"Affiliates vs Referrals: Understanding the Key Differences"
Last Update: Mar 26, 2023
I've been referring people to products and services way before I knew what affiliate marketing was, and you might have been doing the same subconsciously.
The only differnece was I didn't use social media or a blog. I did it by word of mouth. Either way, both can be used on your website, if it fits your niche.
The Key Difference Between Affiliate Programs & Referral Programs
Affiliate programs and referral programs are two marketing strategies that businesses use to promote their products or services.
However, there are some key differences between the two:
Definition: An affiliate program is a marketing strategy in which an advertiser (a company) pays a commission to an affiliate (which would be you, an individual or a company)
After you join the affiliate program they pay you for each sale or lead generated through the affiliate's promotional efforts. Most of the time this is done with an affiliate blog (niche website), social media, PPC, YouTube, or email marketing.
And if you need to know what affiliate programs are out there. Short answer is there's thousands. If you need help finding what's available Wealthy Affiliate has a "Affiliate Program Search" Tool.
Definition: A referral program, on the other hand, is a marketing strategy in which a company incentivizes its existing customers or users to refer new customers or users to the company in exchange for a reward.
So, if you have products that you purchased for your home, yourself, or family and friends most of the time they offer a reward if you were to send them more customers, usually they call them refer-a-friend programs.
Definition: A fancy term, that basically means referrers (yourself) are motivated by the reward or incentive offered by the company for referring new customers or users.
For example, my children are all virtual schooled and I work from home.
So recently we purchased a whole house generator. Using the generator as an example, if I were to refer people to the company, they would pay me $50 per appointment - I have participated due to the motivation.
Either way, the cool part is that, the customer does not have to apply, buy or get approved. They just have to attend their appointment.
After the company goes to their home - my job has been considered complete: Regardless of them not making a purchase, getting approved, or applying.
They then send me a $50 visa gift card. That is considered a refer a friend program.
And because, it's called a refer-a-friend program that doesn't mean that you and that person actually know each other. All you're really doing is sharing a service that worked wonderful for you.
In addition to this, if I get 6 people to actually buy any size and any price generator from them the generator company - they will cut me a $10k check. Also considered a refer-a-friend program.
It's almost the same way affiliate programs work. We as affiliate marketers find products that we love and share them on our blog.
The Difference Between Tracking
The main difference that I noticed is affiliate programs, actually have a tracking system, while referral programs - when it comes to tracking it all depends on the company. Some track while others do not.
Furthermore, affiliate programs typically use specialized tracking software to track the sales and leads generated by the affiliates(you).
Referral programs may use referral codes, links, or other methods to track the referrals made by existing customers or users. As I mentioned earlier some referal programs do not track at all.
A referal program may also pay you with rewards, such as discounts, credits, free products, or services and or other perks.
Most companies that I've seen reward their customers with rewards are grocery stores, auto insurance, your bank, home or renters insurance etc...
But, guess what? Refer a friend programs can also be used on your website as well, if it fits your niche.
Another point I'd like to add is some companies offer both. An affiliate program and referral program. While others just offer the affiliate program.
As I mentioned earlier my children are virtual schooled, so while we do not get any incentives to refer other families to the school - I could join their affiliate program and get paid per lead.
The point is there's a lot of opportunity out there. You just have to give yourself time to understand how to put all the moving's parts together.
Wishing you best and continued success...
Very informative Kisha. Thank you
You're welcome, JD! I'm glad it was helpful. And thank you for stopping by, wishing you a wonderful week ahead...
Great comparison Kisha, thanks for the advice!
You're welcome, Erica! Thank you for stopping by and commenting...
Enjoy your week ahead....
Thanks for clearing the air between affiliate va referral, Kisha. I am sure many will find this helpful. 👍🏼
Great information Kisha!
Thanks for posting!
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Wow. Wish I was just starting out to see this info. 😪. I would have a better mindset .or experience here. You are an awesome researcher Kisha. This info for me tho came to late. But I will put it to good use in my life. Not just here. Thank you.
Thank you, Dennis! It's never too late. I know that you will put it to good use in life. Affiliate marketing is done mostly online, but, in life even without Affiliate marketing, we can still capitalize.
The funny thing is, I have not always loved to research. This thing called life happened to me, so now I learn all I can to stay afloat and not get robbed. So, I research anything and try to capitalize on everything I learn.
Wishing you the best and continued success. Have a beautiful week ahead...