Affiliate marketing isn’t just beneficial for the marketing professionals who rely on it for income. It also offers significant revenue potential for the businesses that use affiliates in their online marketing strategy. My companies, Affilorama and SaleHoo, get approximately 50 percent of their sales from affiliate marketers.
Affiliate marketing provides an efficient, cost-effective method for acquiring new customers. Creating an affiliate program requires very little upfront cost, and it results in a sales team that works on commission alone and provides you with unrivaled brand exposure to a variety of different audiences. These affiliates can permeate the online marketing space — from Pinterest to Facebook to YouTube and beyond — without you having to sink in the time and effort. The more affiliates you have, the more potential customers you reach. Done properly, affiliate marketing can mean exponential growth of your online marketing efforts. Sound good? Here’s how to do it.
Step 1: Define a Goal
When considering introducing an affiliate program, first define a goal. Even if online sales aren’t an option, your goal could be to have affiliates distribute coupons to bring new patrons to your restaurant or receive more test drives at your car dealership. What are you hoping to get out of your affiliate marketers? Make sure you know the answer to this question so you can share it with your affiliates. Clear expectations from the outset means a more fruitful relationship.
Step 2: Crunch the Numbers
After identifying what you hope to achieve with your program, determine the cost of setting up an affiliate program. This often involves choosing a platform for tracking sales, setting up commission payouts, appointing a company liaison, and creating marketing support.
Setting the commission rate for your affiliates is a big decision that can impact the success of your program. When pricing out your commission, consider the price of your product or service and the size of the audience you’ll gain through an affiliate. Some businesses use a tiered system and offer larger commissions to affiliates with larger followings. It’s important that you make this calculation carefully and consider all the factors to find a rate that will attract as many affiliate as possible while still turning a profit for your business.
Once you have crunched these numbers, you’ll be able to determine your break-even point. How many sales will your affiliates need to make to cover the costs of the program? This will help you decide whether an affiliate program is a realistic option for your business and whether it is worth pursuing.
Step 3: Make Your Program Incentives Appealing
Your affiliate marketers should get credit for a sale even if it isn’t made immediately after the lead is obtained. For example, our affiliates benefit from a customer’s purchase for up to 60 days after they provide us with that customer’s contact information. We recognize that our affiliate marketers represent an important resource in providing us with leads and we try to reward them for that. This will also provide you with an accurate reflection of how effective your affiliates are at gaining new leads.
A good commission rate is not the only factor in creating an attractive affiliate program. While a good rate will certainly appeal to potential marketers, there are many other factors that will determine the quality of your affiliate program. One way to attract more marketers is to make your program free to join. Affiliates will also appreciate it if you provide them with standard advertising pieces and custom marketing support.
Step 4: Find the Right Affiliates
The ideal affiliate is someone who already has access to the market you are trying to reach. It’s vitally important that you have a clear idea of your target market because this will help you choose the best affiliate marketers for your business. Someone who has proven experience promoting products or services in your niche will be more likely to achieve the goals you defined in step one.
The best way to find affiliates is to let them know about your program by listing in an affiliate directory. You can do this yourself, or pay about $80 for a service like Affiliate Announce to put up your listings for you.
Respect and trust play a big role in the business-affiliate relationship. These people will be representing your business to a new audience and you have to trust them to be an appropriate brand ambassador. That’s why the process of selecting the right affiliates is so important.
Affiliate marketing provides your business with a largely untapped audience with just a small investment of time, effort and money. Take advantage of it today by following these four easy steps.
Simon is CEO and co-founder of SaleHoo, an online wholesale directory of over 8,000 prescreened suppliers