How to Create an Affiliate Program for Your Online Business
In 2022, estimated spend on affiliate marketing will reach $8.2 billion, its highest jump since 2015, according to Statista. Driving this significant increase in spend is the popularity of influencer marketing and influencers using the commission payment model. Additionally, the global pandemic surged the affiliate model as more businesses & shoppers were left with no option but to go online.
The use of traditional advertising in business promotion has been declining while at the same time the businesses are choosing to use social media in their marketing and business promotion, favoring the rise of affiliate marketers. But, how can you create an effective affiliate program for your online businesses? Below are ways that you can tap into this amazing opportunity.
What Does An Affiliate Marketing Program Mean?
The affiliate marketing program is a reward-based system encouraging partners to promote a merchant’s products to receive payments in terms of commissions. In the affiliate industry, a business is also known as the merchant or advertiser, and the affiliate is referred to as the publisher or marketer. It’s important to understand these references as it defines the roles at the onset of establishing the program. Affiliates drive visitors to your website or online platform through special referral links. Any sales made from this promotion earn the marketer some rewards.
Most affiliate programs pay by a flat dollar commission or a percentage of the sale. However, there may be incentives in discounted or free products. Either way, it is a win-win for the parties involved. This marketing strategy is applicable for business-to-business and business-to-consumer campaigns, with about 80% of the brands using various affiliate marketing programs to market and promote their products. In recent data released by IAB UK, travel and retail are the two largest sectors where affiliate operations are widely used.
Will Affiliate Marketing Work For Your Business?
What do you sell; services or physical products? Regardless of the nature of your business, there is a high chance that affiliate marketing can help your business. However, your company has to meet several requirements for an affiliate program to work. You should note that:
- You should be ready and willing to pay the affiliates in commissions or store credits for every sale they help you make.
- You’ll be able to pay higher commissions without spending much on customer acquisitions while enticing quality affiliates to join the program.
- This program works better when you want others to market your product or business on their channels and directly drive traffic into your website.
- This marketing method is best if your organization has higher customer retention rates.
Affiliate marketing programs work better for digital subscription businesses or e-commerce, especially those having higher profits.
Creating the Best Affiliate Marketing Program
Setting the Goals
Then creating an affiliate marketing program, you must begin by setting the goals. This can be arrived through first establishing your audience. What type of clients do you want to reach using the affiliate program? Which affiliates can help you achieve this?
After establishing the audience, the next thing is setting some measurable goals for the affiliate marketing project. They help you measure the success of the program. The main objective is the revenue you want to earn from the affiliates every month, quarterly or yearly. Set the conversion rates goals. How will people who click on your affiliate links make a purchase, and how often do you want them to? Regardless, all the goals should be measurable.
Analyzing Your Rival’s Affiliate Programs
After a general analysis to evaluate your weaknesses and strengths against your business competitors, it is time to consider their affiliate programs. This allows you to know your standing competitively. Remember, you are also in a competition for affiliates. Select not less than two competitors having an affiliate program. Look at the ways the competing programs have structured their affiliate commissions. These are things triggering payouts to affiliate commissions, how the affiliates are paid, and how the commission rates for each brand stack up. Evaluate the following:
- If you can do some digging, find out the other details of your competitor’s affiliate programs
- Consider the terms and conditions for each affiliate program
- How does each brand promote their affiliate program?
- Evaluate your strengths, weaknesses, opportunities, and threats; otherwise called the SWOT analysis.
Decide the Right Affiliate Program Commission
At this stage, use the findings of your competitive analysis in structuring your affiliate program, and the commission structure is among the vital design choices. Although you’ve seen how your rivals pay their affiliates, you must only reward or compensate the affiliate when a sale has been made through their affiliate link. Never pay for clicks or impressions.
Begin by deciding the payment mechanism; will the payment be based on every sale made by the affiliate or a set amount for every sale? Will the payments be affected by in-store credit or cash? In most cases, merchants pay a commission in cash which is an attractive option for many affiliates.
You then need to set the commission that you will offer the affiliates. Although you want the affiliate program to become more competitive than your rival’s, one-upping your competitors is not often the best option. Then, address your company’s needs. Consider customer retention rates, average customer retention value, and customer acquisition rates.
Consider the Other Key Aspects of the Program Structure
You also have to consider the following in addition to the commission.
- How can you make your affiliate program do better than your competitor’s?
- How will you allow the affiliates to distribute and promote the affiliate links? Which are the marketing channels allowed?
- Will the company hire or designate a dedicated affiliate manager for programs?
- What are the other terms & conditions to be included in the affiliate program?
- What is the period that the cookies will remain active?
Start Finding Affiliates
After setting your program structure, the next step is finding the affiliates. Should you set up your affiliate network or establish an existing network of affiliates. However, you’ll need a method of tracking the affiliates regardless of the method you use for finding the affiliates. This lets you onboard new affiliates, monitor the affiliate progress, or set up the affiliate links.
Using an existing network, you can quickly build a base of representatives, especially if they’ve a relationship with the top affiliates. This can nurture the relationships with the affiliates for your business as the networks typically handle the management of affiliates. However, existing affiliates have one significant disadvantage; they charge the extra commission on top of what you pay directly, and sometimes this is about 30% of the commission your business charges.
You can also form your affiliate network. You’ll still efficiently track the affiliates and automatically compensate them using an affiliate platform. And the good thing is the software will cost less than the fee you would pay to use an existing network of affiliates. Additionally, the affiliate platform provides control over the data you need and the other aspects of an already running program. This means that you get a lot of advantages with the right affiliate platform overusing an already existing affiliate network.
To create your affiliate network, consider the bloggers, social media influencers, and websites followed and trusted by your potential customers, fit your brand’s niche, and produce quality content. Create a list of the people owning those accounts who you can ask to become your affiliates, or you can also have an affiliate signup form on your website.
Recruit And Train Affiliates
After finding the best affiliates, reach out and ask whether they would like to join your affiliate marketing team. You aim to find high-quality affiliates. Therefore, ensure you screen your affiliates thoroughly using business intelligence tools or manually.
How many affiliated do you need? How inclusive should the affiliate membership be? This decision is vital as it informs the reachability of your affiliates. After recruiting, brief your affiliates on the terms and conditions and ensure they sign an agreement binding them by the rules. Train them on the program and brand basics, provide them with affiliate links, and give them the necessary promotional resources. Craft a plan for progress tracking.
After starting your affiliate program, you must regularly track its success. You can do this either through the affiliate network you’ve created or the affiliate platform. Which affiliates are making more sales? Are the affiliates achieving the measurable goals set when planning, like conversion rates, AOV, unique sales, and revenue? If the program doesn’t meet the objectives, it might be time to rethink your marketing strategy and tweak the commission structure.
You now understand the process of creating a successful affiliate program and are ready to begin your program. Follow the guide above, and you’ll meet your marketing objectives with relative ease. Remember, affiliate marketing is on the rise, and you’d better take the opportunity to propel your business to new heights.