Acquiring customers through traditional marketing channels - paid advertising, SEO, etc. - is becoming more and more difficult as costs rise in direct correlation with competition.
Rather than participating in a race to the bottom, smart brands are looking outside the box to find more affordable, effective acquisition channels. There are two in particular that stand out and get compared to each other frequently: the referral program vs affiliate program.
It’s fair to see why these are compared to each other, as they work pretty similarly. New customers get recommended to your brand by someone they trust. The key distinction is who is sending them your way.
With a referral program you’re encouraging your existing customers to tell their family, friends, coworkers, or even complete strangers about your brand. You offer both the referrer and the referree an incentive, like 10% off.
An affiliate program, on the other hand, is more or less a partnership with an authoritative figure in your industry that has their own following. Think of it as a type of influencer marketing. In exchange, you will pay the affiliate a commission of sales they send your way.
So while both programs could have a place in your acquisition efforts, they’re quite different - and we encourage you to narrow your focus to just one or the other at first to avoid spreading resources too thin.
Learn more about the nuances between an affiliate vs referral program below, or get started today with the simpler and more effective of the two with Rivo. We make it quick and easy to jumpstart your own Shopify referral program in a few clicks.
What’s the Difference Between an Affiliate and Referral Program?
Affiliate and referral programs are lumped together all the time, but they shouldn’t be. Though they share the goal of getting new customers into your ecosystem through recommendations, that’s where the similarities end.
Let’s look at the difference between an affiliate and referral program below by dissecting how each works. Then, we’ll be better able to compare the referral program vs affiliate program to see which is right for your brand.
How Affiliate Programs Work
Affiliate programs rely on third parties who promote your products to their audience in exchange for a commission on each sale. Sometimes you’ll instead work with affiliates on an upfront basis, though a commission-based affiliate structure is most common.
Affiliates can be influencers, bloggers, creators, or niche publishers. At any rate, they’re usually not customers - though they can be in some cases. They technically don’t need a personal connection to your brand.
Their job is merely to drive traffic through content, social posts, or email lists using trackable links or discount codes. You agree on the commission rate, define payout terms, and then use affiliate software to track conversions.
This model works well for brands looking to expand reach and drive top-of-funnel traffic. It’s performance-based, meaning you only pay when someone delivers a sale.
However, we’ve seen some brands regret starting an affiliate program because it can drive the wrong type of traffic. It requires a lot of oversight, too. Think onboarding, tracking, fraud prevention, and partner communication.
That said, affiliate programs have their place for brands with products that respond well to cold traffic. But let’s take a look at the other half of the affiliate vs referral program comparison before figuring out if affiliate marketing is right for you.
How Referral Programs Work
So how does a referral program work? These take the users highest up the customer loyalty ladder, your brand advocates, and incentivize them to refer new customers your way.
Instead of reaching strangers, you’re encouraging real customers to share your brand with friends, family, or people they know personally. This leads to much higher conversion rates as the recommendation is built on trust.
Most referral programs offer a reward to both sides: the referrer and the referred. That could be store credit, discounts, or freebies. Unlike affiliate programs, referrals are usually tied to the customer account and tracked through branded share links or codes.
Your happy customers already have credibility and don’t mind promoting your brand to others - you just need to give them a more compelling reason to do so. After all, 86% of loyal customers will recommend a brand to others, per our customer retention statistics guide.
This approach doesn’t require an influencer strategy or big reach, either. Any brand can roll out a referral program without much upfront cost or active management necessary. You just need the right platform for setting it up and overseeing it, like Rivo.
They say word-of-mouth marketing remains one of the best ways for eCommerce brands to grow profitably, and that’s what a referral program is all about. But should you start with a referral program vs affiliate program?
Referral Program vs Affiliate Program: Which is Right For Your Brand?
Be clear, both programs have their place in modern eCommerce marketing for brands looking to break outside the box of constantly overpaying in paid advertising, or waiting months for the organic search snowball to start rolling.
For some brands in certain markets, referral programs and affiliate marketing are two of the only options because of the nature of the products they sell. But is one necessarily better than the other when it comes to a referral program vs affiliate program? Not at all.
Rather, it’s just about which makes the most sense to get started with right now. Eventually you might want both. Or, you might find that one brings in all the customers you need to outpace churn and grow sustainably. That said, let’s compare the affiliate vs referral program below.
Think About Your Average Customer’s Relationship to Your Brand
Start with this question: Are your customers happy enough to tell someone else about you? If the answer is no, well, you’ve got some work to do as far as product quality and customer experience are concerned. More importantly, you’ll have a hard time making a referral program work.
But if you’ve built up solid product-market fit and your customers are already leaving reviews, tagging you on social, or buying more than once, a referral program might be a viable option. It gives people already advocating for you a simple, rewarding way to share the brand organically.
Affiliate programs, on the other hand, don’t rely on a personal connection. They're great if you have a clear value prop that converts cold traffic and want to partner with influencers, creators, or publishers who already have reach. This is also a great way to get a new brand off the ground if you don’t have many customers yet.
Consider Your Growth Strategy and Funnel Goals
The type of traffic that an affiliate vs referral program brings in is very different, and this distinction matters for brands.
Referral programs support the bottom of the funnel. You're giving existing customers an opportunity to get discounts or other freebies in exchange for telling friends, family, coworkers, and other acquaintances about your brand.
This leads to warmer leads, higher conversion rates, and stronger retention. You’ll see the opposite with affiliate traffic. It’s more top of funnel, or in a best-case scenario, middle of the funnel.
That’s not necessarily a bad thing, as this type of traffic can still convert - but these users need to go through the customer acquisition journey, so it may take some time before you see them convert.
An affiliate program can still make sense if your strategy is awareness-first or if you're in aggressive acquisition mode. You’ll get exposure to new audiences that may not have heard of you otherwise.
Evaluate Internal Resources and Tech Stack
You need to be honest with yourself about how much work you’re willing to take on or the amount of resources you have to dedicate to one program or the other.
Referral programs are really easy to set up and maintain, especially when you build yours on the Rivo platform. They mostly run in the background once you have rewards, tracking, and notifications in place. They’re also easier to promote through post-purchase flows, loyalty programs, and community channels.
In contrast, affiliate programs are a bit more demanding. You need to manage payouts, oversee partner compliance, handle tracking links, and possibly deal with fraud prevention. Although it’s definitely manageable, you’ll need more infrastructure and oversight to make it work.
Can You Run Both? (Yes - Here’s How to Do It)
Plenty of brands run referral and affiliate programs side by side. You just need to recognize them as distinct. Separate who the programs are for and how the rewards are structured.
Referral programs should be customer-facing: simple, shareable, and integrated with the post-purchase experience. Affiliates are external partners who promote your brand as part of their own content/platform. They need a portal, onboarding, and a unique communication strategy.
Both models can work together without overlap, but if you’re just starting out and have a strong base of satisfied customers, you can see an almost immediate lift to your revenue and profits by rolling out a referral program.
Tips for Getting Started With Either Type of Program
You should have a solid grasp of the nuances between an affiliate program vs referral program at this point. Each has its place, but you should start with one or the other to avoid spreading yourself too thin.
We recommend referral programs for most eCommerce brands, and you can probably see why after reading through this breakdown of the referral program vs affiliate program. Either way, though, here are some quick tips on taking the next steps.
Choose the Right Platform for Referral or Affiliate
No matter which program you integrate into your acquisition efforts you’ll need to find the right platform to support your goals. The better your backend, the less work it’ll take to set up and manage the program.
Your tech should handle tracking, attribution, rewards, and customer communication without constant babysitting. A solid referral program is built on a platform that integrates directly with Shopify, supports post-purchase flows, and lets customers redeem rewards easily.
Rivo is the best choice for most eCommerce brands looking to hit the ground running. It takes just a few minutes to create a fully customizable program that matches your brand and website.
Some of the brands working on the Rivo platform saw as much as $450k in referral revenue in the first 90 days. See other case studies here. Or, weigh your options below if you’re still not convinced Rivo is right for you:
Otherwise, we encourage you to book a demo today and we’ll talk one-on-one about how Rivo can support your retention and acquisition goals, be it through customer loyalty strategies or referrals.
As for affiliate programs, you need features like custom links, real-time tracking, and flexible payout options. You’ll also want a dashboard where creators or content partners can check performance and grab assets. Proper due diligence can set you up for success from the get-go.
Avoid Overcomplicating the Reward Structure
If your reward system takes more than 10 seconds to explain, it's probably too complex. Whether it's store credit, cash, free products, or tiered bonuses, the key is clarity.
Just as with how you reward customer loyalty, people should know what they’ll get, how to get it, and when it kicks in without digging through fine print.
Simple doesn’t mean boring, though. A $10 reward, a 20% discount, or a free product for a successful referral can be plenty motivating. What matters most is that the reward feels fair and actually useful to the person earning it.
When it comes to affiliate programs, make sure you set clear commission tiers, payout timelines, and eligible products. Affiliates want to know exactly what they’re earning and when instead of chasing vague percentages or delayed rewards.
Promote the Program Well
A great program that no one sees won’t move the needle. Promotion should be baked into your customer journey: post-purchase emails, account dashboards, loyalty landing pages, SMS flows, and even packaging.
Timing is everything. You should ask customers for referrals when they’re happiest - right after they buy or leave a positive review. This is something you can set up in the backend of your program to trigger outreach to perfection.
Promoting your affiliate program will be a bit more hands-on, unfortunately. You’ll need to do some research to identify the right people who align with your brand. Then, offer a low-friction way to join.
This might include influencers, bloggers, or creators who already talk about your category. You’ll need to empower them with brand assets, product details, and commission info to make the most of this method.
Wrapping Up Our Affiliate Program vs Referral Program Comparison
As we draw our referral program vs affiliate program comparison to a close, the key takeaway is that both can drive growth. They ultimately serve different purposes, though.
Affiliates help you reach new audiences through third-party partners. Referrals tap into the trust your existing customers already have. While many brands use both, the majority of brands are better off setting up a referral program since it’s less work and leads to more conversions.
Our blog has more resources on the typical customer acquisition cost for eCommerce, customer acquisition vs retention, loyalty program management, customer retention KPIs, and more. But at this point, it’s time to take the next step and start building the program that fits your goals.
If you find that’s a referral program, you’re in luck. Rivo is here to help you tap into the full potential of your most loyal customers and transform them into brand advocates, in turn creating your own organic acquisition channel. Learn more about what’s possible with Rivo today.
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