Affiliate Marketing vs. Referral Marketing – Which One Is Right for You?

Affiliate vs referral marketing. One taps strangers with reach. The other taps loyal users with trust. Your growth depends on knowing the difference.

If you’re running a SaaS company and looking to grow through partnerships, understanding how each one works (and when to use it) is key to scaling efficiently.

We'll go over:

• What affiliate marketing and referral marketing are
• The five key differences that impact growth
• Which one drives better trust and conversions
• When to use each strategy based on your SaaS stage
• How Reditus helps you run both from one dashboard

Let's look at affiliate marketing first: The go-to strategy for reaching new audiences at scale.

What is it, how does it work, and why do so many SaaS companies use it?

What is Affiliate Marketing?

Affiliate marketing is a way to grow your SaaS business by letting affiliate marketers promote your product for a commission. Think of it as building a remote sales team made up of bloggers, content creators, and niche influencers. 

What you're capitalizing on is that they all have their own audiences.

It’s not about blasting ads. It’s about partnering with people who already have the attention of your ideal customers. When they bring in new leads or paying customers through an affiliate link, they get paid. You only pay for results.

It works especially well when supported by a clear affiliate marketing strategy tailored to your goals and audience.

Here’s how it works in practice.

Common use cases: B2B SaaS, e-commerce, and digital products

Affiliate marketing is especially popular with:

• B2B SaaS tools looking to scale quickly without hiring a massive sales team.
• E-commerce brands that want more product exposure.
• Digital platforms that benefit from high-volume referrals.

For SaaS specifically, affiliate programs work well when you already have traction with a product people trust and a clear ICP. That makes it easier for affiliates to create content that converts.

How affiliates earn commissions

Affiliates sign up to promote your product, usually through a platform like Reditus. They get a unique tracking link. If someone signs up or buys through that link, they earn a commission.

You decide the reward structure. For example, 20% recurring revenue for 12 months or a flat fee per sign-up could work well for your business. 

Either way, it’s pay-for-performance, making it low-risk and scalable, leading to a successful sale.

Example: How Reditus powers affiliate programs

Reditus gives SaaS companies a simple way to launch and manage their affiliate program — even if they’re starting from scratch.

You can list your program on the Reditus marketplace, attract affiliates, track performance, and handle payouts. No juggling multiple tools. No guessing if your links are working.

Now that we’ve covered affiliate marketing, let’s look at its close cousin: referral marketing.

Same goal — more customers. Totally different approach, as it turns customers into brand ambassadors.

What is Referral Marketing?

Referral marketing is all about turning your happiest existing customers into advocates, effectively utilizing word-of-mouth marketing. Instead of reaching strangers through content creators or publishers, you’re tapping into the trust your loyal customers already have with their own networks.

It’s personal, organic, and often built right into your product experience. Think: “Invite a friend, get $10” or “Refer a colleague, get three months free.” It works because people trust people, not ads.

Here’s what makes referral marketing unique…

Common use cases: B2B SaaS, subscriptions, and high-trust products

Referral marketing thrives in:

• SaaS tools with strong user engagement
• Subscription-based products where retention matters
• High-trust industries like fintech, HR, or health tech

If you’ve got a product people genuinely love using, they’re likely to recommend it, especially when there’s a small incentive involved.

How referrals actually work

Customers get a unique referral link or code, often right inside the app. They share it with a colleague or friend. When that person signs up (or becomes a paying customer) both parties get a reward.

These rewards don’t have to be cash. They can be:

• Credits or usage perks
• Discounts
• Free months of service

It’s about creating a win-win that feels good for everyone.

Affiliate and referral marketing sound similar on the surface, but under the hood, they’re built for different goals, different audiences, and different types of growth.

Let’s break down the key differences side by side.

Key Differences Between Affiliate and Referral Marketing

At a glance, affiliate and referral marketing look alike. Both involve third parties promoting your SaaS product as part of your marketing efforts. Both reward people for driving sign-ups or sales through various marketing strategies.

But dig deeper, and the differences start to matter, especially when you’re deciding where to invest your time and budget.

Here’s how they compare across five core areas.

1. Who promotes the business?

Affiliate marketing: External partners — bloggers, content creators, influencers, and publishers. 

Referral marketing: Existing users who already love your product.

Affiliates often reach new audiences. Referrers speak to people they know, encouraging them to become new customers.

Affiliate marketing relies on external partners like bloggers, influencers, and publishers with their own followings. If you’re weighing this approach against creator-focused campaigns, it helps to understand how affiliate marketing compares to influencer marketing.

2. Primary goal & audience targeting

Affiliate marketing is all about reach. The goal is to tap into entirely new audiences outside your customer base. 

Referral marketing focuses on trust. It leverages your users’ networks for more personal, qualified leads.

One casts a wide net to attract a broad target audience. The other aims for high-quality, high-converting traffic.

3. Tracking & attribution

Affiliate marketing uses third-party tracking (like Reditus) to measure clicks, sign-ups, and revenue. Referral marketing is usually tracked natively within the app using referral software that leverages first-party data and product triggers.

Affiliates log into an external dashboard. Referrals never leave the product.

4. Compensation & rewards

Affiliate programs are money-based. These are commissions based on conversions, leads, or revenue. Referral programs often offer non-cash perks: discounts, credits, swag, or bonus features as part of your marketing campaigns.

A strong referral campaign doesn’t just drive growth. It also boosts retention by encouraging great customer service and rewarding loyal users.

It’s transactional vs. relational. Both can work, but it depends on your goals.

5. Conversion rates & customer trust

Affiliate traffic usually sees lower conversion rates since the audience is colder. Referral traffic converts higher, and it comes with baked-in trust from satisfied customers.

If someone you trust recommends a tool they use daily, you’re far more likely to check it out.

Now that you know how they differ, let’s weigh the pros and cons of both referral marketing and affiliate marketing so you can decide what’s best for your SaaS growth stage.

Pros & Cons of Each Marketing Strategy

No strategy is perfect. Referral and affiliate marketing each come with their own strengths and limitations. What works for one SaaS business might fall flat for another, depending on your product, stage, and goals.

Let’s look at the trade-offs.

Pros of Affiliate Marketing

✔️ Scales fast. You can tap into extensive networks of creators, bloggers, and influencers using an affiliate link to track promotions and sales.

✔️ Performance-based. You only pay when you get results.

✔️ Builds awareness. Great for reaching new audiences beyond your existing customer base.

Cons of Affiliate Marketing

❌ Lower trust. Since the promotion comes from people outside your user base, conversion rates can dip.

❌ More moving parts. You’ll need to manage approvals, fraud prevention, and third-party tracking.

❌ Takes time to ramp up. Affiliates need content, links, and motivation to get going.

For more on that, we've broken down the pros and cons of affiliate marketing for SaaS.

Pros of Referral Marketing

✔️ High trust. A referral marketing program leverages recommendations from real users to drive stronger leads and conversions.

✔️ Cost-effective. No need to pay upfront. Rewards are only given for actual referrals.

✔️ Built-in UX. Because it’s often embedded inside the app, the process feels seamless for users.

Cons of Referral Marketing

❌ Limited reach. You’re only as strong as your current user base.

❌ Product matters. If your product isn’t delivering value, people won’t refer it.

❌ Reward structure matters. Too little, and no one refers. Too much, and it’s unsustainable.

So, which strategy is the better fit for your SaaS business? That depends on where you are now and where you want to grow next. Let’s talk about it.

When to Use Affiliate Marketing vs. Referral Marketing?

Not every SaaS business needs both strategies at once. The right choice of a referral or affiliate program depends on your product maturity, customer base, and growth goals.

Here’s when each approach makes the most sense.

Use affiliate marketing if:

• You want to reach new audiences outside your current user base
• Your product already has traction and clear value props
• You’re ready to partner with content creators, influencers, or bloggers
• You prefer a scalable, performance-based model

This is ideal for SaaS companies with at least $50K ARR and solid product-market fit. Affiliates promote best with clear messaging, a strong brand, and proof of the product's delivery.

Use referral marketing if:

• You have users who genuinely love your product
• You want to create organic, word-of-mouth growth
• Your product is sticky, with high customer satisfaction
• You want higher conversion rates from warm leads

This works particularly well for early-stage SaaS companies. Even if your user base is small, happy customers can create a viral loop that brings in more like-minded users.

What if you want both? Good news! You don’t have to choose. 

Reditus is built to help SaaS companies run affiliate and referral programs side by side without any of the usual tracking headaches. Let’s take a look.

How Reditus Helps You Manage Both Referral & Affiliate Marketing

Most tools force you to choose between managing affiliates or referrals. Reditus gives you both in one simple dashboard, allowing you to efficiently manage your referral and affiliate programs.

You can run your affiliate and referral programs side by side. No duplicate tracking. No extra tools. No messy setups.

Here’s how it works.

Reditus: One platform, two programs

Whether someone shares your product as a customer (referral) or a content creator (affiliate), Reditus handles it all, demonstrating how referral programs work effectively.

• Track sign-ups, conversions, and payouts in one place
• Attribute every sign-up to the right partner without overlap
• Only install tracking once. No technical juggling.

Built-in referral tracking

Reditus is launching an in-app referral feature that lets your users share your product using referral links without ever leaving the platform.

• Add a simple widget inside your app
• Reward users with credits, discounts, or swag
• No logins or third-party redirects, just a smooth experience

Automated (but flexible) payouts

Whether you’re rewarding referrals with credits or paying affiliates in cash, Reditus handles the logistics.

• Set caps on rewards to control costs
• Automate payouts through PayPal, Wise, or direct transfers
• Stay compliant across borders and tax systems

You don’t need a separate tool for each program. You just need one platform that was actually built for SaaS.

So, should you go with affiliate marketing, referral marketing, or both? Let’s wrap it up with some final thoughts and a quick recap.

Over to You: Choosing the Right Growth Channel for Your SaaS

Affiliate marketing and referral marketing can both drive serious growth, but they work in different ways and at different stages.

If you’re looking to scale beyond your customer base and attract new customers, affiliate marketing helps you tap into new audiences fast.

If you’re focused on trust, retention, and organic momentum, referral marketing turns your users into your best brand advocates.

And if you’re like most SaaS founders? You’ll probably need both, eventually.

That’s why Reditus is building one platform to help you manage and scale both strategies without the hassle. 

Run your programs in sync, avoid duplicate tracking, and reward the right people at the right time.

Ready to see how it works? Start building your affiliate or referral program with Reditus.

FAQs: Affiliate Marketing vs Referral marketing

1. Can I run both affiliate and referral marketing programs at the same time?

Yes. Many SaaS companies use affiliate marketing to reach new audiences and referral marketing to leverage existing users. Just ensure you have a clear structure for tracking and rewards to avoid overlap.

2. What’s the biggest difference between affiliate and referral marketing?

Affiliates are typically external promoters, like bloggers or influencers. Referrals come from your actual users. Affiliates bring reach. Referrals bring trust.

3. Do I need a certain number of users before starting a referral program?

Not necessarily. If even a small group of users loves your product, you can start a referral program. Just keep the rewards simple and relevant.

4. How do I decide how much to pay affiliates or reward referrers?

For affiliates, aim for commissions that reflect your CAC and average revenue per account. For referrals, non-cash perks like credits or discounts often work better than money — especially early on.

5. What’s the easiest way to get started?

Start with one channel, depending on your growth stage. Use a platform like Reditus to handle tracking, attribution, and payouts. When you’re ready, layer in the second program without needing a separate tool.