If you’re looking for a way to increase sales in your small business without a lot of risk to your bottom line, then starting in affiliate program may be the way to go. Since you do not make any kind of payment until a sale is made, you only pay for results. Each affiliate who participates in your marketing program becomes a sales rep who is out there championing for you so they can earn a commission.
However, for your affiliate program to be successful you must put in a decent amount of planning and forethought before launching. If the program is shoddy or does not provide a decent pay out, you will have trouble attracting affiliates to participate and if you don’t have people participating, you won’t have any commissions to pay out because you won’t get any additional sales.
Let’s take a look at what goes into building a successful affiliate program.
Know Your Audience
Knowing your audience ahead of time is a major part of building a solid foundation for your affiliate programs. If you don’t know what your audience likes it will be hard to put together of the right program. Start from what you sell on your site and how you reached to your audience. You wouldn’t set up an ice cream truck in the winter in New York where the people would much prefer hot chocolate or hot Apple cider, would you? It may work in certain parts of California and Florida where it stays warm year-round, but you want something that works everywhere, all the time. Use this line of thinking when you 1st start trying to develop your affiliate program.
If you can’t figure out what your audience wants, start by creating a poll or a survey to find answers to the questions you have.Getting input from the beginning will make it easier to decide if and affiliate marketing program is the way you should go. Involve your first set of customers because they are your backbone. They are the ones that set the tone of stability in your business. You can’t rely on one-off customers who buy just one or two things because they don’t have stake in your business, or any interest in keeping it afloat. Target your most loyal customers and listen to what they have to say.
Do a Competitive Analysis
Before you begin an affiliate program, analyze what your competitors are doing. Understanding what you’re up against house you make decisions on how you will launch a program as well as how your commissions, arrangements, and targets will work.
Take a look at the cost per action (CPA) and cost per lead (CPL) of your competitors. If your competitor pays $100 per sale and you notice the product as promoted on all relevant websites and marketing channels comment you have two options.
You can either match those commissions and channels, which may be a problem because if you have a limited marketing budget you can’t necessarily afford to pay that much per sale. Or, you can improve your conversion rates.
If you can’t match your competitors cost per action, you can start experimenting with new affiliates to improve your conversion rate because when you have a higher conversion right your affiliates will be paid more. They will prefer promoting your product over someone else’s because they know they can generate more customers and end up making more money in the end.
Determine How You’re Going to Track Sales
When you are building an affiliate program come out you will need to find technology that tracks your affiliate sales accurately. But accuracy isn’t the only thing that matters because the system has to be easy to use. If it’s too complex and doesn’t provide accurate reporting, affiliates won’t stick with it.
Determine Acceptable Tactics and Strategies
Unless you’re clear on the strategies and tactics you allow the affiliates to use to market your products and services, you could be shooting your affiliate program in the foot by competing directly with it. Affiliates drive a lot of business using search marketing. If you are competing against your affiliates with the same keywords common this can cause issues. As such, it is a good idea to tell them you don’t want them to bid on your brand terms, but you must be upfront about this at the start of the program.
In-House or Outsource to a Network?
You’ll have the option to run the affiliate program in house yourself or to work with an affiliate network like ShareaSale or CJ Affiliate, formerly known as Commission Junction. There is no right answer to this question, as what works for one company may not work for you. To find out which one you should choose, answer the following questions:
- Do you need a reporting system or tracking technology?
- Do you know your commission rates?
- Do you want to take care of the affiliate relationship?
- Are your creatives ready?
- Are you actively looking for affiliates the first time?
If you answered yes to all of these, you’ll want a network. Working with a network means they’ll charge a commission to cover their costs for managing the program for you. You may also be stuck paying setup costs, which means you’ll pay more than if you manage the program yourself.
If you’d rather work out the affiliate program yourself, there are several WordPress plugins to choose from that allow you to manage the program directly from your website. Running the program yourself is risky and time-consuming, but can lead to higher profits.
How much can you reasonably afford to pay for each sale? This will depend largely on the price of the item and your profit margin. Affiliates will expect higher payouts on larger ticket items because they are harder to sell.
If you have multiple items to sell, then choose a flat percentage rather than a dollar amount per sale.
Lots of math goes into this – your cost per customer acquisition, customer lifetime value, conversion rate, and so on.
Your commissions should always pay based on sales or leads – rather than impressions or clicks. Impressions and clicks aren’t guaranteed to earn you money, whereas a lead may make you money, and a sale definitely makes you money.
Provide Marketing Collateral
One of the most important ways to ensure success with an affiliate marketing program is to provide your affiliate partners with the necessary creative and promotional materials to make their job easier. If they have to work too hard to market your products or services, they simply won’t do it. The less work they have to do and the more conversions they can get, the more likely they are to promote your products or services.
Start with banners, social media statuses, and other things that make it easy for them to promote for you. Once you have a decent number of participants, you can ask the partners directly what they believe would be most helpful.
Market Your Program
You could have the most effective affiliate program in the world, but if there are no affiliate partners participating, it is useless. Market the program to people who would be interested in selling the products and services you have to offer. Use social media, PPC ads, and other marketing tactics to get the word out about your program. Turn to your email list, and talk to you most loyal customers. Typically, the people who buy from you most often are already recommending you to friends and family and wouldn’t mind a bit of extra cash for sending you the sale.
Stay in Touch with Affiliates
Your affiliate program is another product, and your partners are another set of customers. Stay in touch with them and make sure you keep giving them what they need to be successful. Run specials just for the affiliates to use for marketing purposes. Run contests to get the affiliates working against each other to send you the most customers. Provide them with educational materials so they can learn how to be a better affiliate marketer for you.
Affiliate Programs Aren’t for Every Niche
The thing that makes affiliate programs complicated is that they don’t necessarily work in all niches, and even those that do, don’t always work the same way for everyone in a niche. The structure of your program depends highly on the nature of your business.
Does your business have an affiliate program? Is it successful? Why or why not? Share your thoughts in the comments below.