by Jessi Burg

Chances are, you’ve probably seen Affiliate and Referral programs before. Even if you can’t think of a specific instance, you probably come in contact with both on a daily basis.

Think about a social media post you’ve seen recently that includes a caption like “this post contains an affiliate link” with the brand tagged. Consider a company that pays their customers each time they share a referral code for a product with their friends and family that leads to a sale. Despite their differences, the terms “affiliate” and “referral” are often used interchangeably, so let’s dive into what makes each one a unique addition to your marketing strategy.

Affiliate programs are often used by companies as a marketing arrangement in which affiliates receive a commission for each visit, signup or sale they generate for that company. Affiliates receive an affiliate link specific to them that is connected to a recommended product or service, which can then be published to a website, blog, social media, newsletter, etc. Whenever someone visits that link/purchases a product, the affiliate receives commission for the sale from the company who offers the product. 

Affiliate programs are a great way to market your products by offering an incentive for others to earn a percentage of the sales that they bring in. There are three aspects to this type of program:

• The company who sells the product or service.
• The actual affiliate (a third party).
• The buyer.

For the purpose of today’s post, we are focusing on the perspective of a company who sells the product or service. Have you ever come across a blog post about a particular product you’re interested in that includes a link for purchase? If you were convinced to buy it, and you used the link provided in that post to do so, that purchase gets traced back to the affiliate (who wrote the blog) who then receives a kickback for promoting that product. Think about their blog like a paid promotion.  Here is an example:

Referral programs, on the other hand, develop from a cultivated relationship with a happy client or business connection who recommends your product or service because they truly believe in what you do. 

One difference to note, though, is that there’s not always a reward involved with referral partnership, especially if the referrals go both ways. For example, a landscaping company may refer a client to their favorite hardscape company for work they cannot perform, like installing a patio, and vice versa. These are important relationships to have as a small business owner – a referral from a trustworthy business is the most effective referral there is.

In an instance where a reward or payment is an incentive for a referral, the referrer and the referee both get compensated for the new sale. This is common for a lot of apps, software platforms, and restaurants. Here’s an example:

Gianni’s Italian Restaurant is trying to bring in more customers during the week. They send out a email blast that says:

“Monday Mania! Bring a friend, and get $10 off your total with the purchase of two entrees.”

or

“Get your next order on us when you refer 5 or more friends to our app! (Limit $30 order)”. 

Satisfied clients or partners are willing to vouch for the product or service, while also receiving perks. Affiliate and Referral programs can fit into almost any company, but as with anything you’re considering for your business, you should compare the pros and cons to decide what’s going to work best for your company. 

In the example we used about the affiliate blogger, there’s no limit to how many times that link can be used. Since you can use the link indefinitely, it’s a much more scalable program.

If you sell a product that can be purchased online, working with an affiliate might be the best way to market your product to more people. In a service-based business, on the other hand, there is often a limit to the amount of work you can perform, so a referral program might be more useful for finding the right clients for you.

Consider trying an affiliate or referral program (or both!) for your business to get the word out there about your product or service, attract more clients, and generate more sales! If you are interested in the Outgrow Your Garage Affiliate Program, you can find information below on how to register.

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Want More From Outgrow Your Garage?

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