Affiliate Marketing vs. Referral Marketing: What’s the Difference?

Traversing the landscape of marketing programs can be tricky business, especially when industry terms overlap. Take affiliate marketing and referral marketing, for example.

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?

Let’s break this down.

Affiliate Advocates vs. Referral Advocates

In affiliate marketing, the advocate does not know their referred customer personally, and the primary reason for referring your brand is financial motivation.

In contrast, a referral marketing advocate recommends your brand to a colleague, friend or family member. The motivation is based more on a strong relationship between the advocate and the potential customer. That being said, offering referral rewards helps drive to referrals and shouldn’t be discounted.

Channels for Success

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

Affiliate marketers tend to use more antiquated forms of media like email and PPC ads. They’re not contacting close friends, but rather looking for maximum exposure. Whereas a brand ambassador works mainly by social media platforms, text, and email, which makes sense, given the trust-based focus on peer-to-peer referrals.

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. While you’ll be getting more traffic, your likelihood of conversion is lower due to the lack of a prior relationship.

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.

Although both forms of marketing accomplish the same goals, i.e. growing your business, nuanced differences require nuanced decisions on the type of structure your business develop and optimize. 

Now What?

Ambassador’s proprietary referral software works just as well for affiliate marketing as it does for referral marketing. So whichever route you choose to take, you can be sure Ambassador is there to guide you along the way.