Difference Between Referral and Affiliate Marketing

Affiliate Marketing vs. Reference Marketing

What is the difference?

If you've ever wondered what the difference between affiliate marketing and referral marketing is, you're not alone. I used to be just as confused before I started Action Wins.

Last week, I saw a publication in SaaS Growth Hacks of someone asking for recommendations for the software to launch its refer-a-friend program.

I love SaaS Growth Hacks because every time someone asks a question, everyone responds quickly with excellent answers. Often, solve the problem or answer the question in a couple of minutes.

The response to this publication was excellent, but I noticed that several reference marketing SaaS businesses as well as SaaS affiliate products were included in the list.

Both affiliate and referral marketing are great ways to boost growth, but they have some HUGE differences.

They asked me about this difference a million times and I decided to write an explanation that I hope will be useful. Here it goes.

1. References come from a trusted source, Your Friend, while affiliate sales come from someone who has an audience and drives traffic to your sales page.
2. Rewards by recommendation do not have to be in cash or based on commissions.

I know I know, some affiliate programs (like LeadPages) are a kind of hybrid of this, but in most cases Affiliate Marketing programs take advantage of bloggers and influential people who want to sell their product in exchange for a commission.

References, however, do not need to be rewarded with a commission. In fact, I think it's better to structure your rewards program to reward your current customers with greater use of your product. The idea is that the more they love their product, the more they want to use it, and the more likely they recommend their friends to gain more use. It is a vicious circle!

The reference marketing is also about identifying who are your best advocates for customers and take advantage of them to form a community around your product and promotion program. If you do it right, your abandonment rate will decrease, your customers will gain more value from your product and form a deeper connection with your brand.

Finally, since the references come from a reliable source, they are much more likely to become paying customers. In general, these customers have a higher lifetime value and a much lower acquisition cost.

I would love to hear everyone's thoughts here! Happy Monday 🙂


Video credits to Alexander Kehaya YouTube channel

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Difference Between Referral and Affiliate Marketing

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