Want to learn the difference between a referral and affiliate program? See an overview and find out which is best for your SaaS.
Both programs use word-of-mouth marketing but have different goals and structures. Below we have showcased what the main differences are between the two different growth channels.
Differences between all indirect marketing channels
Before we dive into affiliate marketing vs referral marketing for SaaS, it is good to understand which kind of indirect marketing channels are out there for SaaS. At the moment you can distinguish four different marketing channels.
1. Referral program
2. Affiliate program
3. Partner program
4. Technical partners
Indirect marketing channels; someone else will be doing the marketing for you.
See below the four different channels explained. And how they would compare to each other. If you would like to see us explaining this over video, check out this webinar we did with StartupWiseGuys; webinar explain indirect marketing channels.
Affiliate program vs Referral program
A lot of people often confuse these two different kind of programs with each other, there are definitely some clear differences between them. Below you will see a detailed breakdown on affiliate program vs referral program.
Key difference: A referral program leverages users already using your product, while an affiliate program involves external promoters who may not be customers.
As a referral program is in-app, you will only offer it to the users of your SaaS, making it a big difference between who can join your affiliate program. As anyone could join.
Due to the different kind of people who join, they often have a different kind of reason why they would refer you. When they like your product, they are willing to share this with their network, friends & colleagues. Off course the benefits help with this, but they won't be as money motivated as affiliates are.
The benefits they would receive are going to be different than affiliates. Where affiliates often purely want to generate recurring revenue from their referrals, referrers also want to give something to their network. Think about a discount, extended trial, extra credits etc. A double-sided benefit is very common when it comes to a referral program.
See below how it would compare, when you put it into a table;
What would fit your SaaS best? Referral or Affiliate?
We would recommend starting with an in-app referral program when you are an early stage SaaS company, as it will be harder to find affiliates who are willing to recommend you.
The more established brand you have, the easier it is to find people outside of your own network to start recommending you. With an referral program you can already benefit from the users within your SaaS, which don't need much education on you platform.
Making it a more easy way to get started with indirect marketing.