Jessica Huhn
Jessica Huhn is a content writer at Referral Rock, where they believe every business has the potential to increase their word of mouth. When not writing, Jessica is likely singing or arranging songs.
Traversing the landscape of marketing programs can be tricky business, especially when industry terms overlap. Influencer marketing, Affiliate marketing and referral marketing helps you connect with the most important figures in your industry so your products, services, or brand “comes recommended” by a trusted name and entrepreneurs can invest in marketing the products.
Word-of-mouth marketing occurs whenever people positively share a brand and encourage them to make a purchase. It’s a powerful tool for generating new customers because people trust the word of individuals more than they trust messages that come directly from your brand.
Word-of-mouth might seem hard to predict and control, but it’s never out of your company’s hands. Different types of word-of-mouth marketing strategies encourage people to spread the word about your brand by incentivizing their sharing. Some of these strategies include affiliate marketing, influencer marketing, and referral marketing.
These three terms can be very confusing. Are they really interchangeable? When is the right time to use a specific term? What do referral marketing, affiliate marketing, and influencer marketing have in common? What are the major differences between these three types of marketing? Let’s compare---and let’s start with referral marketing.
Any technique that a company uses to encourage people to tell others about their products and services counts as referral marketing. So, referral marketing is an umbrella term that includes techniques such as influencer marketing and affiliate marketing.
However, when many people talk about referral marketing, they’re talking about a referral marketing program. Given this, let’s define the features of a referral program, so we can compare it to affiliate marketing and influencer marketing.
A Referral program helps satisfied customers share a brand they love with people they know, who they think would also enjoy or benefit from the brand’s products or services. They accomplish this by formalizing word-of-mouth, and by making it easy for customers to tell their family, friends, and peers about a company.
Also, a referral program usually rewards customers for sharing, through some sort of incentive. These incentives vary based on the preferences of each business, and what the business believes will motivate each customer to share.
They are usually awarded to a customer when one of the friends they refer makes a purchase. Popular incentives include store credits, discounts, gift cards, free products, service upgrades, and cash.
And thanks to referral codes or referral links, referral programs make it easy to track where referrals are coming from, connect the person who was referred to the person who was doing the sharing, and see which purchases are the result of a referral.
Airbnb offers a prime example of a referral program. Customers who sign up receive a referral link, for easy sharing with friends. When a friend stays at an Airbnb for the first time, or rents out their own home with Airbnb, the referrer receives a travel credit reward.
Affiliate marketing occurs when a business recruits partners, such as bloggers, social media figures, marketers and other sales leaders, to help sell their products in exchange for commission fees. These partners are known as affiliates, and they agree to place links to the business’s products on their blog, social media account, or website, known as affiliate links.
The brand compensates these affiliates with a commission payment---always in cash--- for each sale they generate through the affiliate links. The brand is able to track how many website visits, and how many purchases, each affiliate link generates, so it’s easy for them to identify their top affiliates.
Sometimes, prospective affiliates will apply through an affiliate program, and then be approved by the brand. Other times, brands will directly recruit people who can reach a large portion of their target audience to serve as affiliates.
For example, a known mommy blogger might be asked to post about a brand’s new baby monitor, and include an affiliate link to purchase the baby monitor on the brand’s website.
Affiliates are, first and foremost, concerned with making as many sales as possible, by getting those coveted clicks and purchases through their affiliate links. They’re speaking to a wide audience of people they don’t know, through their website, blog, or social media. So, they’re not talking directly to friends or peers.
Also, an affiliate may not even be a regular customer of the brand. Rather, they’re admitted to the program based on their ability to reach a target audience. This differs greatly from referral marketing, where customers directly share a brand’s products and services with friends and family who they think might be interested.
When it comes to affiliate marketing programs, Amazon’s program is probably the most well-known example. It may be called an “associate” program, but it’s still an example of affiliate marketing.
You may have noticed that a lot of bloggers recommend products in their articles. Take a closer look, and you’ll see that those recommendations come with links, which often lead right to Amazon.
Amazon uses those affiliate links to track where sales are coming from. When they see sales coming from a certain blogger’s page, they remunerate that blogger.
When companies use influencer marketing, they recruit people with a substantial reputation---known as influencers--- to market their products or services. These influencers show how they use a product or service in real life, on their own social media accounts or blogs, and from their own perspective. Rather than explaining why someone should buy the product, they influence by example.
Influencers are either experts in the niche a brand serves, or authorities among a target audience. Although celebrities, and others with large amounts of followers, are often recruited as influencers, influencers don’t have to have huge follower amounts.
As long as their audience sees them as authorities, and as long as their recommendations feel authentic, a social media user will make a suitable influencer. This authority is what leads their followers to trust their recommendations of products.
So, micro-influencers, with smaller but tighter-knit communities of followers, work just as well (or even better) than more well-known figures.
Influencer Angela Jones promotes It’s A 10 Haircare with her authentic recommendation.
Influencers enter a short-term relationship to promote a brand. The brand and influencer establish how many posts the influencer will make, or for how many weeks the promotional relationship will last. Keep in mind, though, that influencers aren’t always customers of the brand before this relationship.
Often, the brand will reach out to prospective influencers first, to familiarize them with the brand and its products, especially if they weren’t customers before. But regardless of if they were familiar with the brand before, the best influencers will only promote products they enjoy and think their audience would benefit from.
An influencer relationship is always a business relationship. A business will compensate influencers with cash, credits, free products, or some other incentive in exchange for the promotion.
Here’s an example of an influencer relationship: Shannon, a vegan recipe blogger who also maintains a connected Instagram, entered into an agreement with Silk to promote their almond milk. She crafted an article on her blog, “Yup, It’s Vegan,” with three recipes that include Silk’s almond milk, and made a post on her Instagram to promote the article.
As a vegan blogger with high authority in the plant-based cooking niche, and among a focused audience, Shannon is a great fit to be an influencer for Silk.
There are several differences between referral, affiliate, and influencer marketing. Let’s break them down.
Are advocates (the people doing the sharing) customers of the brand?
Why are advocates chosen? (Key qualities of advocates)
Who are advocates sharing with?
Advocates’ Priorities and Motivations
Driving Conversions
Compensation/ Types of Incentives
Still, referral, influencer, and affiliate marketing have several similarities. Let’s examine the most vital ones.
Influencer marketing, referral marketing, and affiliate marketing are all forms of word-of-mouth, which rely on the trust people place in the word of individuals to drive conversions.
However, they differ in the incentives they use, the primary motivations of the advocates, and whether the advocates are reaching people they know. But all three types of marketing can generate powerful ROI, and cause new customers to come rolling in, as long as you pick the type (or types) best suited for your business.
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Jessica Huhn is a content writer at Referral Rock, where they believe every business has the potential to increase their word of mouth. When not writing, Jessica is likely singing or arranging songs.
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