AFFILIATE MARKETING
Affiliate Marketing vs Referral Marketing in 2024: What’s the Difference?
Getting the word out about your brand is one of the most pressing problems business owners face today, especially in a competitive online landscape. Fortunately, there are lots of solutions to grow through the use of affiliate marketing vs referral marketing. Both are sustainable practices you can implement repeatedly, but which is better?
If you are thinking about launching affiliate and referral programs, you should know when to employ each and what it will ultimately cost you. This guide will walk you through everything you need to know to decide which is right for your brand.
Let’s dive in.
Affiliate Marketing vs Referral Marketing: Major Differences
The first major difference between affiliate and referral marketing is how a lead comes to you. An affiliate is typically another brand or influencer who markets your product on their platform. Their audience may or may not know them in real life. Referral marketing gets people to your brand by referring people your existing customers already know.
Another major difference is the payment method for both affiliate programs and referral programs. An affiliate referral program typically pays out in cash, whereas referral marketing may pay in rewards, free products, or discounts.
In both cases, you will pay for a successful referral but the marketing strategy is different for both. Let’s take a closer look at what you can expect from both and how you can implement affiliate and referral marketing programs.
What is Affiliate Marketing?
Affiliate programs rely on influencers and other avenues to relay the news of your outstanding product or service to their unique audience. The marketing person (the affiliate) is paid for their work based on the number of leads they generate or the sales they secure for you.
They must share your content on their social media platforms, YouTube channels, or blogs. They might post an honest review of your goods or service, putting you in front of a much wider audience. Because they are already known, liked, and trusted by their audience, some authority will transfer to you.
It’s important to note here that your affiliate marketer doesn’t necessarily know their audience on a more personal level. This is the key difference between an affiliate program and a referral program.
How to Implement Affiliate Marketing
The only real requirement for your affiliate program is to create personalized links for each affiliate you welcome into the program. This allows you to track who is making what sale and allows you to pay out the correct amount at the end of the month or quarter.
Of course, you will have to pinpoint brand advocates who can do your product or service justice. Make sure you interview or collect data from interested parties to check for alignment with your industry and the reputation of your brand. This also helps you to find more successful referrals instead of watering down your message.
Be sure to see our guide here on how to create an affiliate program.
If you don’t necessarily want to run your affiliate programs, you can register your brand through other companies like CJ Affiliates.
What is Referral Marketing?
Referral marketing is fairly similar to affiliate programs, but it has one major difference: they have a real personal connection with your brand and are marketing it to people they know in real life. Referral programs work by encouraging existing customers to share your business with their friends and family members directly.
They may not post it on their blog or even share it on social media. It could be far more targeted than that, sending your information to the specific people they think could benefit from your services.
You have a much higher chance of closing a sale via a referral program, but the reach is less than expected with affiliate programs. Still, these marketing strategies shouldn’t be overlooked when expanding your audience.
How to Implement Referral Marketing
Implementing a referral program might be a little more cumbersome, but that doesn’t mean you should immediately turn away. Referral programs require you to keep track of points, bonuses, and all of the goodies you deliver to your brand ambassadors for doing your marketing for you.
CRM software can go a long way toward making your referral program more robust without letting any details slip through your fingers. Things you will want to track include:
- Referrals and who referred them to you
- Dates of referrals
- Sales conversions from referrals
- Next step is to follow up with them and nurture them to close a sale
Don’t forget some of these best referral program ideas here!
Overlap Between Affiliate Marketing vs Referral Marketing
While there are some serious differences between affiliate marketing vs referral marketing, it should be clear at this point that there is some overlap, too. Here is what you should know about your affiliate and referral programs and how to implement these marketing strategies effectively.
Know, Like, and Trust Factors Play a Role
People are more likely to buy something recommended to them by someone they already know, like, and trust. This could be someone they follow online, even if they have never met them in real life, as is the case for most affiliate programs. Personal recommendations through referral programs work in the same way.
Whether it comes through someone they admire or know in real life, they are already warmed up to buying from you.
More than 90 percent of people trust referrals from people they know, so pay attention to how your new customers come to you.
Consistency is Key
No matter which method you choose for your marketing efforts, consistency is the key. A single affiliate partner or referral link isn’t likely to help you move the needle forward. You will have to be diligent about signing up new and qualified affiliate partners and encouraging existing customers to refer you to others.
You will only see your affiliate or referral marketing program take off with sustained effort.
Cost-Effective Compared to Broad Ad Campaigns
The good news is that referral marketing and an affiliate program are more cost-effective than you would find with a broader ad campaign. Why are your marketing dollars better spent on affiliate and referral programs? In a nutshell, it’s because you only pay for conversions into new customers.
Affiliates are paid based on their sales volume or per lead, they secure for you. Referral partners are only paid in your reward programs when they bring another customer into the fold.
On the other hand, advertisements to help get you to the top of the SERPs can drain your budget and may not move the needle forward in the same way.
Grow an Audience of Loyal Customers
Once someone enters into your brand’s ecosystem, your goal should be to delight and impress them. Both affiliate and referral programs can create an army of loyal customers that will stick with you for the long haul. It increases sales and retention, especially referral marketing.
Tracking a Referral or Affiliate Link
The last similarity between affiliate marketing and a referral program is that you must track both the affiliate link and the referral link. This is how you know who is referred by whom and can cue you to issue payment, rewards, or discounts to the right person.
This might seem tedious to some, but it’s a mandatory component of both.
Benefits of Affiliate Marketing vs Referral Marketing
Of course, there are some times when an affiliate program might win out over referral marketing. See if any of these benefits appeal to your brand.
Wider Audience Reach with an Affiliate Program
One of the downsides of a referral program is that you can only reach people in the circle of influence of your existing customers. On the other hand, an affiliate has an audience who is ready and waiting to take their recommendations for products to buy.
While it might seem prudent to contract with any affiliate interested in your brand, you might find it helpful to have guidelines about who you will and will not accept into the program. You can do this with audience requirements to maximize your reach.
Low Overhead Costs (But More Out of Pocket Costs)
An affiliate program is typically very inexpensive to start, making it appealing to businesses that don’t have much money to get started.
All you need to do is create a unique affiliate link for each influencer who partners with you.
The downside is that you may have more out-of-pocket costs. Affiliate programs pay their affiliates in cash for the leads or sales.
While you might be bringing more money in because of their marketing, it might also put a huge dent in your bottom line.
Focus on Advertising over Personal Recommendation
Affiliate programs are great because they allow you to focus more on your advertising efforts instead of convincing your existing customers to refer a friend. Advertising is impartial and allows you to best use an influencer’s market share.
Keep tabs on what marketing tactics you allow for your affiliates (videos, social media, blogs, etc.). All are important, but you may prefer one medium over another based on the conversion data for your unique field.
When is Referral Marketing Better?
While an affiliate program might be a great option for some brands, a more grassroots effort, like a referral program, could be the better fit. Here are a few reasons why referral programs should earn a second look.
No Cash Payments (Offer Discounts Instead)
Perhaps the most important reason referral programs should be a part of your marketing strategy is because they don’t always have to cost you directly.
A successful referral doesn’t demand a cash payment to send business your way. Instead, you can reward them with discounts, store credit, or upgrades in your store or business.
Increase Customer Lifetime Value and Retention
Want to keep customers coming back again and again? Referral marketing could be exactly what you need. Once people accrue points and other rewards, they are more likely to stick with your brand. They will continue purchasing from you, thus increasing their customer lifetime value.
Getting a new customer costs five to seven times more than retaining an existing one, so this should be something you consider when weighing the perks of getting new customers via referral marketing.
Personal Recommendations Necessary
Many affiliate programs might promote your product even if they have no personal experience with your brand. This could lead to inaccuracies or content that falls flat with their customers. On the other hand, referral marketing is only successful when they can give a rave review to their friends, family, and loved ones.
You already have one customer who purchases from you. Then, they refer more people to you. It’s a constantly evolving process that keeps people engaged and moving through your sales funnel.
Final Thoughts: Implementing Referral and Affiliate Programs
In many ways, affiliate programs and referral programs offer some of the same benefits. They get the word out about your business to people you may not have been able to connect with organically. For each referred customer, you have another opportunity to delight and engage with someone new.
The best part is that you only pay if you accrue leads or sales — and sometimes, you may not have to pay anything at all.
Fortunately, you don’t have to decide between affiliate program rewards and referral programs. You can always implement both if you have the bandwidth to manage two programs. This can help you cast out an even wider net regarding your products and services.
AFFILIATE MARKETING
Unlock Simplified, Pro-grade Design Capabilities with Ashampoo 3D CAD Professional 11
Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.
For entrepreneurs and design professionals who are looking to elevate their projects, Ashampoo 3D CAD Professional 11 offers a powerful yet user-friendly solution that combines precision, versatility, and an extensive object library—all for just $39.99 (reg. $330).
Whether you’re a seasoned architect or a DIY enthusiast, this software offers a seamless blend of simplicity and sophistication. Its intuitive interface guides you through every step of the design process, from sketching floor plans to visualizing your space in stunning 3D.
This Windows-only software is designed to make your workflow more efficient and your designs more precise. It has a host of powerful tools and features that simplify complex tasks. For instance, the program offers dedicated input modes for walls, windows, and doors, allowing you to quickly and accurately define key elements of your project. Additionally, numerical editing tools provide even greater precision, ensuring that every measurement and modification is spot on.
Ashampoo 3D CAD Professional 11 has auto-save functionality and reminders to save your work manually, so you never have to worry about losing progress. The context menu supports cut, copy, and paste functions, making it easier to manage different elements of your design. With powerful floor plan analysis and correction features, you can quickly identify and address any issues before they become problems.
It has extensive object catalogs that provide a wide range of 3D objects and more than 250 ready-to-use object groups. From pre-designed garages and kitchen lines to garden houses and saunas, these objects make adding detail and realism to your projects easy. You can also create your own catalog directories and use them directly in the software, customizing your designs to fit your unique vision.
With more than 20 million users, this software provides all the tools you need to help bring your vision to life.
Get a lifetime license to Ashampoo 3D CAD Professional 11 now and pay just $39.99 (reg. $330) for a limited time.
StackSocial prices subject to change.
AFFILIATE MARKETING
4 Tips for Building Stronger Relationships Between IT and Non-Technical Teams
Opinions expressed by Entrepreneur contributors are their own.
Most companies have some form of dedicated IT management. According to a workforce survey, the common IT to non-technical staff ratio is typically around 4% of all personnel.
These IT individuals and departments often need to communicate with the other staffers throughout a company. From basic day-to-day activities to long-term collaborations, meeting deadlines and maintaining security, it’s important that the relationship between IT and the non-technical workforce is not just existent but effective.
If you’re aware of a lack of quality in your IT-related inter-departmental collaborations, here are four ways to enhance communication and build better professional relationships between technical and non-technical teams.
1. Establish and promote healthy communication
Communication cannot be overlooked in any business setting. As the workforce becomes more geographically diversified by distance and time zones, it’s important to maintain communication, not just with teams but between departments. This is ground zero, especially in an isolated area like IT.
One way to enhance communication is through regular cross-team meetings. Many companies hold recurring meetings where everyone comes together to hear company-wide updates and generally realign themselves. If the thought of a full company meeting sounds like a mammoth, intimidating and time-sucking use of resources, never fear. There are multiple ways you can implement this concept efficiently.
For instance, Zappos holds its well-known all-hands meetings three times a year. Spacing out these larger communal moments helps make them special.
If meeting is a problem in any quantity, you can go a different route: pre-recorded messages. If you choose this option, though, be warned that simple video messaging can become just as confusing and lengthy as a meeting. Instead, look for tools that help you send purposeful, value-centered messages.
Marketing platform Drift, for instance, used the communications tool Zight to improve its internal communication. The company used screen recorder technology to send annotated, knowledge-based videos to their employees. This organized and enhanced the purpose of each message, making it easier to reference later on without rewatching the entire thing.
The takeaway? Invest in some form of healthy cross-departmental communication that fits with your workflow.
2. Use jargon-free language
Removing jargon and technical terms from basic inter-departmental communication starts at the top. IT leaders must demonstrate how to remove dense language when talking, recording, typing and otherwise engaging with coworkers.
This isn’t just because leading by example is effective. It’s also because workplace jargon often finds its largest adherents in the upper echelons of a business. One study from MyPerfectResume found that 33% of those asked considered upper management to be the most likely to overuse workplace jargon.
Even worse? A third of those asked had also used jargon that they didn’t even understand. Use jargon-free language. It keeps communication transparent and avoids peer pressure and embarrassment from undermining effective understanding between IT and other teams.
Related: Here’s Why You Absolutely Have to Stop Using Jargon at Work
3. Bridge knowledge gaps with cross-functional training
Specialization and niche knowledge are defining factors for IT teams. Tech workers’ value comes from their ability to bridge the gap between humans and machines. However, this expertise isn’t as effective if the communication gap between IT staff and other personnel widens too far.
One way to keep all staff on the same playing field is to engage in cross-functional training. This is the process of educating employees from various departments in disciplines that are complementary to their own focus. It emphasizes shared knowledge and helps teams both respect and understand their respective duties in the larger context of business operations.
Google has mastered the art of cross-departmental training. On the one hand, the company famously used its whisper courses — a series of micro-lessons in email form — to teach small teamwork lessons. In addition, the search engine giant encourages employee-to-employee training. This shares knowledge in a peer-to-peer fashion and maintains a culture of learning.
Again, the takeaway here is that you don’t have to follow a formula for cross-departmental training. Find something that works for your setup, and then invest in it.
4. Cultivate a culture of inclusivity
Inclusivity is a common workplace culture goal. It emphasizes making all members of a workforce feel welcome. It seeks to embrace gender, age and other demographic differences and to incorporate the strengths of each individual and team into a company’s operations.
This is a powerful way to keep IT and non-technical personnel connected and respectful of one another’s contributions. As a central focus of how a company operates, an emphasis on empathy and respect helps keep those all-important communication channels open and healthy.
No company has demonstrated genuine, effective inclusivity in business activity quite as well as Pixar. The media company is famous for its ability to develop high-quality ideas and, at the same time, make sure everyone feels welcome and part of the conversation.
The company’s “Notes Days” are a poignant example. These are days when the entire company shuts down and comes together to collectively brainstorm. The result is some of the best inter-departmental collaboration in modern history.
If you want your tech and non-tech teams to connect, make them feel included.
Related: How to Build an Inclusive Culture That Permeates All Levels of the Organization
Breaking down barriers between IT and the rest of the professional work world
The IT department has become an integral part of most modern businesses. But it cannot operate in a vacuum. Miscommunications can lead to confused expectations, missed deadlines and even compromised safety and security.
It’s essential that leaders make an effort to align their IT and non-technical teams. This keeps everyone informed and up-to-date as you work together to achieve the same goal as a business.
AFFILIATE MARKETING
5 Ways Kamala Harris Can Support The Franchise Community
Opinions expressed by Entrepreneur contributors are their own.
The five weeks between the Republican and Democratic conventions could have been a lifetime, as a brand-new Democratic ticket formed in record speed. As always, the International Franchise Association (IFA) is neutral in presidential elections and we will work with whoever is in the White House for the betterment of our model. Just as we were in Milwaukee for the RNC, we were on the ground in Chicago, educating candidates and campaigns about all the good franchising provides, especially for minority-owned businesses.
More highlights from championing franchising with lawmakers in Chicago at the #DNC2024. IFA is proud to work with members across the aisle on policies that support the franchise business model and its 9M employees in the U.S. pic.twitter.com/vexxskHpuK
— IFA (@Franchising411) August 21, 2024
Like many Americans, the franchise community is interested in learning more about Vice President Harris’ vision and policy priorities, which she characterized in her acceptance speech as an Opportunity Agenda. It is encouraging that one of her early commercials features her time working at McDonald’s. In fact, if elected, Harris, along with her husband Doug Emhoff, will share a common thread with the 1 in 8 Americans
who have worked at McDonald’s. To genuinely support the franchise business model, here are five concrete ways Vice President Harris can appeal to the franchise community.
Be a champion for franchising
First, Vice President Harris should be a champion for franchising and use every day on the campaign trail to visit franchises and meet their employees in swing states — and everywhere in between. Doing so will unlock franchising as a component of the Opportunity Agenda, including the unique benefits of franchising for all stakeholders involved in the model.
Those stakeholders are substantial — from the nearly 9 million employees who work for America’s 800,000 franchise businesses (and earn higher wages and better benefits than non-franchised employees) to the franchise owners themselves, who are more diverse in race and gender than non-franchises.
Abandon an expanded joint employer rule
Second, Vice President Harris talked at the DNC about working with business and labor. Yet, one of labor’s top priorities has been a joint employer rule that would effectively destroy franchising. A Harris administration that wants to support small business creation must abandon efforts to implement an expanded joint employer rule.
Bipartisan majorities in congress and a federal court have rejected expanding the joint employer test to include reserved and indirect control. Even Democratic supermajorities in the California legislature, and her home-state Governor Gavin Newsom, rejected joint employer liability. This created a pathway to negotiate a bill with organized labor that preserved franchisee equity in their business, and creating predictable increases in the minimum wage.
Call for pro-small business tax policies
Third, Vice President Harris should call for pro-small business tax policies, given the expired and expiring provisions of the Tax Cuts & Jobs Act (TCJA). These include extending the qualified business income deduction (QBID), also known as the section 199A deduction, and restoring a pro-growth interest deductibility standard that expired at the end of 2022.
Extending the 199A deduction, along with passing the bipartisan Tax Relief for American Families and Workers Act — which garnered overwhelming bipartisan support in the House this year — would greatly benefit franchise owners. This legislation would increase the amount of interest owners can deduct from their income taxes, offer temporary bonus depreciation for the purchase of equipment and short-lived capital assets and include other pro-business and pro-worker provisions.
These actions would provide small business entrepreneurs with a competitive edge over large corporations and demonstrate that Vice President Harris is committed to addressing the needs of the small business community. She can chart a new path and extend an open hand to the business community by putting the politics aside and commit to extending a policy they have come to rely on. Without action, every business owner in country wakes up on January 1, 2026, facing a tax increase.
Increase lending limits at the SBA
Fourth, increase lending limits at the Small Business Association (SBA) and boost access to the 7(a) Working Capital Pilot (WCP) program. During her acceptance speech, Harris pledged to, “provide access to capital for small-business owners and entrepreneurs and founders.” Launched earlier this year, WCP is a line of credit product that features an annual guaranty fee structure that works to offer greater flexibility than a traditional term loan to meet specific business needs.
Accessing capital is increasingly challenging in such a high-interest rate environment. The SBA pitched the concept as a means of breaking down barriers seeking to start their own pathway to entrepreneurship, where the franchise model is poised to continue playing a major role.
Outline a future for the Federal Trade Commission
Finally, Harris should outline a future for the Federal Trade Commission (FTC) that includes a modernization of the Franchise Rule, a federal regulation solely enforced by the FTC that governs the sale of a franchise. Currently under review by the FTC, the Franchise Rule hasn’t been updated since 2007 — the same year the first iPhone was introduced.
Research published in the Wall Street Journal showed it took more than 20 years of education to understand a Franchise Disclosure Document (FDD), and a federal investigation found many prospective franchisees did not read the disclosures at all. This needs to change, especially during the pre-sale process when a prospective franchisee is deciding whether to invest significant financial resources in a franchise.
A Harris administration would be wise to course-correct the FTC to foster entrepreneurial development in franchising and double-down on the true mission of the FTC — to protect consumers and prospective franchisees. The franchise business model encourages workforce development and small business formulation in local communities, we look forward to working with any administration and any political party toward that important goal.
Related: Is Franchising Right For You? Ask Yourself These 9 Questions to Find Out.
Matt Haller is the President and CEO of the International Franchise Association (IFA). Greg Flynn is the Founder, Chairman, and CEO of Flynn Group and Flynn Properties, and an IFA Board Member. With 2,700+ Applebee’s, Taco Bells, Paneras, Arby’s, Pizza Huts, Wendy’s and Planet Fitness units generating $4.7+ billion in sales and employing 75,000+ people in 44 states and 3 countries, Flynn Group is the largest franchise operator in the world.
Google’s Revamped Documentation Shows 4 Reasons To Refresh Content
Daily Search Forum Recap: August 26, 2024
Google Ranking Bug Fixed, August Core Update Swings, AI Overviews, Google Ads Bug & More
How to Secure Your WordPress Store
Daily Search Forum Recap: August 27, 2024
Business Owners are Batting 1,000 With This All-in-One Management Hub
Google Migrating All To Google Merchant Center Next By September
10 Best StudioPress Alternatives (Genesis Framework)
9 Best Elementor Alternatives 2024 (Faster Page Builders)
What Every Entrepreneur Can Learn from NCAA Coach Dawn Staley’s Leadership Style
-
SEO7 days agoGoogle’s Revamped Documentation Shows 4 Reasons To Refresh Content
-
SEARCHENGINES5 days ago
Daily Search Forum Recap: August 26, 2024
-
SEARCHENGINES7 days agoGoogle Ranking Bug Fixed, August Core Update Swings, AI Overviews, Google Ads Bug & More
-
WORDPRESS7 days agoHow to Secure Your WordPress Store
-
SEARCHENGINES4 days ago
Daily Search Forum Recap: August 27, 2024
-
AFFILIATE MARKETING7 days agoBusiness Owners are Batting 1,000 With This All-in-One Management Hub
-
SEARCHENGINES6 days agoGoogle Migrating All To Google Merchant Center Next By September
-
WORDPRESS5 days ago10 Best StudioPress Alternatives (Genesis Framework)