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Referral vs Affiliate Marketing

Referral Marketing vs. Affiliate Marketing

What is referral vs. affiliate marketing ? This is the question that often gets many marketers confused. Many consider this as the same marketing strategy as both deals with the advocates (the existing customers). And why not consider them the same? They both work for the same motive to drive more customers.

But carrying the same motive and strategy, these two differ a lot, such as the customer they target or how they engage the customers.

Further, in this blog, we will learn the similarities and the differences between them both so that you can decide what suits your business the best. 

Before I start off with the comparisons between the two, let us know in brief what referral and affiliate marketing as individuals are. 

What is Referral Marketing?

Referral marketing works along with word of mouth. Your existing customers love the products/services of yours, and they recommend it to their peers. You don’t pay any customers to promote your brand. Instead, you reward them or incentivize them for recommending you via the referral campaign. As reward customers get discounts, free products, or sometimes cash backs. Rewarding is the best way to encourage your customers. 

A referral program contains a referral link and a unique code that your customers will share with their friends. Once their friends subscribe to your service, the advocates can redeem their reward. 

The referral program is considered one of the best ways to promote a business without spending a hefty amount of money. 

what is referral marketing

What is Affiliate Marketing?

Affiliate marketing is more like referral marketing, but you don’t give out rewards for promotions. Instead, you pay the influencers in cash. You pay to the affiliate of your business to sell out your products to others. The affiliates not necessarily can be your customers. Their sole agenda is to sell or promote your products and get a commission in return. 

If you are getting a hard time to generate traffic to your website or sell your products/services, you can always hire an affiliate to help you for good. Once an affiliate is successful in getting you the desired results, you can pay them their part of earnings. 

Now that you know the key difference between affiliate and referral marketing from their definitions let us begin with the key differences. 

Below mentioned are four major points of referral vs. affiliate marketing :

Affiliate Marketing vs. Referral Marketing

1. Relationship with the audience

Affiliate: The Affiliate does not know the customers personally, but the customer might be a follower of the Affiliate. The Affiliate can be an influencer a celebrity or any other online business that people follow of have trust upon. 

Referral: Referral marketing works on recommendations from friends to friends. The trust level is very high, as there is a sense of personalization. The friend/ family share about the brand to the people they know. Thus, how a strong customer base is created. 

2. The loyalty of the customers

Affiliate: The trust level is not as high. Thus in the long term, there is a probability of losing the customer over time. 

Referral: As the recommendations come from the friends or the people they trust, the chances of losing customers diminishes. The loyalty and the perpetuity of the customer are very high in referral program marketing. 

3. Types of Rewards

Affiliate: In Affiliate, the rewards are more like giving out incentives in the form of cash. Cash is the commission of the sale the affiliates do on your behalf. As the affiliates are the influencers of the celebrities, they sometimes get free products to advertise and bring in the customers. 

Referral: The incentives in referral marketing are the reward that customers get in return for referring your services to their friends. The reward can be discounts, free products or sometimes the cashback. 

4. Medium of Share

Affiliate: The products and services are shared via a dedicated website or some blog posts. The affiliates can mention you in their blogs or can sell your products through their website.  

Referral: The referral program contains the referral link and a CTA. The advocates share the link with their friends via social media. The sharing of the referral link and the code can be done in the form of a text message or as a facebook post.

These were some differences between affiliate and referral marketing. Where there the differences exist, some similarities are there too. 

Similarities between Affiliate and Referral Marketing:

1. Referral and Affiliate both work with the people to promote your products to others. 

2. They both are cost-effective and don’t burn a hole in your pocket.

3. They both work in the same ideology to get new customers and in return, get rewards or incentives. 

4. Both drive-in the loyal customer that stays in for the long term as there is a level of trust. 

referral or affiliate marketing

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

It all depends upon the type and the goals of your business. Both types of marketing use influence to drive customers in. If you want that your products need influencer use affiliate marketing but if you want your advocates to recommend your services to their friends via word of mouth use the same. 

Adapting any one of these depends on many factors, such as the budget of your campaign or the way of customer engagement. The choice is you choose wisely!

Sara Williams

Sara Williams

Sara is a Content Writer at InviteReferrals. She is not only a creative writer but also paints a beautiful canvas. She makes sure that you are left with no doubt on keeping up with marketing and sales.

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