"This article is originally posted on GrowSurf.com"
Affiliate programs and referral programs are powerful customer acquisition strategies that tap into your business' word-of-mouth growth potential.
And although affiliate and referral marketing share the same goal of getting referrals through incentives, they target different audiences with different types of rewards.
Here's a quick breakdown of the differences:
REFERRAL PROGRAMS Vs AFFILIATE PROGRAMS
RewardsNon-cash (gift cards, coupons, account credits, swag) and cash rewardsCash (percentage of sales)Reward recurrenceUsually one-offPayouts (typically monthly)Partner typeFirst-party (your users, customers)Third-party (affiliate marketers)Partner channels/reachFriends, family, colleaguesAffiliate circles, ad networksLogistical hurdlesProvide partner with a unique referral link to shareProvide partner with a unique referral link to share, and collect tax forms
What's an affiliate program?
An affiliate program is when you leverage third parties (any person or organization) to refer you new customers. The reward is typically a recurring cash payout.
These partners (called affiliates) can be any third party (person or organization, but more commonly individual marketers) that refers you with potential leads. Once leads convert into customers, you would provide the affiliate with a kickback of the revenue made from the sale.
If you want to provide a referral reward based on commission, chances are you want an affiliate program.
Example: You provide 20% sales commission for every lead in a trial period who successfully converts into a paying subscriber. You pay out this commission every month to the affiliate until the paying user cancels their subscription.
What's a referral program?
A referral program is when you leverage your existing customers/users to refer you new customers. The reward is typically a discount, account credits, or any other incentive that is related to your product/service. Like an affiliate program, the reward can also be cash.
