Does Referral or Affiliate Marketing Apply to Your Business?

Do you have an awesome business that sells amazing products and outstanding service? (this is a trick question, by the way: of course you do!)

But…maybe not everyone knows that like we do?

So, how do you (awesome business owner) go about getting your product & service (totally amazing) in front of hundreds of thousands perfect customer avatars and high-value audiences located smack-bang in the middle of your target market?

Geez, you’re not making it easy on us, are you?

The answer: Referral Marketing & Affiliate Marketing – why not both?

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Actually, the real question we hear most is: what’s the difference and which one should I use?

The long and short of it is: both methods leverage your customers, friends, affiliates (duh!) and partners to create explosive profits & sales growth – for little more than pennies!

First Up: What The Heck is Referral Marketing? Can I Use It For My Business?

First Things First: A Definition

Referral marketing is – by definition – a strategy in which your company would incentivize your existing customers to bring in new customers – aka, their friends, family & coworkers – for your business.

As you can guess, this strategy operates on the extremely powerful basis of referrals: the most powerful marketing technique in your playbook.

For example: if you were to buy a new sink, would you buy it from:

  • Sink shop A: whom you have never visited, only just discovered on the internet and generally know nothing about?

Or, would you instead choose:

  • Sink shop B: the business that your best friend has just recommended to you, on the basis that they’re latest sink is perfect, was installed conveniently, and the price was fair?

The answer should be obvious: in this case, the referral turned two identical shops into a clear choice. Nothing changed about the situation other than a referral.

Hot tip: did you know that more than 90% of consumers trust recommendations from people they know?

Why Does It Work?

Referrals work so spectacularly well because us human beings are social creatures by nature. We define our life’s journey by our experiences and oftentimes the best experiences are ones shared with friends, loved ones and family.

So it is only natural that a referral from someone you know comes across as a huge trust signal.

For your customers, referrals simplify the buying process and there is nothing more compelling for fence-sitters than a recommendation.

How Do I Use Referral Marketing?

The first step to leverage referral marketing in your business and score sky-high sales & customers is simple: let your current customers know they can get a reward whenever they make a referral.

“Reward” is a little broad in this context, but ensure it gives something of value to compel your existing customers to spread the word about you.

We’d all like to live in a world where customers are so impressed by your service that they shout your name from the rooftops.

But the fact of the matter is incentivizing your customers to refer you will see thousands more referrals coming in.

Besides, the rewards will be well worth the costs. You see, referral marketing will compel your existing customers to make more repeat purchases with you, too.

New sales from new customers and new sales from old customers? Sign us up!

What About The Nitty Gritty?

To truly bring scale your sales game, you’ll need to have a system in place that connects new customers to the referrer.

Usually, this is a linked code which is a unique code that will recognize and reward the referrer.

Rewards are usually a:

  • discount
  • cashback
  • coupon
  • free month
  • 2 for 1

Spread The Word

Now you’ve got a referral marketing strategy in place, it’s time to put it to work.

The most effective (and easiest) way to get the word out to your customers (and new ones) is through social media.

A lot of influencers already do this. They post a product and ask their friends to use their special code to get a discount.

It works so well because social media has tremendous potential for organic reach; a single post can be seen by thousands (or millions for the top influencers).

Can I Use Referral Marketing For My Business?

The best part about it is anyone can use it for huge gains!

Any kind of business, from small single-owners to large corporations, can use referral marketing.

Businesses that offer products and services can easily implement referral marketing campaigns.

Some types of businesses that typically use referral marketing are:

  • retail stores
  • restaurants
  • hotels
  • travel agencies
  • health clubs
  • gyms
  • doctors
  • dentists

So How Is Affiliate Marketing Different?

A Definition

Affiliate Marketing differs significantly from Referral in one key way: you (the business) would compensate a third-party partner (the affiliate) who is promoting your products and services.

Typically, this compensation comes in the form of a flat fee or a percentage of each purchase the affiliate generates for your business.

As you can see, it’s much more hands on and formal than a referral campaign, in which you simply ask and/or incentives your customers to refer you.

Affiliates, however, will see you working together with a partner, similar to an employer or employee relationship. You will likely be targeting their audience & existing customers rather than your own.

A Short History

Affiliate marketing started well before the internet and was quite popular, as you’d expect.

But now – with every branch of your business becoming digitized - digital marketing, cookies, and analytics have turned affiliate marketing into a billion-dollar industry due to its easy implementation.

All your business needs is a link that has a tracking pixel that can monitor user behavior and conversions from any traffic that your affiliate partner sends through.

How Do I Use Affiliate Marketing?

If you want to increase your customer database – instead of leveraging it, such as referral marketing – than you’ll definitely want to consider affiliate marketing.

Here’s how to use it:

  • First, you’ll need to find an affiliate that suites your business model.
  • The best affiliates to use are owners of several websites or email marketing lists that are similar to your business niche.
  • Once found and negotiated with, this affiliate then promotes your products to their network.
  • Typically, they’ll advertise your products by running banner ads, text ads, posting links on their website, or sending emails to clients.
  • Advertisements can be in the form of articles, videos, and images.
  • Visitors who click the ads or links are then redirected to your e-commerce site. When a purchase is made, the affiliate gets a commission.

Why Does It Work So Well?

Affiliate marketing is rewarding to both the advertising company and the affiliate marketer. Your company benefits from low-cost advertising and the affiliate earns some income and incentives.

The ROI is high as the company only pays on traffic that converts to sale.

Plus, you get to set the terms for the program.

Similarities of Referral Marketing and Affiliate Marketing

  • Compared to other forms of digital marketing, referral and affiliate marketing don’t require too many resources and investment to begin seeing profits
  • Referrers and affiliates are just promoters. They don’t own or sell your product - they’re just promoting it.
  • Referrers and affiliates get compensated based on performance or action taken, so it’s in their bets interest to deliver you results.
  • Both programs are ongoing marketing techniques and not campaign-based.
  • Both programs aim to bring in more business.
  • Both use a link and tracking technology.

Differences between Referral Marketing and Affiliate Marketing

Referral Marketing

Affiliate Marketing

Who is involved

Customers become referrers

Affiliates become business partners


Rewards like vouchers, cash-back, discount, etc.

Affiliates are paid


Individuals or groups of individuals, Limited to customer’s reach

General audience, limited scalability


Some relationship between referrer and referee

None between affiliate and new customer


Personal recommendation

Advertising and publishing


Build trust and loyalty. Increase probability of repeat purchases

Drive traffic and generate leads


One-time activity

Ongoing relationship


Minimum setup and monitoring

Can be a business unit


No technical skill required from the referrer

Requires some technical proficiency

Which One Should You Pick?

Simple: both!

One is not better than the other. You can use either or both depending on your marketing goals and how you want to reach them.

Identify your objectives and assess how each method could help your business & niche.

For instance: if your objective is to increase traffic and leads? Go with affiliate marketing.

Or, if you have a strong customer base that you think you can get more sales out of then referral marketing.

When it comes to selling your products or service, you can get tremendously far even with just a little help from your friends.

Use referral or affiliate marketing - or both! - depending on what you hope to achieve. Because both methods will catapult you to new achievements and success!

The trick is to find the formula that will bring the best results for your business and for that it’s critical to get industry data. With accurate, reliable and fresh insights you can beat the competition and boost your marketing. 

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