According to stats, 90 percent of ecommerce startups crash down in their first year. However, there’s a robust solution to it which is intensive marketing campaigns. Now, you must be wondering how to start.
Creating an affiliate marketing program is one of the best paths to start. As per the report from Statista.com, affiliate marketing spend has grown year after year since 2010. It grew to the worth .2 billion in the US in 2022.
What is affiliate marketing, and how affiliate programs work? Here, in this blog, we will discuss all about affiliate marketing.
You must have came across messages on some blogs or articles like this before:
“ Disclaimer: Please note that this article includes affiliate links. If you choose to make a purchase through these links, we may receive a small commission without any extra cost to you.”
This is an example of affiliate marketing. So whenever a customer makes a purchase through an affiliate, the retailer pays a commission to the affiliate. This type of performance-based marketing is popularly used by marketers as they just have to pay for genuine results.
Affiliates can be individuals, existing customers, companies, or publishers who promote the retailer’s website. There are many benefits of affiliate marketing that we have mentioned below:
- Builds trust if a reliable or reputable source promotes you.
- Easy to track with affiliate dashboards.
- Less investment with higher ROI.
- Scalable; you can add more affiliates as your business grows.
To gain these affiliate marketing perks, you need to put effort into building an affiliate marketing program. Here, we will tell you the seven steps following which you can plan a successful affiliate marketing program.
Brief Overview
- Step 1: Market research
- Step 2: Define goals and KPIs
- Step 3: Finding the right affiliates
- Step 4: Onboarding affiliates
- Step 5: Developing a commission plan
- Step 6: Managing your affiliate partnerships
- Step 7: Refine your website
Now, we will discuss each of these steps in detail below.
How to set up an affiliate marketing program?
Step 1: Market research
For planning and executing an affiliate marketing program, you should conduct thorough market research. It’s essential to know how the current market is working and what trends are going on. This way, you’ll be able to understand what affiliates you should engage with.
Research your Target Market
Primarily, when you are just starting with affiliate marketing, you should research your target audience. You should see what sites and platforms they interact and engage with the most. Ask questions such as:
- What do they like to buy the most?
- From where do they like to shop?
- Which channels are they subscribed to?
- Which social media platforms do they use the most?
- What are the peak times for their online activity?
You can see what type of content your target audience likes. Check out the popular blogs, trending social media content, well-liked podcasts, and famous YouTube channels. Use web analytics to know the website traffic and find commonly searched terms by your prospects.
Create buyer personas and customer profiles to discover the affiliates who are popular among those groups. Later, we will tell you how you can find the right affiliates for your affiliate marketing types.
Research your competitors
You should research how your competitors are using affiliate marketing. This will give you an idea of how you can utilize affiliate marketing to get the maximum benefits. You can check their records and find information like:
- How much do they pay their affiliates?
- What’s the commission rate that they offer their affiliates?
- What benefits, discounts, or incentives do affiliates get?
The commission rates can differ based on the industry. Below we have given the average cost per lead in distinct industries. The finance and marketing industry has the highest cost per lead.
No matter whichever industry you are in, you should be highly competitive. If you have less budget in the beginning, then you can engage with a small number of affiliates. Once your business grows, you can increase the number of affiliates.
Step 2: Define your goals and KPIs
After comprehensive research, you should define the goals and KPIs of your affiliate marketing program. This will help you to create a marketing strategy accordingly.
Defining your goals
Keep your goals smart and make sure they are achievable. For example, you can set goals like:
- Increase website traffic by 5% each month.
- Convert 20 new customers each month.
- Decrease churn by 10% by the end of the year.
You can use discounts and offers to attract new customers through a price comparison website. This is one of the commonly used affiliate activities. Below we have mentioned the most common affiliate activities in the UK.
You can partner with loyalty and voucher code websites to reduce churn. You should set up clear goals so that you can plan out which affiliates would be apt to achieve them.
Defining KPIs
To know the success of your affiliate marketing campaign, you need to measure it. Key performance indicators can help you do it effectively. With KPIs, you can assess your customer service team’s performance and track financial growth. You can evaluate different aspects of your business with KPIs.
For instance, you can have KPIs like the ones below for your affiliate programs:
- The number of conversions, leads, or clicks every month.
- The number of affiliates added to the program.
- The number of customers coming from each affiliate.
- Overall business conversion rate.
You can track KPIs with the website and online retail analytics. You can gather information like:
- The affiliate partnerships that are giving you maximum benefit.
- Which products are getting sold the most?
- How much on average a customer spends.
- The most common problems that your customers face.
Step 3: Finding the right affiliates
Once you have defined your goals and set KPIs, you have to find the right affiliates for your program. Here, we will tell you how you can find affiliates. First, let’s start by understanding the different types of affiliates.
- Content affiliates: They include links in the online content on keywords.
- Website affiliates: Add product descriptions or reviews on their website or blog.
- Comparison affiliates: Compare the pricing and other factors of different businesses.
- Email affiliates: Incorporate your business info in emails to their customers.
- Incentive affiliates: Give users a reward or cashback for purchasing through the given links.
- Conversion affiliates: Helps businesses in improving their conversion rate.
You can engage with different types of affiliates instead of including just one type of affiliate.
Now, we will suggest distinct ways through which you can find affiliates for your marketing program.
- Give rewards or discount coupons to your existing customers to recommend your brand.
- Find affiliates related to your industry on social media.
- Search popular blogs & websites and connect with them through emails or phone calls.
- Join affiliate networks through LinkedIn or different business platforms.
- Attend affiliate conferences and live events.
Don’t associate with affiliates directly. Check their professional backgrounds and the audience they have. You should see what potential they have and the outcome you can expect from them. Before onboarding the affiliates, ask questions like:
- How much website traffic do they have?
- Is their website relevant to your business?
- Where do they rank on the search engines?
- How many people are following their social media?
- Do they have any active promotions?
- The past analytics of the promotions they did.
Step 4: Onboarding affiliates
After the sorting out process of the affiliates, determine how you would want them to promote your brand. You can use different ways for that, such as:
- Inserting links into content
- Social media posts and emails
- CTA buttons
- Product descriptions with pros & cons
- Awesome video content
- Pricing and offers
- Banner ads
- Branding
You can ask your affiliates to post content at specific times when your target audience is most active. This way, you can get the most out of your affiliate program.
Step 5: Developing a commission plan
A commission plan varies based on the industry. You can select a commission plan based on your budget and the results you receive from it. While creating a commission strategy, you need to keep different factors in mind, like:
- Average Order Value (AOV): How much a customer spends on an average per order.
- Customer Acquisition Cost (CAC): How much you need to spend to get a new customer.
- Conversion rate: How many potential customers turn to paying customers.
- Customer Retention Rate (CRR): How many customers stay with your business for a given period.
- Customer Lifetime Value (CLV): The cost you get from a customer throughout their business relationship with you.
- Cost of goods sold (COGS): The amount spent to produce each product sold.
You can’t pay your affiliates high if your profit margins are low. However, you should aim to give them a minimum of ten percent. Next, you need to determine how you will pay your affiliates.
Most of the affiliates prefer affiliate programs that pay per click or impression. In this way, they can earn more, and it’s suitable for retailers as well. They just need to pay for the results they are getting from the affiliate.
Additionally, you should give your affiliates regular incentives or higher payments. This will aid in keeping them motivated to work with you.
Step 6: Managing your affiliate partnerships.
To execute a successful affiliate marketing program, you need to do a lot of things. We have mentioned a list below:
- Find and onboard the right affiliates
- Negotiate commissions
- Create promotional content
- Keep affiliates informed
- Track conversions and sales
- Keep a record of payments
For doing these activities, you can hire an affiliate manager. You can keep an in-house or outsource an affiliate manager from an external company. Both have their pros and cons, which we have given here. You can compare both and choose the best suited for your affiliate marketing strategy.
| In-house Affiliate Manager | Outsourced Affiliate Manager |
|---|---|
| Single Employee | Part of a big team |
| Quick response | Slow response |
| More accountable | Less accountable |
| Less connections | Many connections |
| Knows company’s values better | Doesn’t know much about company |
| Involvement in other activities as well | Focused on affiliate program |
| No prior affiliate lists | Prior contacts with affiliates |
| Company pays them directly | Agency pays them |
Step 7: Refine your website
The last step of affiliate marketing campaign is improving your website to ensure a high conversion rate. So you can execute conversion rate optimization for your website in two ways, such as:
- Reactive: Fixing the issues reported by customers or website visitors.
- Proactive: Use analytics tools to identify problems and fix them beforehand to avoid issues in conversions.
We recommend using both CRO ways to gain new customers and retain the existing ones.
Summing it up
Affiliate marketing can help you to create awareness and get new customers to your business. In the above blog, we have given 7 simple steps by which you can plan & execute a robust affiliate marketing campaign. These affiliate marketing guides tips will help you improve your conversion rate.
However, to strategize better, you must understand your customers’ needs, wants, and expectations. WebMaxy Analyzer is a user behavior analytics software that comes with a wide range of features like session recordings, heatmaps, funnel view, form analytics, user insights, surveys & feedback, push notifications, and so on.
FAQs
What is affiliate marketing?
Affiliate marketing is a marketing strategy in which a retailer pays a commission to the affiliate for getting new leads or conversions.
Does an affiliate get paid?
Yes, businesses pay affiliates based on the commission plan that can be pay-per-click or pay-per-action.
What are the benefits of affiliate marketing program?
There are many benefits of affiliate marketing, such as:
– Increased traffic
– Low cost
– Higher ROI
– Flexible
What are the types of affiliate marketing program?
Below, we have mentioned different types of affiliate marketing program:
– Content marketing programs
– Review-site programs
– Incentive programs
– Email Marketing
– Digital assets
