Online referral marketing is akin to affiliate marketing. Although “referral marketing” refers generally to word of mouth advertising using existing customers. Whereas affiliate marketing uses third party advocates who get paid for each sale referred.
Referral marketing: used by businesses to invite existing customers to promote your product/service to friends and family members for rewards.
Affiliate marketing: a business model in which the (third party) referrer gets paid a commission for referring customers to products online.
Online Referral Marketing – “Referral Marketing”
Referral marketing is a tactic which businesses use to increase their number of customers or sales. A reward scheme is usually set up for existing customers. When an existing customer refers someone they know to a business or product, they receive a freebie, reward or gift of some kind. Since existing customers are already using the product/service, it makes sense that they are the best brand advocates.
- A Radius global marketing study showed that millennials ranked word of mouth as the top influencer in their buying decisions on a number of goods.
- The most trusted form of advertising is a friend’s recommendation. See the Nielson report here which shows that people are four times more likely to buy when referred by a friend.
- A Radius global marketing study showed that millennials ranked word of mouth as the biggest influencer in their buying decisions on a number of goods.
- Another study shows that 74% of consumers say Word of Mouth is a key influencer in their buying decisions.
- Customers are 18% more likely to stay and 16% more profitable than customers acquired from other sources. See this cases study.
- In the Huzzah media study, 36% of small business owners stated that word of mouth is their best source of revenue, followed by returning customers at 44%.
So if you’re in business, it makes sense to offer some kind of referral program; rewarding customers for bringing in their friends and family members.
Online Referral Marketing – Affiliate Marketing Vs. Referral Marketing
Affiliate marketing is a form of referral marketing. With affiliate marketing, affiliates join an affiliate program and can promote goods and services online. When they make a sale, they earn a commission. So if you’re looking for “online referral marketing”, it could be affiliate marketing you want to know about. “Referral marketing” is mostly off line and deals with recommendations which people make through word of mouth advertising.
Affiliate marketing, on the other hand, mostly is concerned with online marketing strategies. Affiliates use strategies such a paid marketing, blogging and YouTube’ing; Social Media marketing and email list building to get products in front of customers.
Often with affiliate marketing the referring affiliate is more biased than an actual customer (of a business) might be. Since the affiliate is mainly interested in the sale, not whether the customer is satisfied, or whether the product they recommend is actually a good one!
Despite this the affiliate marketing model is one of the most popular ways to earn on the internet today.
Referring People To Products As An Affiliate
With affiliate marketing, your main job is to refer people to products and services online. You can do this through a number of different strategies. See 22 ways to promote affiliate products. If you get good at this, your affiliate business can take off! You can even make sales online on complete autopilot. See affiliate marketing autopilot.
Learning how to be an affiliate takes time and there’s some skill involved in getting customers in front of affiliate products. But once you learn the skill, you have an income for life and you’ll never need a job again! Access this free video series to learn more about the affiliate marketing models available online.
Whether you’re referring affiliate products or referring people to a business you are a customer of, you’re effectively a referral marketer! Referral marketers make money through referring people to someone else’s business, product or service. This is how they do it!
How To Refer Sales Online?
Most marketers have a list of email subscribers which they can build using several different strategies. These strategies can be broken down into two main categories:
- They use paid marketing to send targeted visitors to a landing page where they collect their email addresses. See customer attraction strategies.
- They create content and generate an interest through social media, using SEO (search engine optimisation) and through sharing their content online. See unpaid advertising examples.
Some marketers use one and some use another. You can use both of course but it’s worth concentrating on a particular strategy, and getting good at it before moving on to another one. Paid marketing is definitely the fastest way to promote other people’s products and services online. However, you need to make sure you’ll be making a profit before spending large amounts on advertising. Knowing how much you can earn from your referrals is key to getting this right. See affiliate marketing business models.
Summary
With online referral marketing, people are rewarded for promoting other people’s products and services. The term “referral marketing” typically refers to people recommending a product or service; which they are a customer of via word of mouth. But online referral marketing typically is a term used to describe affiliate marketing. In affiliate marketing, affiliates refer people to products and services online. This is usually through some sort of marketing which can be grown and scaled up.
If you’re interested in becoming an affiliate marketer, access a free video series here and learn the different types of affiliate products you can use to earn an income online.
