The players behind Trackbox comprise of a very small yet efficient team; currently 3 to be precise. We all hail from different vocations and we leverage those skills in building a fine product, which will be available very soon. However, the higher purpose, the reason for Trackbox, is to support Startups & Businesses in achieving their Sales objectives with better returns on investment, and via an effective way to promote the value their business has to offer.
This is why we’re 3 very strong advocates of Affiliate Marketing because it incorporates the best of Digital through Content, Social, Reviews, Coupons and similar. But there also exists another form of Performance based Marketing which occasionally does get mixed up with the above. It’s the reason why more than 70% people convert with a brand, and is one of the most trusted sources of Product or Service information.
It’s called Referral Marketing.
What’s The Difference Between Affiliate Marketing & Referral Marketing?
Affiliate Marketing – this form of marketing involves having an independent promoter who’s motivated and excited to promote your business for a piece of the pie. He may or may have not interacted and engaged with your business, but he understands it, recognizes your buyer persona/audience and has already been attracting it through a medium that he or she uses. For instance the affiliate could use a Blog, Review Site, Social Channel, Email and similar.
In practical purposes picture yourself consider a cell phone purchase. The ideal scenario would involve you having to conduct research on specifications, reviews, features, view un-boxing videos on YouTube, price comparison and so on by people who either have used the product, or have extensive knowledge about it. In the process of doing the above you might come across a recommendation for the purchase over a Flipkart, Snapdeal or Amazon in the form of a link. If you complete the purchase, the Affiliate, through whose recommendation you visited an E-Commerce store, will receive a Commission which will either be a percentage of the Sale or a Fixed Amount.
This accounts for a 6+ Billion Dollar Industry.
Referral Marketing – this form of Marketing leverages on the altruistic nature of people. Here the user is motivated to promote a business not for a monetary compensation, but because they love the product so much that they’re willing to climb on a mountain and scream their lungs out for their family, friends and close ones to hear about it.
In practical purposes picture yourself at a party having a conversation with a bunch of friends, and you bring up a discussion of the beautiful customer service that you experienced through Flipkart. Or you could be talking about how Snapdeal worked hard in ensuring that your Customer Support experience was beyond what you expected. In this case, the user is a subtle and organic influencer for the brand. The next time when the friends think of making an online purchase, they will certainly recollect the discussion had at the party. This form of conversation could also occur over Social Media.
43% people are more likely to convert when building their information through such Social Interaction.
I am also including a simple Infographic made by the guys at Referral Candy that visually explains the difference
Why Does It Help To Do Affiliate Marketing & Referral Marketing?
Optimized Marketing Campaigns – whether you’re a Startup or an Established Business with a well funded Marketing Budget, it’s always been the Marketing Heads objective to optimize cost and deliver more than the best on what’s spent. This could be in the form of Lead Generation, Lead Conversion, Building Awareness or any other aspect that is integral for the business. The idea is to derive the best at the lowest cost.
Promising Results – statistics pertaining to Google Search have shown that businesses are gradually moving towards understanding organic and more cost efficient forms of Marketing for their business. This is because they have noticed a stark difference in the quality of the customer relating to Average Order Value and Life Time Value measures of customers coming in through these channels vis-à-vis opting for online paid advertising.
And did I mention that it either costs nothing or is quite less.
Bring Out The Numbers
• Affiliate Marketing slated to grow over 500% over the next few years
• 85% Indians use Vouchers before Shopping
• Online Coupons account for more than USD 2 Billion in 2013
• 62% less than the cost of paid advertising
• 6x higher website conversion rate
I have done a separate article that talks about why Affiliate Marketing will be the choice for Start Ups in 2015.
• 85% of followers of brands on Facebook are instrumental in recommendations
• 43% consumers would highly consider buying a product when hearing about it through Social Media
• 77% consumers would highly consider buying a product when hearing about it from family or friends
• 81% consumers decisions are influenced by referrals made by family members
As you can see both the channels are effective when it comes to contributing as a medium towards New Customer Acquisition, and if done well it also helps with Customer retention.
Companies Operating an Affiliate or Referral Program
1) Freecharge – termed as one of the simplest and fastest ways to do an online recharge they operate an Affiliate and Referral Marketing program. They reward referrals with a certain amount of Free Credit every time a successful referral is made for the business
2) Bigrock – India’s most popular Domain Registrar and Hosting Provider also operate both an Affiliate & Referral program. They offer about Rs 3,000 per Hosting Sale, and Free Domain Renewals for referrals that you send their way
3) Flipkart – India’s poster boy to the E-Commerce industry; they operate a well oiled Affiliate Program, and offer lucrative independent commissions for referrals being directed to the website and the mobile application
4) Dropbox – a service that allows you to store your photos, documents and videos online rose to success with its referral program. They managed to increase their user base from 100,000 to 4,000,000 in a span of 15 months
How Do I Set Up My Affiliate Or Referral Program?
From a macro perspective all you would need is a handy dandy software that can ensure tracking your referrals, whether through an Affiliate Program or Referral Program, is being done correctly and that the rewarding is also being attributed to the right person. I will be doing a subsequent article on setting up an Affiliate or Referral Program.
The above is one of the most vital aspects in operating a successful Affiliate or Referral Marketing program.
Also it’s important to know your customers/target audience well and where they go for information during the pre-sales process. This will help you approach the relevant individual and discuss the potential of becoming an Affiliate for your business. For your Referral Program make it easy for your Customers to spread the word about your service. This could be in the form of a catchy post that automatically gets generated at the end of your businesses’ purchase process; the user can then easily share this message on Social Media channels with a link to your service. You could also offer the user access to a brief creative mail that explains the delight of the user which has got him/her to explicitly send it out to their close contacts.
Conclusion: Affiliate Marketing & Referral Marketing are two Inbound Marketing Channels that will effectively assist your business with the organic and valuable growth hack required, and all of this while keeping your Marketing cost low.
Now that you know the difference between both the Marketing Channels and the advantages available, would you be considering starting up either one or both of them? Leave your comments below. Also, if you personally feel these channels wouldn’t work for your business, please leave a comment discussing why.