Edward Roesch
Edward Roesch 8 January 2020
Categories Affiliate Marketing

4 Key Differences In Affiliate Versus Referral Marketing

Every business needs an effective marketing campaign - one that packs a punch to help you spread the word about your brand. Though, while referral and affiliate marketing are quite similar, there are key differences between them. Ignore these differences and you run the risk of an unsuccessful campaign, or, even worse, failure to launch any campaign at all.

What’s affiliate marketing? 

If you Google affiliate marketing, you will stumble upon many tips on how you can make loads of money quickly online with affiliate marketing. However, it is more intricate. In short, affiliate marketing is when another site refers someone to your business website. That person then makes a purchase and, in return, the affiliate gets paid a commission for the sale. 

What’s referral marketing?

Referral marketing is when a customer personally recommends the product or service by, for example, sharing a code with their network of friends, family and colleagues. In return, they will get rewarded if one of their friends then actually puts your product or service to the test. 

So what are the main differences?

Referral marketing can offer more personalisation

Let’s face it, we simply trust people we personally know easier than a company. If you opt for affiliate marketing, the site that advertises your product does not have that same personal connection with the audience that referral marketing offers.

If you opt for affiliate marketing, your affiliates do not know the audience on a personal level. Plus, they are also most likely driving traffic to your company’s website for their own financial gain. Though, when done correctly, that does not necessarily have to be a problem. Many affiliates go to great lengths to make sure that they do not end up sharing impersonal messages. And, according to one source, if you do not have many customers already who will recommend your brand, it is one of the signs when affiliate marketing is best for you. 

Referral marketing can offer a higher conversion rate.

As your audience already trusts their friends, the chances are better that they will actually convert. Plus, referral marketing links are mostly shared on social media, one-off emails or text messages. 

Why does this matter? Unlike search engines (where affiliate marketing links are mostly shared), social media channels have a lot less nonsense that your audience will need to process. In fact, your target audience has probably already become accustomed to view PPC ads as untrustworthy. 

Affiliate marketing can reach more people.

The reality is that you will typically only reach a set number of people if you opt for referral marketing, considering that those who refer your brand will only be able to refer it to those in their immediate network. Plus, you will also have to account for people who simply are not swayed by referral marketing.

Now, affiliate marketing on the other hand can reach loads more people. Whether you opt to work with a website, blogger or influencer, they have their own network that can market your product or service on their website.

Referral marketing can offer better engagement.

As referral marketing can offer better personalisation, the chances are better that people will proceed to the final stage of the checkout process. Though, do not just write off affiliate marketing just quite yet. Many influencers have fostered such a personal connection with their followers that people feel as if they actually know them personally. So, there are pros to working with an influencer that can help you to yield a high conversion rate.

The final verdict

At the end of the day, whether referral or affiliate marketing will deliver the best results will be influenced by your company’s goals. Affiliate marketing (or even a combo of the two) could work well for businesses that are eager to scale quickly. 

Though, if you are not in that big of a rush, begin with a referral marketing campaign. You can always work your way towards launching an affiliate marketing campaign later. 

That being said, you do need to have enough time to devote to an affiliate marketing campaign as this type of marketing does require some TLC. For example, you will have to design logos and banners that your affiliates can share.

If time is on your side, you can try to find ways to leverage the perks offered by both referral and affiliate marketing.

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