With both referral marketing and affiliate marketing, a company will compensate people for helping them get (new) customers. Online, they both use the same tracking technology. However, there are some differences. In this article I’ll explain what the differences are, from a practical standpoint, as used online. Note that, even though there are some clear differences, you’ll find that both will be used interchangeably.
Referral marketing has been around for longer, and has it’s roots in the offline world. For instance, a gym I used to go to, had a referral program. If I got one of my friends to sign up for a membership, the gym would give me one month of membership for free. This is sometimes called ‘refer-a-friend’.
With referral marketing, every customer, by default, can partake in the referral program. However, compensation is not always monetary, in the sense that you’d actually get paid for referring someone. Often, you’ll get a discount as a customer yourself, or save up some kind of credit.
Online, this means that you, as a customer, will get your referral link when you sign up. There are hardly any rules on where, or how you can use this referral link. You don’t need a website to share your link, but it will be beneficial if you want to reach more people to refer.
Affiliate marketing is more professional. The first difference is that you don’t necessarily have to be a customer to be an affiliate, but you have to apply to get into the affiliate program. In most cases, you need a website to sign up as an affiliate, and not everyone is allowed in! You’ll have a separate account as a customer and as an affiliate. Also, most affiliate programs have more strict rules in place, that restrict how you can market your affiliate link. Affiliate programs pay you money for every new customer (pay-per-lead; PPL), every sale (pay-per-sale; PPS), or installation (pay-per-install; PPI).
To sum things up, these are the most important differences between referral marketing and affiliate marketing:
|Referral marketing||Affiliate marketing|
|Every customer is in!||You have to sign up as an affiliate|
|Website not necessary||A website is often necessary to sign up|
|You’ll get discounts, credits/points, or get paid||You’ll get paid!|
Both are interesting as a method of making or saving money online. If you’re interested in making money with either, read more about my recommended course here. It’s a complete, step-by-step course that will teach you how to make money with referral and affiliate marketing.
Interested in affiliate marketing, but you need a website to sign up? It’s not that hard; here are my step-by-step instructions on building a website.