As a content creator and maker, you are aware of the power of a referral.
In the past, referrals or “word of mouth” advertising helped businesses grow their brand and develop a loyal customer base. In today’s online world, this type of marketing still exists, but it has a different name: affiliate marketing.
Affiliate marketing is an easy, cost-effective way to increase your sales and grow your brand.
To craft the perfect affiliate marketing strategy for your business, you need to know what affiliate marketing is, how it works, and learn creative ways to approach affiliate marketing to boost your business and track results.
What Is Affiliate Marketing?
Affiliate marketing is a method of advertising that uses referrals to sell products or services, and there are three parties involved in the affiliate marketing process.
The user is a potential customer who sees the affiliate link on a website, blog, or social media profile.
The affiliate is the blog or social media profile that hosts the link and receives compensation when a user makes a purchase using the affiliate link from their site.
Meanwhile, the merchant provides the service or product that the affiliate link refers to and pays the affiliate when a sale is made.
Usually, when a company advertises, they pay for a piece of content or ad up front, and the ad is designed to draw people to the business.
With affiliate marketing, you pay for performance instead, which means you don’t pay your affiliate unless their affiliate link performs. Generally, you pay per sale. However, you may also choose to pay based on leads or clicks.
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How Does Affiliate Marketing Work?
Affiliate marketing works by tapping into the existing trust between the affiliate and the user. Whether you provide a B2B service or sell to consumers, trusted referrals are still the most valuable form of marketing.
With affiliate marketing, you can reach a wide variety of potential customers with one affiliate link. These are customers who have never heard of your brand directly but are now aware of who you are and what you provide.
Users tend to trust the accounts they follow. So when the affiliate promotes your link, your business is seen as trustworthy and verified.
The user is more likely to choose your brand over an unaffiliated brand because you are partnered with an ambassador or influencer they already resonate with.
When users click on the affiliate link, they are directed to the product page on your company’s website. From here, the user can buy the product, browse additional items or services, sign up for your company’s newsletter or mailing list or spend time reading the content you offer.
Affiliate marketing is an excellent tool because it leads to the direct sale of the item in the affiliate link and draws customers to your site, so they explore everything you have to offer.
Crafting an Affiliate Marketing Strategy
An effective affiliate marketing strategy is essential in reaping its benefits.
To craft the perfect strategy, it is crucial to get caught up on the current state of affiliate marketing and principles, such as who you want to partner with, how you aim to attract leads, and how to test the effectiveness of your affiliate plan.
Consider the following helpful tips as you begin to form your affiliate marketing strategy:
Choose Affiliates Carefully
Your affiliates are the most vital element to your program’s success, so it is essential to choose them wisely. A good affiliate is reliable, trustworthy, reputable; an authority in their niche, they are consistent in promoting your links.
Choose an affiliate whose audience is likely to be interested in your product. They should also have a sizable and loyal following, whether that’s subscribers on YouTube, followers on Instagram, or blog visitors.
Attract Customers (and Sales) With Coupons, Promotions, and Deals
Affiliate links to your website are great. But links attached to coupons, promotions, and deals for new customers are even better. Work with ambassadors or blogs to create specific promo codes for their link to reinforce the affiliate relationship.
If potential customers hear from their favorite influencer on social media that they can receive 15% off your product with a promo code, they are likely to check out what you offer.
Deals and coupons bring customers to your site, where they will also browse the other products or services.
Recruit Niche Influencers
Discover and recruit niche influencers as affiliates. A successful niche influencer has authority and power in their field, meaning they wield significant influence over their niche-specific audience.
Influencer tools like Upfluence and Captiv8 can help you easily discover influencers in your niche or area of interest.
If your product fits perfectly with their audience’s needs, working with that influencer can lead to your business becoming the authority for the service or product you provide. There is a niche influencer for almost any topic imaginable, so search for the top influencers you know would love your product.
Build an Affiliate Network
Build a varied affiliate network using different channels to bring in leads and make sales.
Affiliate networks like Dotdash or Sovrn Commerce are a great source of publishers looking to monetize their content or work directly with influencers on social media platforms like Instagram, YouTube, and Twitch.
Partner with bloggers whose sites get good traffic and have a solid following. Work with different types of bloggers and influencers, including those who review products for content.
Consider working with podcasts that have great listener numbers.
Partner with people who host webinars, podcasts, make ebooks, and produce other courses where listeners are apt to trust your brand when the host recommends it.
Build your affiliate network with reputable, genuine affiliates who bring in unique leads and believe in your brand.
Test Your Affiliate’s Success
Once you get started on your affiliate program, you must test the success of the various affiliates, links, and forms of media you use.
Do this with user-friendly affiliate tracking software that lets you understand which elements of your strategy are succeeding and which parts you need to adjust.
You should be able to track conversions, sales, clicks, and other data that shows you which affiliates are profitable versus those that are not as effective.
This allows you to:
- Tweak your link keywords.
- Work with the affiliate on ways to promote the affiliate links.
- Adjust the terms of your program.
- Raise the commission rates you offer.
- Make any number of other adjustments that help you maximize your ROI (return on investment) on the affiliate marketing program.
Optimize Your Website and Product Pages
Although hosting an optimized website isn’t directly tied to affiliate marketing, it is an integral part of the process. One main reason that users leave websites is poor design, poor content, and poor user interface.
If a user excitedly clicks your affiliate link but lands on a poorly designed webpage, they may click off without even looking at what you offer.
It is vital to maintain a website that makes purchasing your product or service simple and where new customers can browse your products and content with no confusion.
How to Measure the Success of Your Strategy
Measure the success of your affiliate marketing strategies to gauge what is working and what isn’t. Pay attention to the top three KPIs of performance marketing:
- eEPC (effective earnings per click).
- Total revenue by affiliate.
- AOV (average order value).
The eEPC shows you how each of your affiliates is performing per 100 clicks.
To calculate this number yourself, take the dollar amount of net commissions earned divided by total clicks and multiply that number by 100. The eEPC shows you which of your affiliates is most effective and brings the most value to the table.
Create an eEPC threshold that reflects your goals and desired revenue numbers and discontinue working with affiliates who do not meet this criterion.
Total Revenue by Affiliate
This zooms out to a longer-term overview of the effectiveness of your marketing program. Keep track of the revenue earned by each affiliate partner in a spreadsheet and make sure the information is up to date.
It is helpful to create a visual graph of this number to make it more understandable and pinpoint problem areas quickly.
The AOV helps you evaluate customer behavior and your affiliates’ efficiency. It is beneficial if you sell varying products in different price ranges.
This number is a ratio that tells you how well the affiliate marketing is working for a particular partner and allows you to help them tweak their methods to sell specific products that have fallen behind.
To calculate, take the revenue divided by the number of orders.
Ready to Start Your Affiliate Program?
Things to Consider While Crafting Your Affiliate Marketing Program
There are a few additional factors to consider when crafting your affiliate marketing program.
These have to do with setting your marketing program policies and incentives, adhering to the legal elements of affiliate marketing, and deciding whether or not to use SaaS companies to help you keep track of all your numbers.
Policies and Incentives
Before you implement an affiliate marketing program, develop the policies that guide your program and decide how to incentivize affiliates.
Your program policy is essentially a contract that sets the expectations and requirements between your company and the affiliate.
Include information such as the conversion, sale, lead or click thresholds you expect the affiliate to gain, the time frame they must successfully perform in, and any specific rules surrounding how to market your affiliate links.
Developing incentives for affiliates is also an important detail to consider before launching a program. Some influencers promote in exchange for services or goods; however, most affiliates expect a performance commission.
To ensure that you pay appropriately but don’t lose your profit to overpaying your affiliate marketers, it is a good idea to sit down and calculate your ROI (return on investment) for your affiliate program.
Figure out how much you’ll profit off your links in relation to how much to pay an affiliate and decide what is best for your business situation.
Many merchants use SaaS (software as a service) companies to keep track of affiliate marketing data. SaaS companies that specialize in affiliate marketing data are equipped to track the eEPC, AOV, total revenue, and other important numbers related to tracking the success of your affiliate program.
For example, if your ecommerce store is hosted on Shopify, finding and installing an affiliate marketing app from the Shopify app store is easy.
You don’t have to do the calculations by hand, and you can access your affiliate marketing data with the click of a button.
As you grow your business and your affiliate network, SaaS tools are an integral part of a profitable affiliate marketing strategy.
Legal Aspects of Affiliate Marketing
Your affiliates must adhere to the “dot com disclosures” put forth by the Federal Trade Commission to have a successful affiliate marketing program.
They aren’t challenging to follow; however, all your affiliates must be aware of and follow the federal guidelines.
Affiliates must disclose that they are receiving compensation for the products they sell and the links they provide. The disclosure must be in “clear and conspicuous” language.
It is easy to include this mandatory disclosure at the beginning or end of a blog or social media post.
This prevents their audience members from assuming that affiliates are freely recommending a product when they are being paid. However, many affiliates choose to use the products they endorse and state so in their videos and posts.
Start Your Affiliate Program
Starting an affiliate program is a great way to increase your sales, grow brand awareness, and generate leads for your business.
Work with software platforms to develop your affiliate marketing strategy and start your affiliate program. With a user-friendly app, you’ll be generating leads and increasing sales in no time.
Make sure your affiliate marketing platform lets you track and manage affiliate data and grow your referral network with easy-to-use apps and plug-ins that allow you to track your sales and automate commissions.
The software should do the calculating for you so that you can focus on other elements of your content creators and makers’ business.