Referral Marketing vs. Affiliate Marketing

David Serna by David Serna on June 12, 2014

Referral Marketing vs. Affiliate MarketingHere is a post to provide some good insight about the difference of these 2 similar but completely different terms. When you start thinking about the creation of a referral program (or affiliate program) for your business it is crucial that you fully understand the difference between referral marketing and affiliate marketing.

Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. (source: Wikipedia)

Referral marketing is a method of promoting products or services to new customers through referrals, usually word of mouth. Such referrals often happen spontaneously but businesses can influence this through appropriate strategies. (source: Wikipedia)

Affiliate marketing is commonly confused with referral marketing, as both forms of marketing use third parties to drive sales to the retailer. However, both are distinct forms of marketing and the main difference between them is that affiliate marketing relies purely on financial motivations to drive sales while referral marketing relies on trust and personal relationships to drive sales. (source: Wikipedia)

In affiliate marketing the “promoter” doesn’t know the person being referred personally and the motivation is purely financial, while in referral marketing the “promotion” is only done to actual friends and family and the motivation is not necessarily financial.

Another important fact is that in referral marketing the person making the referral is putting their reputation at stake on each referral made. So the bottom line is that affiliate marketing is about making money or getting rewards and referral marketing is about spreading the love 🙂