What Is an Affiliate Program?

An affiliate program is a marketing arrangement in which a business rewards individuals or companies for referring new customers, leads, or sales.

The people or businesses promoting the brand are called affiliates. They usually receive a unique affiliate link, referral code, or other tracking method that allows the company to see which customers came through their recommendations.

When an affiliate generates a qualifying action, such as a purchase, the business pays them a commission or other reward.

In simple terms, an affiliate program works like this:

A business provides affiliates with a trackable way to recommend its products → affiliates promote the business → customers make a purchase → the affiliate earns a reward.

Affiliate programs are commonly used by ecommerce stores, SaaS companies, subscription businesses, online education companies, and other brands that want to grow through word-of-mouth and partner marketing.

What Is the Purpose of an Affiliate Program?

The main purpose of an affiliate program is to help a business grow through trusted recommendations.

Instead of relying entirely on advertising, the company creates a network of people who introduce its products to their own audiences.

This can help businesses reach potential customers they may not have reached through their own marketing channels.

Affiliate programs can also make marketing costs more closely tied to performance.

With many affiliate programs, the business pays commissions after an affiliate generates a specific result, such as a completed sale.

That makes affiliate marketing different from some forms of advertising where businesses pay upfront for impressions or exposure without knowing whether those impressions will lead to revenue.

Affiliate Program vs. Referral Program

Affiliate programs and referral programs are similar, but they are not always the same.

An affiliate program is typically designed for partners who promote a brand consistently and earn commissions based on measurable results.

A referral program is often designed for existing customers who occasionally recommend the company to friends, family, or colleagues.

For example, an affiliate might earn a 15% commission on every sale they generate, while a customer referral program might give both the customer and their friend a $20 discount.

Some businesses operate both types of programs.