When it comes to marketing, there are two popular strategies that companies use to increase their customer base: affiliate programs and referral programs. While both of these strategies have the same goal of obtaining referrals through incentives, they target different audiences with different types of rewards. So, what is the difference between an affiliate program and a referral program? The key distinction is that affiliate marketing focuses on third-party brand promoters to send customers to your company for a fixed fee. Both affiliate links and referral links are used to track any new customer or sale that comes from a program participant.
As soon as an affiliate or customer signs up for your program, they'll receive a unique link that they can use to invite others to visit your website or product page. Generally, referrals attract customers who offer long-term value, while affiliates help achieve short-term goals. On the other hand, referral marketing involves a promoter recommending your brand to a colleague, friend, or family member. Motivation is based more on a strong relationship between the defender and the potential customer.
That said, offering referral rewards helps generate referrals and shouldn't be discounted. In affiliate marketing, an affiliate can use a variety of channels to promote a product or service. Most of the time, affiliate programs require prospective affiliates to go through an application process that determines if they are suitable or not. Affiliates receive a commission for sales, subscriptions, or other desired actions that consumers make through their affiliate link.
When you get a new sale from a particular affiliate link, the company automatically compensates the affiliate (called Amazon Associates) with a percentage of the sale. Another major difference between an affiliate program and a referral program is the type of relationship between the person making the recommendation (the affiliate or the customer) and the person the company is referring to (the potential new customer). Many affiliates write articles comparing the different subscriptions offered, often with affiliate links for each company, increasing the level of competition. Affiliate marketing, also known as partnership marketing, is when an affiliate promotes products from other companies.
Second, since affiliate programs are still a traditional form of advertising, it's essential to consider your marketing budget. And while affiliate marketing and referral marketing share the same goal of obtaining referrals through incentives, they target different audiences with different types of rewards.