Network marketing vs referral marketing

Referral marketing is based on the same basic concepts as network marketing. Both approaches use individuals and their personal relationships or contacts to sell services and products.

Network marketing is what we do to expand our connections, get ourselves and our brand known, and exchange ideas. You network to promote your firm’s services or products, make friends, learn from your peers or even to find a new career opportunity. Referral marketing is a deliberate and methodical business-expansion strategy. Once you get to know people (this can happen through networking), you will identify several opportunities to provide business referrals.

You might refer someone to a potential client or an association partner, or to a person in a similar business. Referral marketing is a form of “word of mouth” and it can work in several different ways. Referral marketing is sometimes considered one of the simplest forms of marketing. However, when utilised correctly it can result in remarkably high close rates with an extremely high return on investment. 

So, why should you consider Referral marketing? Here are some of the benefits of a well-structured referral marketing approach:

People feel more comfortable when a service is recommended by someone they know and trust. This is particularly relevant if the service or product is expensive. Referrals do not involve direct selling – satisfied clients sell the service or product for you. If a happy client tells a close friend about a certain business, then their trust is immediately transferred to the company, irrespective whether he or she has heard about it or not.

Cost effective
Referral marketing reduces your sales expenses. You do not have to extensively train your staff or employ a sales team. Your network of people will assist in the sales process.

Decreased price sensitivity
Referred clients are typically less price sensitive. Most referrals can be sold at full price because they have been presold on your client’s trust and credibility.

Quick expansion
A decent referral marketing system can quickly multiply, giving you plenty of interested prospects.  This will provide you with the luxury of selecting who you want to work with instead of having to take everything that comes your way. You will be able to focus on high-quality customers that are highly profitable for your business.

Increased levels of satisfaction
Referrals can build your level of satisfied customers. The cycle drives itself with more satisfied customers referring others to your company.

Referral marketing is a powerful and important component for every business. Implementing some basic tactics can help encourage and facilitate the referral process, which can be a major source of new sales. 

For more information contact Francois Pretorius at

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.