Everyone in the business world, from internet marketers to CEOs understand the importance of marketing. With that said, there are many types of marketing that your company can start using. Considering that, you might be determining between affiliate programs vs referral programs.

When done correctly, both referral and affiliate marketing are great ways to grow your business. In some ways, these two marketing methods are similar. But they’re not identical to each other. Let’s look at the similarities and differences between referral programs and affiliate programs.

We’ll also look at referral vs affiliate programs and which one is best for your company.

Similarities Between Referral Programs and Affiliate Programs

In many ways, affiliate and referral programs can seem quite similar to one another. Let’s take a closer look at how referral and affiliate programs are similar to one another.

Rewarding Others for Bringing Customers to Your Business

One of the most striking similarities when comparing referral vs affiliate marketing programs is the end result both of these marketing techniques have for your business.

With a referral program, you’re rewarding people who refer out your company to other people or businesses.

Companies utilizing affiliate programs reward people (affiliates) that bring a company qualified leads that end up making a purchase.

Do the two previous explanations sound similar to each other? It’s because affiliate and referral programs are very similar to one another in this aspect.

They’re Both Marketing Techniques

At the end of the day, it’s always good for a business to keep growing. To help ensure this happens, most companies utilize some types of marketing techniques.

With that in mind, another similarity between affiliate and referral marketing is that they are marketing techniques. The end goal of either of these campaigns is to bring more customers to your business.

Whether you’re a B2B or B2C company, both marketing strategies can be very effective.

affiliate vs referral explainedSource: BigCommerce

Differences Between Referral and Affiliate Programs

Now that we’ve looked at the similarities between these two marketing methods, we need to see how they differ from each other. Let’s look at the differences between affiliate and referral marketing programs.

The Attachment of a Potential Customer

One huge difference between referral and affiliate marketing is how attached your lead is to your business.

With affiliate marketing, it’s rare for the person marketing your business to have much of a relationship with who they’re trying to sell to.

In most cases, someone will encounter an affiliate marketing pitch by visiting a website that uses this type of marketing technique. Unless they’re a frequent reader, the affiliate and their customer start out as strangers for the most part.

Things change when discussing referral marketing. With this type of marketing, the relationship in question is much more personal. More often than not, a referral comes from a friend, family member, or someone else that the person knows. With this type of connection, it’s often much easier for people to trust referrals over affiliate marketing.

This all isn’t to say that affiliate marketing is ineffective. Far from it. One recent study found that 81% of businesses currently use affiliate marketing to generate more sales and receive more leads.

Referral Marketing Offers More Variety With Rewards

With affiliate marketing, there’s typically only one main way to reward affiliates and that’s with money. That’s not necessarily a bad thing. After all, who is going to turn down money as a reward?

When it comes to referral marketing, you have more options with how you reward people. Sure, you can pay people after they make referrals and you gain a new customer (making more sales). With that said, companies also incentivize or encourage referrals by offering free or discounted products and services.

Referral Programs Vs Affiliate Programs: Which is Best for My Business?

referral programs vs affiliate programs

After learning how these programs are similar and different from each other, it’s time to think about which one is best for your company.

If your company is after quantity of leads over quality, it might be best to choose affiliate marketing.

Companies preferring quality over quantity, go with referral marketing.

For example, the close connections that come from referrals are usually easier for companies depending on local business to pull off. Larger companies who are after e-commerce traffic from throughout the nation or world can get better results with affiliate marketing.

Of course, the best option is to use both referral and affiliate marketing together. Both of these marketing techniques are incredibly effective. If done well, it’s hard to go wrong with implementing either of these marketing programs into your business.

For more marketing-related breakdowns, check out my article where I compare content marketing vs inbound and other types of marketing. Or don’t.