It’s not enough to just build a brand; you need to build a community. Community marketing is effective. By their very nature, referral programs are social. Referral marketing is, at its very essence, about people. And when you let people talk to people as people, it creates a genuine brand community. They run on word-of-mouth, friends referring friends.

Like referral marketing, affiliate marketing drives new customers to your business through individuals who don’t work for you directly. Sounds similar … right? Both drive new customer growth for your business, both use indirect advocates to make sales, and both provide a remarkable ROI on your marketing investment – so what exactly is the difference? In practice, they can actually be rather different ways of acquiring new customers.

What´s the difference?

 

Referral Marketing

Individuals refer new customers to the business.

Referrers know new customers personally (colleague, friends, family).

“I´ve found a great product that I want to tell my friends about because I believe that it will make their lives better.”

Motivation: ALTRUISTIC

Affiliate Marketing

Individuals refer new customers to the business.

Affiliates and new customers don´t know each other personally.

“I´m going to refer this product to anyone who needs it so that I can make a living.”

Motivation: FINANCIAL

 

Channels for Success

These interactions lead to differences in the channels of communication used to drive conversions.

Affiliate Program
An affiliate program will focus on website owners and large influencers—making it more of a partnership than a relationship. The traffic generated is visitors searching for products online, and has very little to do with a prior relationship. Affiliate marketers not contacting close friends, but rather looking for maximum exposure. Brand marketer works mainly by social media platforms, text, and email, which makes sense, given the trust-based focus on peer-to-peer referrals.

Referral Program
A referral program focuses more heavily on customer engagement. It is building a strong relationship with your customer base to the point where they feel your brand is good enough to share with a colleague or friend. Here, because of the prior existing trust-based relationship, referred customers are of higher quality, meaning they’re more inclined to engage with your brand and make a purchase.