Boost Revenues With Affiliate Marketing

Affiliate Marketing: A Tool to Market Your Products and Services:

An affiliate program (sometimes called an associate program) is an arrangement in which companies share revenue. The site owner pays others a commission for sending customers to them, and the affiliate is an independent "salesperson" rather than a paid employee of a company.

If it helps, you can think of affiliates as "middlemen," although many of the most effective marketing sites aren't selling tangible goods, only e-books, online courses/tutorials and services.

When choosing affiliate software, there are two options: do it yourself or third-party. Each has its advantages and disadvantages, depending on the type of product or service you are selling.

Third Party Affiliate Software:

One affiliate site, clickbank.com, easily allows you to set up your own affiliate program, and they even send the checks out to your affiliates for you. They take orders and act as a credit card company for making payments. For new business owners, third party software is the ideal solution.

So, what does the third-party affiliate site get in return? Generally, a fairly hefty fee as high as 7% to 10% of every sale. There may also be a setup fee and a small charge for each transaction. It's also important to note that not every affiliate program allows the sale of tangible products. If your small business is membership based, and customers are billed by monthly recurring billing, the fees can be even higher. 

Do-It-Yourself Affiliate Programs:

If you want to create your own affiliate program, there are some web scripts available at fairly inexpensive rates. Some DIY options can be found at www.AssociatePrograms.com and http://www.groundbreak.com.

Each program will cost about $200 and you will have to set it up with your own web hosting company. While you avoid the fees, you are responsible for sending out affiliate checks and working out any errors. If you're not comfortable with CGI (or you don't know what it is!) get a freelance web person or someone who's savvy to help you. Help in this area, though, isn't likely to come cheaply.

What Kind of Commission Do You Pay Affiliates?

If you're selling something like an e-book, which costs you little or nothing (not to mention you never run out of stock), you can easily offer a 50% to 60% commission. Remember, you get to keep the customer. You'll get to continue selling to that customer yourself in the future, even if an affiliate made 50-60% of the profit on their first purchase. With a high commission rate, you're going to get a lot more salespeople signing up and selling for you because of the clear mutual benefit.

If you have to ship, buy, or package your product, of course you're going to have costs that your affiliate doesn't have. Make sure that whatever commission you set covers your costs of making the sale, with a comfort cushion, and leaves a good profit margin for yourself. I've seen rates as low as 20% for drop shipping or 5% to 10% for pure affiliate sales of physical inventory products.

Types of Affiliate Programs:

Different affiliate programs work with various methodologies. Here is a brief description of different categories of affiliate programs:

Pay-Per-Click Affiliates:

Basically, the merchant pays the affiliate for every click-through to their site from an affiliate's link. Unfortunately, this type of affiliate program is open to fraud and has become the least popular option. Without rigorous standards, the merchant has no guarantee that the affiliate isn't just paying someone to keep clicking onto their site over and over. 

Pay-Per-Sale Affiliate Programs:

The most popular option of an affiliate program is the Pay-Per-Sale kind. The affiliate is only paid a commission if the referred customer actually buys a product or service. This is the best way to grow your sales network without having to pay anything up front. Often, you negotiate the exact terms and percentages that an affiliate will receive, but only after making a sale.

Pay-per-sale programs are virtually risk free, unlike pay-per-click programs. You only have to pay an affiliate when they refer a buying customer to you, and that customer completes their purchase. You've got your money in hand before having to dole out anything. 

Pay-Per-Lead Affiliates:

This type of affiliate program pays affiliates a flat fee when they refer a customer to the site, and the customer then fills out a contact form with their information. This is a more popular version, as the merchant actually obtains useful information from the affiliate's referral.

Give Your Affiliates Plenty of Resources:

Once you've got your affiliate program set up, it's time to give those affiliates a toolbox of promotional items that they can use to ramp up the referrals they send to you. While the best affiliates often create their own original promo pieces, it is extremely helpful to them if you provide the framework and somewhere to begin.

Some of the things you'll want to include in an affiliate tool box are:

• Articles.
• Endorsements/testimonials.
• Free training or courses.
• Classified ad text to use.
• Banner ads and graphics.
• Customer service and a way to contact you.

Ultimately, supporting your affiliates produces loyalty. It can make all the difference to an affiliate when they are deciding which program to support, so offer unlimited support and competitive commissions if you can!

 

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What's Next

Next In This Guide
Part 40:
Reward Point Systems - Are they right for your business? Let's face it, customers like to be thanked for supporting our small businesses. A reward point system is a great marketing tool for ensuring loyalty.

Previous In This guide
Part 38:
Values-Driven Marketing - Research shows that 1 in every 4 shoppers chooses one product or company over another based on the values or ethics of the item or the business that sells it.

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