Referral program vs Affiliate program
Both programs use word-of-mouth marketing, but they have different goals and structures. Below are the main differences between the two growth channels.
The four indirect marketing channels for SaaS
Indirect marketing means someone else does the marketing for you. At the moment you can distinguish four different channels for SaaS:
- Referral program
- Affiliate program
- Partner program
- Technical partners
We also explained all four on video in a webinar with StartupWiseGuys: webinar explain indirect marketing channels.
Affiliate program vs referral program
A lot of people confuse these two programs, and there are clear differences. The key one: a referral program leverages users already using your product, while an affiliate program involves external promoters who may not be customers.
A referral program is in-app, so you only offer it to the users of your SaaS. Anyone can join your affiliate program.
Because different people join, they refer you for different reasons. Referrers like your product and want to share it with their network, friends, and colleagues. The benefits help, but they won't be as money motivated as affiliates are.
The benefits differ too. Affiliates often purely want recurring revenue from their referrals. Referrers also want to give something to their network, think a discount, an extended trial, or extra credits. A double-sided benefit is very common in a referral program.
See the table below for the side-by-side comparison.
What fits your SaaS best: referral or affiliate?
For an early stage SaaS company we recommend starting with an in-app referral program. At that point it is harder to find affiliates who are willing to recommend you.
The more established your brand, the easier it is to find people outside your own network to start recommending you. A referral program lets you benefit from the users already inside your SaaS, who don't need much education on your platform.
That makes it the easier way to get started with indirect marketing.