Referral Program vs Affiliate Program: The Difference for SaaS

Written by Joran Hofman, Founder of Reditus

difference referral and affiliateaffiliate vs referral

The difference is who promotes you. A referral program rewards people who already use your product for introducing someone they know. An affiliate program pays outside promoters, who usually are not customers, a commission when someone they referred becomes a paying customer. Everything else, the rewards, the volume you can expect and the work it takes to run, follows from that one distinction.

Side-by-side comparison of an in-app referral program (existing users, in-product rewards) and an affiliate program (outside promoters, commissions) — Referral programs turn your existing users into advocates inside the product; affiliate programs bring in outside promoters who reach their own audience.

Referral program vs affiliate program, side by side

The dimensions that change how you run each one:

Who promotes you. Referral: existing users, invited from inside the product. Affiliate: people who apply or whom you invite, most of them not customers.
Motivation. Referral: they like the product and want to share it. Affiliate: income, so your program competes with every other program they could promote instead.
Reward shape. Referral: credits, a discount, an extra trial period, extra features or money, often double sided so the invited person gets something too. Affiliate: a commission, usually a percentage of each payment the customer makes.
Payout duration. Referral: usually one reward per successful referral. Affiliate: a set percentage for a set number of months, often 12 to 24, sometimes for the customer's lifetime.
Volume per promoter. Referral: low, a few introductions each, but many possible referrers. Affiliate: very uneven. Across three B2B SaaS affiliate programs we analysed, covering more than 10,000 affiliate-months, the top 20% of active affiliates produced between 80 and 87% of program revenue.
Lead quality. Referral: high, because the referrer knows both sides. Affiliate: depends on the affiliate, which is why your terms and your paid-ads policy matter.
Where it lives. Referral: inside the product, as a widget or your own interface. Affiliate: a public landing page with an application flow, and on Reditus a marketplace listing on Scale Up or Enterprise (annual), once your installation is complete.
Ongoing work. Referral: mostly setup and placement, then it runs. Affiliate: continuous recruiting, onboarding and activation.
What has to be true first. Both need paying users who like your product. For affiliates, add a product with enough brand and conversion that a stranger believes their traffic will convert.

Why the difference in who joins changes everything

A referral program is offered in-app, so only your users see it. They refer you because they use the product, and the recommendation costs them nothing socially. The reward still has to be worth it: tiny rewards don't make people recommend a friend. A double-sided offer, where the invited person also gets something, gives the referrer a reason to send the link that is not only about their own reward.

An affiliate program is open, so the people who join are choosing between you and every other program in their niche. They are driven by income, so your offer is judged commercially: the commission rate, how long it runs, whether your product converts the traffic they already have, and whether they can use the product themselves. A generous rate on a product that does not convert is worth nothing to them. Recruiting them works like sales: you first have to convince them that recommending you will pay off.

If you want the same comparison written as a quick reference, see SaaS affiliate vs referral program: key differences.

What each one typically pays

Referral rewards can be credits, an extra trial period, a discount, extra features or money, and on Reditus anything custom you grant through webhooks. Whatever you choose, make it big enough to matter. One Reditus customer pays €150 for every new paid client a user refers, and it has worked really well. Compare that with what a new paid client costs you through your other channels, or through an affiliate commission of 20% for 12 months: a reward like that is often cheaper.

Affiliate commissions in B2B SaaS usually sit between 20 and 50%. Early-stage companies pay a higher percentage for longer, because affiliates still have to believe in an unknown brand; established programs often pay 20 to 30% for 12 to 24 months. Duration counts as much as the rate: if the customer stays two years, 25% for 24 months pays the affiliate six monthly fees, while 40% for six months pays 2.4 monthly fees. The detail is in recurring commission affiliate programs.

Which should you launch first?

Launch both together and start with your own network. Your users go into the in-app referral program. The consultants, agencies and partners who already know your product and reach clients in bulk go into the affiliate program. On Reditus, Growth includes both programs, so there is no reason to run them one after the other.

What you do need first is paying customers who like your product, roughly $10K MRR with product-market fit. Below that, people usually won't recommend you yet, and affiliates can't earn if nobody pays. Longer versions of both calls: should you start with referrals or affiliates first? and when should a SaaS launch an affiliate program?

Can you run both at the same time?

Yes. They target different people and rarely compete for the same person. On Reditus both programs use the same tracking script and cookie, so attribution is simple: the last click before signup decides who gets the referral, advocate or affiliate, and after signup it never moves. See running referrals and affiliates together.

Frequently asked questions

Is a referral program the same as word of mouth?

No. Word of mouth happens anyway. A referral program makes it trackable and rewards it, which turns an occasional recommendation into a channel you can measure.

Do affiliates have to be customers?

No, and most are not. Giving them access to your product is still worth it: affiliates who have used the tool write better content about it.

Which one brings more revenue?

They do different jobs. A personal, one-to-one recommendation is still the best way to get someone to use a product, and those customers tend to stay longer, so your own users are often your best marketing channel. Affiliates who reach your ideal customers in bulk bring volume your users can't. Good affiliate programs get 20 to 30% of their new revenue from affiliates. Run both.

What about partner programs?

A partner program is something else again. Affiliates mention you at volume, in newsletters, blogs and articles. Partners co-sell: they join calls, make introductions and may want to see deals in your CRM. Most companies that ask for a full partner program don't need a partner relationship management tool (PRM): an affiliate program that agencies and consultants can join, with manual referral import and signup on behalf of their clients, is usually enough. Reditus does not offer a PRM.

Going with referrals too? The referral strategy guide covers what to offer and where programs fail.