How Affiliate and Referral Marketing Pays Off
Wouldn’t it be great if you could simply refer a friend to another company you’re familiar with, helping out that friend and the business while earning yourself a commission on top of that? Today, it really is just about that easy. We’re talking about referral marketing programs that have been around forever (also called “refer-a-friend” programs that you’re likely already familiar with) and affiliate marketing programs, which didn’t really become a marketing technique until the mid-’90s. Here’s a look at both.
What Is Referral Marketing?
Referral marketing is a fancy way of saying referral program; it is a deliberate, structured way for companies to get other people to make referrals to their business. It’s also sometimes called word-of-mouth marketing because it rewards existing customers for getting new customers to purchase a product or service from a company they may otherwise have not done business with.
These rewards usually come by way of referral incentives, such as product or service discounts, cash, or free access to an app or program that would otherwise cost money. While there are upfront costs to companies initiating a referral program in order to cover the cost of the reward, it can greatly increase long-term revenue by making loyal customers from an existing customer base and by bringing in new customers (who, in turn, may refer friends as well). For those doing the referring, however, it doesn’t cost a thing.
So why would a company hand out money or other incentives just for a referral?
According to data from the Wharton School of Business, companies with formalized referral programs experience 86% more revenue growth compared to those without. So, when someone refers a friend, it can be extremely lucrative for them!
What Is Affiliate Marketing?
It’s estimated that more than 80% of marketers and almost 85% of publishers leverage the power of affiliate marketing. In addition, Forbes reports that affiliate marketing makes up more than 15% of e-commerce sales, putting it on par with email marketing and beating out social commerce and display advertising!
So what exactly is affiliate marketing? Pat Pat Flynn, the founder of Smart Passive Income (SPI), offers the following definition, and we think it’s spot-on:
“Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others, and earn a piece of the profit for each sale that you make.”
Still not sure? Think of it this way: Let’s say your company specializes in selling products in bulk to other businesses using a particular fulfillment company. These businesses will likely need fulfillment services to get the products they create into the hands of their customers. Since you don’t provide fulfillment services yourself, you can refer them to your fulfillment company as part of an affiliate partner program. More value for your customer, and money in your pocket. Cha-ching!
Now, different affiliate programs will have different structures (for example, one may pay affiliates for generating website traffic, while another may require that leads make a purchase). The bottom line, though, is that anyone can be an affiliate—you don’t have to be an affiliate marketing expert. All you need is to know one right person to get started!
How Much Can I Make as an Affiliate?
We mentioned earlier that the sky's the limit when it comes to affiliate marketing. To see this type of advanced affiliate marketing in action, you need not look any farther than Jason Stone. He got started as an affiliate in 2014, and today—just six years later—he’s amassed an incredible six million followers, earning himself the nickname the “Millionaire Mentor.” At one point, he managed to earn $7 million in sales in just 18 months, without ever selling his own product!
Of course, many affiliate partners are simply looking for a steady, reliable income (about half of affiliate marketers make less than $20,000 per year), and we think that’s great too! It’s whatever is up to the affiliate. Be sure to check out our blog, 5 Best Affiliate Marketing Tips That Will Earn You More Money
Top Reasons to Become an Affiliate Partner
We’ve covered the reasons to join an affiliate program, but let’s recap:
- It’s easy money. Affiliate programs create a passive revenue stream without having to invest in new products/services. Many affiliate programs provide free marketing support too; after all, you’re helping them too!
- It grows your business. A new revenue source for your business offers additional capital that you can invest back into your company to gain a competitive advantage over others while offsetting growth costs.
- It offers value to your contacts. Why let your customers look for a product or service you don’t offer when you can refer them to one that will pay you? That’s the beauty of affiliate marketing!
Referral & Affiliate Marketing at The Fulfillment Lab
If you like what you’ve heard so far, you should consider The Fulfillment Lab (TFL) Affiliate Partner Program. When you sign up, you earn a commission when one of your referrals ships with us. And not just the first time—every time!
At TFL, we like to say that Refer-a-Friend is a simple yet effective way to become a part of our Affiliate Program. It is available to anyone who knows a business owner in the e-commerce industry; whether you have 100 contacts who ship products or just one, you are a perfect fit.