Results Showdown: Affiliate Marketing vs. Referral Marketing
Affiliate and referral marketing are often confused since
they essentially hold the same objective; increase sales and bring in new
customers. However, they are in fact very different. We’ve broken them down to
help you see the differences. Which strategy do you prefer?
Referral Marketing
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Affiliate Marketing
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Based On
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Positive word-of-mouth recommendations
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Financial gain
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Relationship
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Company and Customers
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Affiliate and Company
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Customers
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Potential customers have been personally referred.
Referred customers spend 13.2% more than those non-referred.
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Potential customers are not referred, but if the affiliate
is doing a good job, they will be the target audience.
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Who Does The Work
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Satisfied customers do the promoting. Relies on customer
satisfaction.
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The middleman does the marketing. Relies on visitors to
click your business’s links and banners.
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Who Benefits
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Loyal customers are rewarded with either monetary
supplements or products/offers for referring their contacts.
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The affiliate marketer is rewarded, with a flat fee or %
of revenue, for proven results.
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Consumer Reaction
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92%
of people trust recommendations from people they know
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24%
of people trust Internet banner ads
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What You Get
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Builds a stronger relationship between business and
customer, establishes trust and brand loyalty. Brings in more customers,
increases profit. Referred customers bring in 25% higher profit margins.
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Helps establish your image and brand name. Enhances your
online presence. Brings in more customers, increases profit.
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Your Network
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Filled with satisfied customers, continues to grow with
every customer recommendation.
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Can utilize multiple affiliates to ensure constant flow of
new customers.
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Price vs. Profit
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Cost efficient. The costs of running a referral program
are low, while the returns are high. Personal referrals and rewarding your
customers create trust and brand loyalty, which cannot be bought.
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Cost efficient. You pay based on the performance of the
affiliate, and in return you receive more customers and internet ad space.
Much cheaper then paying to advertise your business elsewhere.
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Affiliate
marketing definitely has its place in the business world, but referral
marketing is continuously gaining in popularity. This cost efficient method of
promoting your company not only brings in new customers, but also builds trust
in your business and products, and instills brand loyalty. Word-of-mouth
recommendations have always been the most trusted form of advertisement, and
referral marketing has brought it to a whole other level. Now that you have a
better idea of what each strategy has to offer, which one will you choose?