How do you use referral and affiliate programs for marketing? Our guide outlines how each works and the benefits of each type of marketing.
Did you know that 81% of marketers and 84% of publishers use the power of affiliate marketing? (Source: Web Market Support) According to Business Insider, affiliate marketing accounts for 15% of total advertising revenue for digital media. Speaking of referral programs, a Nielsen report states that 92% of consumers trust recommendations from people they know and 77% of consumers are likely to buy a new product if they learn about it from their friends or family members.
Factors of referral and affiliate programs
What is affiliate marketing?
When an online retailer pays his partner a commission for advertising his product / brand and generates traffic or sales via his partner link, this is called affiliate marketing. Affiliate programs have proven to be very effective for both marketers and retailers. It helps e-retailers increase customer acquisition and sales.
How do affiliate programs work?
Affiliates advertise the link of your shop products on their website, blog or YouTube channel etc. If the affiliate’s visitors / followers use this link to shop in your shop, you pay a small commission of the product amount to the partners for the Generate sales for you.
Why should you use affiliate marketing?
The main motive of any online business is to increase sales and keep the sales graph high. Affiliate marketing increases sales by attracting more potential customers to your website.
Improve product visibility
Make your products accessible to a wider audience with affiliate marketing. If your partner gets a lot of traffic on their website, the visibility of your product will improve. As more and more new visitors use the affiliate link to get a discount on your products, you get more sales.
Increase brand awareness
Partners highlight your brand in front of a new audience. This creates brand awareness and brings more traffic into your business.
What is referral marketing?
Referral marketing or referral programs are among the most successful marketing tools. With this type of marketing, you encourage people to share your products or services with their friends, family, employees, etc. for some rewards. Rewards can be gift vouchers, product discounts, or cash. It is also known as word of mouth.
How do referral programs work?
With this type of marketing program, a visitor or customer passes your products on to their employees. When the customer-recommended employees shop in your store, give them some kind of referral bonus. A customer can release the product link or the voucher code.
Why should you use referral marketing?
People trust recommendations
When a customer recommends a product to his friends, a relationship of trust arises with the people who are referred. It creates more sales opportunities than conventional advertising.
Improves customer acquisition and customer loyalty
The recommended people already get a positive response to your brand / product if they are recommended by someone. This keeps them loyal to your brand and increases customer loyalty . When new visitors come to your store through recommendations, you improve customer acquisition.
Increases user interaction
Referral marketing can bring you high user engagement on your website. When your product is circulated through recommendations among people, visits to your online shop increase significantly. You get more engagement, which can lead to higher sales.
Is there a difference between affiliate and referral marketing?
There is no big difference. For an e-retailer, both affiliate marketing and referral marketing are a way to promote their brand and generate sales by offering affiliates some incentives. It is only the process that varies. The main difference between the two is that affiliate marketing requires third-party websites to promote your company on their channel, while referral marketing focuses on providing rewards to your existing customers for sharing your products with others.