Referral marketing and affiliate marketing are often compared, but what’s the difference? Incentives are integral to both strategies; however, their underlying techniques and strategies differ significantly. Referral marketing and affiliate marketing have a similar structure in that both drive new customer revenue using incentives. No denying both the terms are the easiest way to earn money online.
As opposed to traditional advertising, affiliate marketing draws customers to your business by relying on third parties to promote your brand. This type of marketing rewards existing customers for recommending a product or service to their friends. Every one of these approaches has certain nuances based on consumer motivations, marketing strategies, and product/market fit.
Our goal here is to illustrate affiliate and referral marketing programs using examples from consumer brands and publishers.
What is Referral Marketing?
A referral marketing strategy focuses on how your brand is perceived by your customers, their friends, and their associates. To earn rewards, your current customers should personally refer new users to your brand. This will help you earn money online.
Providing your customers with an effortless, natural referral program will motivate them to spread the word of your brand. Referral marketing makes it easy for happy customers to become active brand ambassadors, so your company can increase conversions while rewarding users for their involvement.
A referral program, on the other hand, is based on personal interactions, which is different from affiliate marketing, which is like employing an unknown but reputable salesperson to do the marketing for you. A friend offers an advice piece of advice when you bump into him or her on the street. Referral campaigns are often referred to as word of mouth campaigns.
How does Referral market work?
A good product or service is often referred to your website, app, or landing page by customers or visitors who like it’s a result, there is a reward and you can make money from home. There are two ways to obtain this reward:
- Emotions of altruism
- Discounts, credits, and product upgrades can be redeemed as rewards.
There are a variety of rewards that can be offered for referrals as a medium of easy way to earn money online, but they must be relevant. In an almost exponential manner, users are transitioning from customers into ambassadors for brands, introducing them to new contacts and generating goodwill. A valuable gift to the referrer (the person who introduced you) is key, but remembers those few tips:
Engage your customers first. Customer relationships are what matter most, since everyone involved in your network is part of a trusted relationship with your brand. The referrals become more loyal with each act, whether they write reviews on your website or post on social media.
What is Affiliate marketing?
An affiliate relationship is a business relationship between a brand and a third party. Affiliates are paid to promote a brand through this type of performance-based marketing. Their own marketing efforts earn them compensation for every visitor or customer they generate. This is one of the easy ways to make money online.
To reach consumers through their own tactics, you may want to consider hiring an affiliate that is part of a larger affiliate network. These companies act as agents, sending qualified traffic to your website. A commission is paid to the affiliate when one of these visitors converts.
Affiliate Marketing Vs. Referral Market
- Relationship with the audience
| Affiliate Marketing | Referral Marketing |
| A customer might be a fan of the Affiliate, even if the Affiliate doesn’t know the person personally. Affiliates can be influencers, celebrities, or any other online business that people trust or follow. | Referral marketing is based on the recommendation of friends to friends. There is a sense of personalization, which leads to a high level of trust. People they know are informed about the brand by their friends/family. |
- Loyalty of the customers
| Affiliate Marketing | Referral Marketing |
| There is a low level of trust. Therefore, over time there is a possibility that the customer will be lost. | The chances of losing customers diminish as they receive recommendations from friends or people they trust. Marketing referral programs produce very high levels of customer loyalty and permanency. |
- Medium of sharing information
| Affiliate Marketing | Referral Marketing |
| A dedicated website or a blog post introduces the products and services. Affiliates may mention your products on their blogs or sell them on their websites as well. | Referral links and CTAs are included in the referral program. By sharing the link, the advocates connect with their friends. A text message or a Facebook post can be used to share your referral link and code. |
- Types of reward
| Affiliate Marketing | Referral Marketing |
| Cash is more like an incentive in Affiliate marketing. Commissions are earned from affiliate sales when the affiliates make them for you. A few affiliates get free products in exchange for promoting and bringing in customers as they are the influencers of the celebrities. | As compensation for referring your services to their friends, referral marketing offers incentives. Discounts, complementary products or cash back are some of the rewards that can be offered. |
Affiliate Vs. Referral: What to choose for your business?
What kind of business you have and what goals you have are all factors to consider. Customers are attracted to both types of marketing by using influence. You can use affiliate marketing to get your products noticed by influencers, but if you want your advocates to recommend your services to their friends, you can do the same.
A campaign’s budget and customer engagement method determine whether any one of these can be adapted. It’s up to you to make the right decision!
About the Author
Sheetal Goyal is a Sr. content writer working with USA-based firm Tutree Inc. She is an expert in writing content for B2B, B2C Clients. She brings her years of experience to her current role where she is dedicated to educating and inspiring the world on how to become better storytellers and bloggers.