WHAT MAKES A GOOD AFFILIATE PROGRAM
With over 80% of brands utilizing affiliate marketing strategies, now is the perfect time to look into whether this type of program could be right for your business. Running a good affiliate program isn’t easy, but there are a few key approaches that will help to move you towards long-term success.
WHAT IS AN AFFILIATE PROGRAM?
Affiliate marketing is where an individual (the affiliate) earns a commission for marketing another business’s products or services. Typically, the affiliate will have a unique URL or code that they use to promote the product so that, when a customer makes a purchase, that transaction can be traced back to the affiliate and the commission given. There’s no additional cost to the consumer, but the affiliate will receive a small portion of the profit if their link is used for the purchase.
In most cases, an affiliate has a limited formal connection to the company that they’re marketing for, such as being part of an influencer campaign or being a previous customer themselves. Businesses that are most successful with affiliate programs are typically ecommerce or online subscription sites with high customer retention rates.
HOW TO BUILD A SUCCESSFUL AFFILIATE PROGRAM
SET CLEAR, MEASURABLE GOALS
As with anything in marketing, you need to know what you’re aiming for in order to create the best strategy for your business. You’ll first want to think about the type of customers you’d like to attract through your affiliate program, as this will later help you to determine the types of current customers or influencers who you’d like to recruit as affiliates.
Then it’s time to get down to the numbers. Look at your existing conversion rates across your business and different marketing channels to decide what a realistic conversion rate likely is for your affiliates. You may also want to consider setting an average order value (AOV) goal for each of your affiliates–over time, higher order values may warrant a different commission structure.
Tracking metrics like impressions, link clicks, leads, and unique affiliate sales in a given period will also be useful in determining the success of your campaigns.
DO YOUR RESEARCH
If your competitors are already running their own affiliate programs, find out as much information as you can about how theirs works. What is their commission structure? Who are they recruiting as part of their campaign? When you’re working on your first affiliate program, knowing this information can at least give you a solid starting point that reflects the standards in your industry.
If possible, see if you’re able to find details on their training and recruitment process. This is a significant part of building a successful affiliate program and knowing what others are already doing can point you in the right direction and save you time by not having to build something from scratch. Look for areas of weakness in their campaigns where your own affiliate marketing could fill in some gaps and entice affiliates to choose you over a competitor.
DECIDE ON YOUR COMMISSION STRUCTURE
One of the most important parts of building a successful affiliate program is deciding on how you’re going to pay your affiliates when they help you to close a sale. If there’s one thing to remember, it’s this:
Only pay your affiliates when a sale is made via their link. Never pay for impressions or clicks.
If your business isn’t making any hard cash from a sale, you shouldn’t be paying out to your affiliates. You’ll want to choose between a few of the most common options–a percentage or set amount per sale, and whether it’s paid out in store credit or cash. Percentages are typical and usually the most attractive to affiliates. After all, it’s in their best interest to get you a higher value sale when there’s more money in it for them.
Think about your customer acquisition costs, customer retention rate, and typical per-customer revenue when deciding what percentage you should be paying out as commission. You can even offer bonuses to your top affiliates after they meet certain revenue goals or are in the top X% of affiliates.
FIND YOUR AFFILIATES
When you’re first getting started with affiliate programs, it can be tempting to work with an existing affiliate network to find potential partners quickly. But the major disadvantage here is that these networks will charge up to 30% of your commission in management fees, so you’re losing even more money long-term.
You also won’t have direct control over your own data as this will be owned by the network, so you’ll need to spend time (and possibly money) replicating this yourself if you want to keep your data history.
The best way to find affiliates is to start building your own program with your existing customers. There’s plenty of software out there that will help you to track everything, but you’ll own your data and affiliate information. You’ll need to put in the work to approach websites, influencers, or potential customers who you think would be a good fit for your affiliate program. But over time, building and maintaining these relationships will be incredibly valuable and worth the effort you put in.
Once you’ve recruited your affiliate team, brief them on the terms and conditions of the program, along with supplying them with any marketing materials that they’ll need to promote the product or service. You’ll want to give them guidelines about what they can and can’t say in relation to your product or business (everything will reflect back on your brand), but also allow them to have the freedom to market creatively.
KEEP TRACK OF YOUR RESULTS
Tracking your performance consistently is the key to ensuring the success of your affiliate program. You need to be monitoring metrics at least on a monthly basis and referring back to your goals to see if you’re on track. If not, you’ll want to work on alternative strategies to start heading back in the right direction.
Want to learn more about implementing an affiliate program in your business? Contact us today for a consultation call.