of confidence. Friends and family members tell their friends and family members about the brand. As a result, a strong customer base is established.

2. The loyalty of the customers

Affiliate: The level of trust is low. As a result, there is a chance of losing the customer in the long run.

Referral: The likelihood of losing clients decreases if a recommendation comes from family, friends or others they trust. In referral programs, customer loyalty and retention are quite high.

3. Types of Rewards

Affiliate: In Affiliate, the benefits are more akin to sending out monetary incentives. Cash is the commission earned by affiliates on sales made on your behalf. Since affiliates are celebrity influencers, they are occasionally given free products to advertise and bring in customers.

Referral: Referral marketing incentives are the rewards that clients receive in exchange for recommending your services to their friends. Discounts, free merchandise, or cashback are all possible rewards.

4. Medium of Share

Affiliate: A website or blog postings are used to promote the goods and services. Affiliates might write about you in their blogs or sell your stuff on their websites.

Referral: The referral program includes a referral link as well as a Call To Action. The advocates spread the link on social media with their friends. The link and code can be sent via text message or shared on Facebook.

I just listed some differences between referral and affiliate marketing. Where there are differences, there are similarities too.

ALSO READ  Top 10 Business Bachelor Degrees In High Demand

Similarities between Affiliate and Referral Marketing:

  1. Both affiliate and referral marketing work with the people to help promote your products.
  2. They’re both cheap and won’t burn a hole in your wallet.
  3. They both follow the same philosophy of attracting new customers in exchange for rewards or incentives.
  4. Since there is a level of trust, both drive in the loyal customer who remains in there for the long run.

Affiliate marketing vs. Referral Marketing: What to choose for your business?

It all relies on the kind of company and its objectives. Influence is used in both types of marketing to get clients in. If you want your products to have influencers, utilize affiliate marketing, but if you want your advocates to spread the word about your services, use referral.

Adapting any of these is dependent on a number of things, including your campaign’s budget and customer interaction strategy. You have the option to select wisely!

Leave a Reply

Your email address will not be published.

Back to Top