referral marketing program

At Buyapowa, we see many digital marketers trying to decide between using word of mouth marketing programs like affiliate, influencer and referral to help increase sales. All of these are genuine forms of word-of-mouth marketing, but differ from each other in a number of ways. For retailers just starting out, the terms can be easy to mix up. Even experienced marketers can struggle to understand the best time to implement such a program, and the relative benefits of each. Which program is best for new businesses?  Which is most cost-effective? Which will generate the greatest results? What considerations should I make before I choose one?  Again: it depends on you, your business model and your product or service.  These word-of-mouth programs can all be highly effective and profitable when deployed at the right time and in the right way for your business. They each require different levels of effort, cost, and can bring you varying degrees of results. 

How can Word of Mouth Marketing help my online business?

Word of Mouth marketing is the oldest form of marketing known to humans. We are a social species, and regularly leverage our friends and family for advice on what to buy and where to buy it.  Before social media, before there was any form of media, even before there was a printing press, humans used word of mouth to tell our friends and family about businesses that had great products, great service and great value.  Today, nothing has changed.  As Nielsen’s report shows, more people trust the recommendations of their friends and family than any other marketing method. And we now have access to digital marketing tools that make it easier than ever before to make and receive referrals to businesses.  E-commerce businesses that sell their products and services online are best positioned to take advantage of advances in technology that make it easy for people to share their favorite brands via social media, content sharing services, blogs, email and messaging applications.    The three most popular word of mouth marketing programs that you can leverage for your store are affiliate, influencer and referral programs.   

What’s the difference between these programs? 

Let’s try to reduce the confusion, and start by defining these terms, using marketing parlance:

Influencer – a marketing influencer is anyone who has the power, reach and willingness to influence the purchase decisions of prospective customers for your business, usually in return for a one-time fee for each promotion – paid by you. 

Influencers are people or groups who have a large audience which is interested in — and potentially swayed by — the influencers’ opinions. These influencers generally have a large number of fans and followers on various media platforms. Traditionally, influencers were media personalities from the arts, entertainment, sports, education, science, political and business fields. However, in this age of personality, in which ordinary people can leverage social media to achieve extraordinary reach, influencers might be people who have each generated an extremely large following simply through their activities on social media. You typically pay influencers a flat up-front fee for them to promote or endorse your product and bring you new customers. Promotions can be Instagram or Facebook posts, YouTube Videos, blog articles or any other forms of social sharing.  In each case, you’ll pay a fee for the post (usually paid before the post occurs).  (There are circumstances in which influencers may recommend your products for free, or for alternative considerations, however this requires a tremendous amount of good fortune, product differentiation, and/or fairly epic marketing skill on your behalf.  So we’ll leave that topic for a future post.) The more popular or successful the influencer, the more you’ll pay for their service as an influencer for your brand. In addition to a fee for a promotion, influencers might also expect free products or services from you as partial reimbursement. Each promotional activity they undertake for you is usually paid for separately. You can engage with endorsers on an influencer platform or agency like D’Marie, Influitive, Tapinfluence and more. Kim Kardashian posting an Instagram ad for Sugar Bear Hair. Screenshot from Gizmodo.

Affiliate – an affiliate (sometimes called associate) is a person or group who will market your products in return for a commission for each sale they bring you.

Affiliates are essentially third-party marketers who act as extensions to your existing marketing and sales group. Affiliates will promote your products and services on their own media and refer traffic to your site. They leverage their skills in SEO and click-generation to create interest and awareness in your product offering. When a prospective customer clicks on an affiliate’s ad and makes a purchase, you then pay the affiliate a commission for that sale (and sometimes for subsequent sales as well). These affiliates might be bloggers, product reviewers, people who run general interest marketing sites, or unique content creators that attract many visitors and get paid for their creativity through ads that they run for businesses like yours. Affiliates don’t typically get paid until they bring you a new sale, and until you (and the affiliate) can reliably determine that sale came from the affiliate’s link. Rather than building your own affiliate program and platform from scratch, you can engage with affiliates on readily available platforms like LinkTrust, Refersion and more. Large retailers like Amazon and EBay have been running affiliate programs for many years — paying affiliates to send paying customers to those sites. — not without some controversy. Source: Amazon Associates

Referral program –  A method of tracking referrals made by your customers who refer their friend to your business in return for a reward.  Rewards are paid by you to the referrer when they generate business for you. 

Referral marketing is – as we mentioned above – one of the oldest forms of business promotion, and is the simplest form of word-of-mouth marketing.  Customers of yours who know your business – and your products, refer their friends and family to you. When those friends make purchases at your store, you track how they were referred, and reward your advocates (your referrers) for their allegiance to your brand.