To understand what peer-to-peer (P2P) marketing is, let’s start with an example.
Recently, I was looking for a new face moisturizer. Of course, I could’ve trusted the numerous influencers I follow on Instagram, all with strong opinions regarding the “best, most effective” options available.
But I wasn’t convinced these influencers had my best interest in-mind. Yes, most influencers’ (and micro-influencers) are successful because they promote valuable products. But they’re getting commission off those posts, too.
So I handled my problem the old-fashioned way — I texted my friends and asked what products they use.
This isn’t to say influencer marketing is ineffective. Quite the opposite: When done right, influencer marketing is a fantastic opportunity to expand your brand’s reach and increase sales.
But depending on your team’s budget, influencer marketing could be limiting. Plus, influencer marketing inhibits your brand from reaching those consumers who still trust their peers above all else.
Enter: P2P marketing.
What is P2P marketing?
Peer-to-peer marketing (otherwise known as P2P marketing), is when consumers recommend products or services to their peers. An effective component of word-of-mouth marketing, P2P marketing uses reviews and personal recommendations from customers to appeal to new audiences.
Given 93% of consumers trust friends and family over all other influences (including review sites, blogs, and social media platforms), it makes sense why P2P marketing works.
And P2P marketing, a form of word-of-mouth marketing, isn’t new. People have been giving personal opinions about their favorite — and least favorite — brands, products, and services long before social media.
Some older forms of P2P marketing include Yelp, reviews on personal business’ websites, and good old-fashioned conversations between your consumers and their friends and family.
However, there are some new tools that help businesses leverage P2P marketing on a broader scale. Amazing Brands, for instance, helps businesses generate customer reviews and referrals, guarantee event attendance, or even increase in-store foot traffic.
The tool ultimately relies on the premise of P2P marketing, which is that there’s nothing more powerful than peer recommendations.
Other tools, like Higher Logic, work to establish a sense of community among existing consumers, and increase brand loyalty — a critical component of P2P marketing. (Since consumers won’t refer products or services towards which they don’t feel loyal.)
However, if you’re learning about P2P marketing for the first time, you might be wondering — why invest in P2P marketing, instead of more traditional forms of influencer marketing?
And what’s the difference, anyway?
What’s the difference between P2P marketing and influencer marketing?
Over the past couple years, influencer marketing has been one of the most popular and effective opportunities for brands to reach new audiences by leveraging those influencers’ built-in communities.
However, as mentioned above, consumers still trust their own peers more than anyone else. And influencers can often feel like celebrities to the general public — in fact, sometimes, they are actual celebrities, like George Clooney with Nespresso. This removes a level of authenticity you might be striving for as a brand.
Additionally, many small and medium-sized businesses can’t afford the typical influencer cost. Celebrity or macro-influencers charge between $3,000 and $500,000 for a single post — and while micro-influencers are undoubtedly cheaper, they can also charge upwards of $500 per post.
Ultimately, P2P is a form of marketing that can feel increasingly trustworthy and authentic through real, genuine reviews from peers who have no incentive to promote businesses they don’t care about.
To further explore the difference between P2P marketing and influencer marketing, let’s consider an example.
Jessica Alba’s business, The Honest Company, has a referral program in which they credit existing customers $20 for each invited friend who makes a purchase.
This is an example of P2P marketing.
Influencer marketing, on the other hand, refers to the influencers on Instagram (as well as other social platforms) who tag posts with #honestambassador, signifying the post is sponsored by The Honest Company.
These are both equally valuable marketing options, but they achieve different goals. The P2P marketing initiative (in this case, the referral program), aims to tap into The Honest Company’s existing consumers to reach new prospects.
The P2P program is likely more narrow in reach, but has the potential to convert more quickly than influencer marketing, since it’s leveraging the power of an existing relationship between customers and their friends or family.
The influencer marketing program, alternatively, is meant to spread brand awareness about Honest Company to a wider audience.
P2P marketing can take many different forms depending on your brand and business goals — including creating a referral program, encouraging reviews on your site in exchange for a small discount or prize, or organizing events meant to increase brand awareness to the larger community.
Ultimately, P2P marketing comes down to increasing the incentive for your consumers to share your product or service with friends and family, which is undoubtedly one of the best long-term strategies for success.
Originally Appeared On: https://blog.hubspot.com/marketing/p2p-marketing