Affiliate Marketing: Leads to Success
What is affiliate marketing? How can it benefit your e-commerce business? How can you use your data to create an affiliate marketing program which set yourself up for success? Follow these tips and tricks on how to make this happen.
Congratulations. You have successfully started an online store. Now, how to get more traffic to your website and promote your brand in the shortest time possible so you can get a good sleep with your pockets full?
As a business owner you probably don’t believe in easy money (and good for you). There isn’t any magic that would make you rich overnight or that would skyrocket your sales within hours to make you a billionare. But still, there are certain proven methods that are cheap enough to be affordable even for small businesses and very effective at the same time.
One of these marketing methods are affiliate programs.
What it means?
Affiliate marketing basically means that you let other people market your products which increases your traffic and hopefully your sales. In return, your affiliate marketers get a certain percentage (in most of the cases) of every purchase that originates from their website.
First, you should think about whether your business is suitable for affiliate marketing. If you have poor profit margins, the whole thing probably wouldn’t work for you, as you will get to know further below. Just look at your competitors — are other businesses in your market involved in affiliate programs? Then it should be the right way for you, too.
Be aware of these types of affiliate programs:
- CPA (Cost per acquisition)
- CPM (Cost per impression)
You will choose the one that suits you based on the type of products or services you sell.
How it works?
Usually, you provide your affiliates with special hyperlinks leading to your website. Each link has a unique ID code that helps to track the origin of a customer. And here comes the good part: you don’t pay for a customer brought by an affiliate program until he actually buys something. That’s why affiliate marketing is so popular but don’t be mistaken. It isn’t so easy.
Theoretically, if you would let anyone in the world market your products, it should be a win-win situation. You get a customer, your sales increase, the marketer gets his reward. However, be very careful when planning your affiliate program, as your profits will be cut by the commission you give your marketers.
Setting commissions
Here you need to set some basic commission structure based on your current revenue and all the parties that are taking part: A) the affiliate marketer(s), you may need to use B) an affiliate network and even to pay some C) affiiate manager. If you consider all these expenses, suddenly this inexpensive sales channel could ruin you if you don’t calculate it all properly:
- Structure your commission rates so that you still make a profit on your goods and leave some additional margin for special affiliate incentives. For example when launching a new product you want your marketers to promote it. You need to be able to increase their commission for a while for doing so.
- Keep in mind that new customers are more valuable than the existing ones. Thus you should offer higher incentives for bringing “fresh meat” to your store. In fact, whichever marketing method you would use for acquiring a new customer, it would cost you up to seven times more than to keep existing one. And still, new customers have traditionally higher lifetime value than existing ones.
Affiliate commissions for new and existing customers by category:
If you sell many different products, you probably have different margin on each type of them. For example, you can have 2% margin on electronics and about 15% on accessories. Then you need to create such a blended commission that will be suitable for both you and your affiliates. This is more of a technical matter, which leads us to the following:
Affiliate marketing networks
As mentioned above, it is common practice to sign up for an affiliate marketing network. This is definitely the easiest way for beginners: the network will provide you with a marketplace where your program will be offered to other affiliate marketers. They should also provide a tracking system so that you don’t have to build your own and your marketers can thus easily track their commissions. This is a big advantage of affiliate networks — marketers are often worried if they are precisely paid for the exact sales they generated. Networks with their tracking systems solve this credibility issue.
We recommend here to check out one of these: Commission Junction, ShareASale or AffiliteFuture.
Home grown systems
Of course there is still a possibility of building your own tracking system and self-promoting your home grown affiliate program. Sure, you can succeed this way and find your target affiliate group (and you should pay special attention to bringing the right partners into your program) that will advertise your products and push your sales ahead. But that would be for a completely different article.
Treat your affiliates!
“Easier said then done” may pop up in your mind, but just think about how much traditional advertising would cost you and how expensive marketing campaigns are. This way not only grows your traffic, it also grows your sales and acquires new customers effectively. Moreover, affiliate marketers can help you with narrowing in on your target audience by using their own marketing techniques — it is after all for their own good to engage as many people as possible. For example if one of your marketers translates your copy to French (as part of his target audience is French speaking), it means your own audience is getting bigger and you save both money and time for the translation. And that is cool.
What else?
Although affiliate marketing has rather unique place among other marketing activities, you shouldn’t reject more “classic” ways of promoting your store and products once and for all. Still we have social media, more and more powerful as another sales channel these days. When it comes to building relationships with your partners, there are good ol’ loyalty programs that save the day. And what about email marketing? The powerful weapon of the modern marketer. Follow trends and don’t rest on your laurels because your competitors certainly won’t.
Final word
Although affiliate marketing isn’t a piece of cake, it can drive considerable traffic and conversions for your — even small — business if you focus on quality, not quantity. Remember to choose your niche carefully and foster relationships with your affiliates, keep just a few key ones and build together such a system that will be beneficial for both parties.
Originally published at commercegeek.com.
