If we were to put it shortly, that would be it:
Influencer marketing is the process of partnering with an influencer in order to promote a product or service.
Referral marketing, on the other hand, takes advantage of customer engagement and word-of-mouth to generate sales. It can involve anything from adding referral links to your website to incentivizing customers for referrals.
There are several similarities between these two types of marketing strategies: both rely heavily on content that is interesting and engaging; they encourage users to share their opinions; they offer incentives for sharing information about products or services; etc. However, there are also some significant differences between them. This blog post will explore those differences so you can figure out which strategy might be right for your business!
What is referral marketing?
Referral marketing is the act of persuading a customer to buy from you by getting someone they know and trust (a referral) to sell or endorse your product. When done right, it can be one of the most effective ways of generating new leads for your company.
How does referral marketing work?
Referral marketing is a form of word-of-mouth advertising that relies on the power of personal recommendations and social networks to get more people interested in your product or service. It’s mostly based around customers getting other customers (who are likely friends) to sign up for something, buy a product, or try out an experience via referrals from existing members.
In contrast, influencer marketing involves working with someone who has access to media channels such as blogs and YouTube channels with lots of subscribers/fans which can help spread awareness about a company’s products through testimonials or reviews. These individuals have large online audiences – they’re usually called “influencers” because their social reach influences purchases among fans following them.
What are some benefits of referral marketing?
The key benefit that comes with referral marketing is boosting sales through familiar faces in an increasingly digital world. Because people tend to do business with those they know and like, referrals play on this impulse while also giving companies access to customers who may not have found them otherwise. Plus, when something goes wrong during the sale process (e.g., an inaccurate shipment), a good word from a trusted friend has much more clout than any form of marketing.
Customers are guaranteed quality goods and services. When customers refer businesses they trust, they’re essentially guaranteeing that the person or company will provide what was promised–a guarantee not found in most referral programs. It also helps build loyalty for repeat referrals as well so companies see higher conversion.
What are some drawbacks to referral marketing?
The biggest drawback that comes with referral marketing is the time it takes for a company to get set up and running on the platform. It can be tough getting users who have never heard of you or tried your product before, which requires a lot more work in order to grow an audience from scratch – something most companies don’t do well without a budget behind them. This also makes these platforms less attractive if customer acquisition costs are high and competition is fierce (i.e., Facebook campaigns).
This leads into another issue: relying too much on one channel for lead generation means missing out on other opportunities as they come along, especially when social media trends change fast or new channels open up.
One more downside is that these platforms only work when customers are ready to buy something. If the customer isn’t in-market, there’s nothing being sold, and thus no lead.
What is influencer marketing?
Influencer marketing is a new way for businesses to connect with their target audience via social media. It’s an effective strategy because it places the trust and message of the business squarely in the hands of someone that consumers already know, like, and trust. The influencers we work with are true thought leaders – they’re experts at what they do as well as passionate about your line of products or services.
How does it work?
The most common type of influencer marketing is paying for a sponsored post on a blog. A company will pay an influencer to create content that features their product or service, they then share it with their audience and this, in turn, leads to potential customers. This technique has been around since the 70s when Phillip Morris paid sitcom stars from “M*A*S*H” $25,000 per episode to mention Marlboro cigarettes in dialogue and show images of actors smoking cigarettes between scenes. There are many benefits associated with using Influencers as your advertising medium including improving brand awareness, raising website traffic through social media sites like Facebook or YouTube channels devoted solely to Influencers.
Pros of influencer marketing in your strategy
Influencer marketing can be a lot less expensive than other forms of advertising because you’re purchasing their attention rather than something physical. It’s the fastest way to get an audience on board without much investment in time or money.
In influencer marketing, it is important for your strategy that what they are promoting aligns with their niche and who they want to reach so it has more impact. For instance, if someone wants to promote vegetarianism as opposed to veganism then it might not have as great of a response from the target group but will still generate interest among those looking into different types of eating habits.
Influencers have social proof which means that when they put something out there, their followers and fans find it credible.
Influencers also have a deep understanding of the needs of consumers: Influencer marketing campaigns can be much more targeted than other forms of advertising because influencers know what people in their niche want to hear about. You don’t need to guess at demographics or psychographics when you work with an influencer who is already familiar with those things.
What are some similarities between referral marketing and influence marketing?
If people know a brand but not the individual behind it (e.g., Jennifer Lawrence), they might still trust what this person is saying about them because of who they are as an influencer – even if all their stuff had been sponsored from day one. In either case, those with clout have power over others’ decisions; how much weight is given to each depends on the level of connection felt by both parties.
Influencers can be anyone: celebrities like Taylor Swift or Kim Kardashian, social media stars like Gigi Gorgeous or Zoella from YouTube, the CEO of your company.
Influencer marketing is the newest trend in advertising because it’s a more authentic form of advertisement. Referral marketing isn’t as effective at influencing consumers to buy products for various reasons, such as people see referral posts as annoying advertisements and they don’t want their friends knowing that they bought something from an ad.
What are the main differences between referral marketing vs Influencer Marketing?
Here are some key points:
– Referral programs rely heavily on word-of-mouth referrals
– Referral programs can be used by any company
– Influencer marketing is more based on generating content to attract a specific target market
– Word of mouth referrals are usually cheaper than influencer marketing methods. Whereas, large online reach through social media means that influencers have the ability to generate an expensive cost per click for their products or services (i.e., they could charge $500-$1000)
– Referral and Influencer marketing both come with choosing who you want to work with and what form your end goal should take.
Over to you
What should you choose: influencer marketing or referral marketing? Why wouldn’t you combine your efforts and invest in both ways? We fully encourage you to do so – and use Early Parrot for this purpose!