First things, first. What exactly is referral marketing and why is it so beneficial for both companies and clients?
Referral marketing is a marketing strategy that involves the active participation of your clients.
This kind of marketing strategy is mutually beneficial as both clients and companies help each other grow and increase their client base.
The client commits to sending out referral links (typically exclusive) to find new customers for the company, and in turn, the company offers the client incentives in the shape of rewards, discounts, special offers, etc.,
This kind of marketing is growing exponentially. We’ve all been browsing social media and spotted our favorite influencers offering a special discount when using their code for the product.
For it to work the business has to build strong relationships with its clients. You want your clients to reflect the nature of your business. So make sure you follow through with your promises, have a solid product or albania phone number list service to offer, and have a dedicated team to solve your partner’s doubts.
Why choose a referral marketing strategy? Check the stats!
60% of small businesses’ revenue comes from referral programs
82% of new clients for small businesses come from referrals
Referral program vs affiliate program?
Referral and affiliate programs essentially work under the same principle: use an exclusive link or code to build the business’ customer base.
But there are some subtle differences. We’ve summarised them in the following table
Area Referral Affiliate
Relationship Referrals go to acquaintances. The referrer receives a reward if it leads to a sale. Affiliates promote the business and earn a commission for each sale through the referral link.
Participants Existing customers or users referring new customers to the business. Wide range of participants (bloggers, influencers, content creators, website owners, etc.)
Incentives Discounts, credits, free products, etc. Commissions based on sales through the affiliate links
Relationship with the business Between the business and its customers Formal partnership. Affiliates operate independently
Tracking and management Through unique referral links or codes. The business manages the program internally. Sophisticated tracking system. Affiliates also track their progress
Let’s get a bit more specific, though.
Nature of the partnership relationship
By nature of the partnership relationship, we mean the relationship that the referrer has with the people they refer the business to and to the program.
Referrers can either promote the business to their own audience base or reach out specifically to their acquaintances.
The rewards they receive will also vary.
Referral Program
In a referral program, existing customers or users refer friends, family, or acquaintances to the business with an exclusive link or code. The referrer typically receives a reward or incentive if the new client uses the referral link or code to make a purchase.
Affiliate Program
In an affiliate program, individuals or entities (affiliates) sign up to promote a business’s products or services through unique affiliate links. Affiliates earn a commission for each sale or conversion generated through their referral links. Affiliates tend to have a wider audience base and are required to reach more people.
Participants
The company generally opens up the program, and customers then sign in and are vetted by the company. In some cases, the company may choose to reach out to specific customers and prompt them to promote the business.
Referral Program
Referral programs usually involve existing customers or users referring new customers or users to the business.
Affiliate Program
Affiliate programs can involve a wide range of participants, including bloggers, influencers, content creators, website owners, or other businesses. Basically, eligible members for an affiliate program are those clients who already have a decent audience base.
The affiliate program can also offer site recommendations and co-branding, thus expanding the affiliates’ audience base even further.
Incentives
By incentives, we mean the reward that the referrer will receive every time a new client purchases from the starting company using the referral link or code.
Incentives won’t always be the same for all referrals. These can vary depending on the client reach the referrer may have and the amount and quality that they bring into the business.
The company opening up the referral program should be clear on how the rewards and incentives before the partnership is closed.
Referral Program
Referrers in a referral program typically receive rewards such as discounts, credits, free products, or other incentives for successful referrals.
Affiliate Program
Affiliates in an affiliate program earn commissions based on the sales or conversions they generate through their referral links. The commission structure can vary, and affiliates may earn a percentage of the sale amount or a fixed fee per conversion.
Relationship with the Business
The relationship of the referrer or affiliate partner with the business involves a close connection between both parties. The referral program’s relationship is typically with existing customers who refer others, while the affiliate program involves external partners who promote the business’s offerings to their audiences.
Referral Program
Referral programs often focus on leveraging the existing customer base to acquire new customers or users. The relationship is primarily between the business and its customers.
Affiliate Program
Affiliate programs establish a formal partnership between the business and external affiliates who promote its products or services. Affiliates operate independently and may promote multiple businesses simultaneously.
