Affiliate marketing may appear to be a straightforward digital marketing technique: your firm recruits partners, known as affiliates, who place links to your business on their website, blog, or social media page. Then you pay these affiliates a commission each time someone purchases through their affiliate link.
If you want to try affiliate marketing for your service or product, then this guide to setting up your first affiliate marketing program will help you understand everything you need to know.
Starting and running a successful affiliate program might be difficult, especially if you’ve never done it before. After all, you’ll need to locate and educate the correct affiliates, choose a commission rate that is fair, and devise a strategy for monitoring their success. You’ll also have to ensure they adhere to your policy.
Our guide to beginning an affiliate program covers everything you need to get off on the right foot. You’ll be up and running with these seven steps (and affiliate marketing software).
Is an affiliate program the right solution for your online business?
There’s a lot of money to be made as an affiliate marketer, whether you’re selling tangible goods or a digital subscription service. Affiliate programs are rather specialized; however – your firm must satisfy several criteria in order for an affiliate program to function.
Here are a few things to keep in mind:
- If you want others to promote your business on their own channels and drive traffic straight to your website, an affiliate program will come in useful.
- You must be ready to pay affiliates a cash commission (or store credit) every time they assist you in making a sale, like Amazon Affiliate Program
- Affiliate programs are ideal if your firm has high customer retention rates because commissions are paid out for every sale.
- You’ll be able to provide larger commission payments and entice better-quality affiliates to join your program if you don’t spend as much on customer acquisition expenses.
The majority of affiliate marketplaces, in particular eCommerce or internet subscription firms with higher margins, are profitable.
Affiliates, on the other hand, are best for the following sorts of companies:
- Subscription services
You can earn a little money from affiliate referrals, but you’ll usually get your cashback after customers renew their subscriptions. It’s up to you whether or not to credit affiliates each time a customer they attracted renews their subscription.
Keep in mind that since affiliates advertise your product on their websites, they’ll mostly appeal to strangers.
If you’d rather have consumers sell your items to people they know, you should choose a referral program instead. We’ve outlined the differences between a referral and an affiliate program in greater detail.
Affiliates are not the same as influencers. Influencers are people who have a following and develop a relationship with them. In comparison to affiliates, influencers place a higher value on genuinely demonstrating how they use a product rather than generating direct purchases. Furthermore, influencers are compensated via campaign commission rather than per sale commission.
Guide To Setting up Your First Affiliate Marketing Program
Now that you’ve decided an affiliate program is right for you, follow this step-by-step guide to establish a successful affiliate program.
Set goals for your program
Set goals for your affiliate program, just like you would do with any other marketing campaign.
To begin, you must first determine who you want to appeal to.
- What kinds of consumers do you want to attract through your affiliate program?
- What sort of affiliates will assist you in doing this?
After that, create a list of top measurable objectives for your program. This will assist you in determining whether or not your program is effective.
- The primary aim is to determine how much money you want affiliates to generate each month, quarter, or year.
- Set targets for conversion rates: How many people do you want to convert when they click on affiliate links?
- Set a goal for the affiliate-driven average order value (AOV).
- Set quarterly or monthly goals for the number of unique affiliate sales.
- You can also create goals for the impressions, clicks, and leads you’d want affiliates to bring in by these dates.
Sales are undoubtedly the most important variable, but these additional metrics will also assist you in evaluating your affiliate program’s performance.
- Analyze your competitors’ affiliate programs
You’ve probably conducted a broad comparison of your firm’s strengths and disadvantages versus those of your competition. It’s now time to look into your competitor’s affiliate programs.
Before you start building your own, it’s a good idea to conduct thorough research of the existing affiliate programs to determine where you’re at and how you want to position your program. After all, you’ll be competing for affiliates as well.
Here’s how to conduct a competitive analysis of an affiliate program:
- Find at least two affiliate programs from competitors. It also helps to locate at least one firm that you don’t directly compete with but has the same audience as you (and may attract similar affiliates).
- Examine how each competing program pays out affiliate commissions.
- What action causes the affiliate commission to be paid out (a sale, a lead generated, or anything else)?
- Is the commission percentage or fixed sum for each action paid to affiliates?
- Are affiliates paid in cash or in credits to use towards the company’s items?
- How does each brand’s commission rate compare to the competition? Is it high or low when compared to other program commissions and to the cost of their goods?
Determine how each brand finds its affiliates.
- Do they do it themselves or use an affiliate network?
- Are there any specific requirements for joining an affiliate program?
- What are the requirements for being accepted into the program?
What are the terms and conditions of each affiliate program?
- What is the affiliate marketing business model of each brand? What methods do they provide for affiliates to market and post their affiliate links?
- What are the limitations placed on affiliates when participating in a certain program?
Consider the competition. Are there any other things you could find out about their programs? Try to learn anything you can about your competitors’ initiatives.
- What sort of training, if any, does each company give to its affiliates?
- What promotional and branding resources does each brand make available to affiliates (banners, creatives, free goods)?
- How often do each company’s representatives communicate with affiliates?
- How does a company utilize affiliate tracking cookies? Do they keep track of a transaction back to an affiliate even if no purchase is made immediately? How long do the cookies remain active?
Finally, run a SWOT analysis.
- What are each program’s advantages and drawbacks?
- What possibilities could you take advantage of because a competing program overlooked them?
- What dangers could each competing product or service provider have to your own affiliate program?
Decide on the right affiliate commission.
Use your competitive analysis findings to help you create your own affiliate program. One of the most crucial design choices you’ll make is how you’ll pay your affiliates.
Although you may have seen other commission rules in competitive programs, you should only pay an affiliate when a sale is made via their affiliate link. (Payment per impression or clicks is not acceptable!)
Decide whether you’ll receive a fixed sum for each sale or a proportion of each affiliate’s earnings. You’ll also need to pick between paying in cash or credit. A percentage commission paid in cash will usually be the most appealing option for affiliates.
Then, figure out how much you’ll pay affiliates. While you want it to be competitive when compared to similar affiliate programs, bear in mind that one-upping your competition isn’t always the best course of action.
You should also look after the requirements of your firm. Consider your client acquisition costs, retention rate, and average customer lifetime value.
- How much does it cost to acquire a new client?
- What proportion of clients do you retain each year?
- What is the maximum amount of money you can count on each client to generate?
Using all of this data, you can generate a commission that will appeal to new affiliates while also remaining sustainable.
Offer commission bonuses to your best partners who reach certain revenue objectives or fall within a specific top percentage of affiliates. This will increase the allure of your affiliate program even more.
Decide on other key aspects of your program structure
You’ll also need to select your commission rate, as well as the following:
- How will you make it possible for affiliates to advertise and distribute their affiliate links? Which marketing channels may they utilize?
- How long will affiliate cookies last (how long may affiliates get paid a commission after someone clicks on their affiliate link)?
- What other conditions will your affiliate program have?
- What will you do to make your affiliate program stand out when compared to other competitors?
- Will you have a designated affiliate manager for your campaign?
Start finding affiliates
After that, you’ll have to figure out how to structure your own program. Your next step is to locate affiliates. You’ll have to choose between using an existing network of affiliates and creating your own select affiliate network at this stage.
Whatever method you use to locate affiliates, you’ll need an affiliate tracking technology that allows you to enroll affiliates, establishing affiliate links, and keep track of an affiliate’s performance. This may be the current affiliate network or affiliate program software; more on each below.
Will you use an existing affiliate marketer network?
A mid-sized firm with a stable affiliate network may be able to assist you in developing a strong base of representatives quickly, especially if they already have contacts with top affiliates in your field. It can also act as a middleman between you and these affiliates since networks are generally responsible for affiliate management.
Affiliate networks, on the other hand, have several drawbacks. They charge their own fee (or finder’s fee) in addition to the commission you pay affiliates directly – sometimes up to 30% of the commission you charge.
If an affiliate network discovers the affiliates for you, for example, and you pay them $100,000 in a given year, they may demand another $30,000 from you.
Even if your affiliate network monitors your affiliate performance and automatically pays out affiliates, you won’t be in direct control of your valuable affiliate data.
Will you form your own network of affiliates?
Affiliate marketing software (also known as an affiliate platform) can help you manage your own personal network of affiliates and pay them automatically.
Typically, the retail software will cost considerably less per year than the fee you’d pay to join an existing affiliate network. Furthermore, this program gives you complete control over the data you need – as well as all other elements of running a promotion. As a result, using the appropriate affiliate software comes with several rewards over utilizing an established affiliate network.
How do you build your own network of affiliates? Consider reputable websites, bloggers, and social media influencers that your potential consumers trust and respect and who produce high-quality material in the field your brand is focused on.
Then, make a list of individuals you’d want to ask to be your affiliates behind those accounts. If they’re aware of your product or service (and maybe already purchase and adore it), that’s even better. However, it isn’t necessary.
Place an open affiliate application on your website, advertise it, and welcome interested parties to get in touch with you. Screen them carefully based on your requirements and see how well their niche and target audience match yours.
A LinkedIn group for affiliate networking may be useful for locating suitable affiliates. Create a post and get in touch with affiliates if you’re interested. They’ve already indicated an interest in working together!
Recruit and train your affiliate team
Choose trustworthy affiliates who are also interested in working with you. Reach out to see whether any of them would be willing to join your affiliate team if you offer the best deal. Your aim is to locate high-quality affiliates and avoid fraudulent ones, so double-check potential partners – both manually and with business intelligence solutions.
Decide how many affiliates you want to recruit, depending on the breadth of your reach and how exclusive you want your affiliate membership to be. Learn from the professionals in our affiliate roundup for advice on finding top-notch affiliates.
After you’ve recruited affiliates, educate them on your program’s conditions and terms, as well as have them sign an agreement to abide by these regulations. Then train affiliates on brand and program fundamentals, give them distinctive affiliate links, and provide them with promotional materials. Make a timetable for checking in on their performance on a regular basis.
Keep track of how your affiliate program is doing.
After you’ve launched your affiliate program, you’ll need to keep track of it on a regular basis. This may be done using your affiliate program software or the network through which you joined.
Track which affiliates are generating the most sales. Check how effectively your affiliate program is meeting the measurable targets you established during planning, such as revenue, conversion rates, unique sales, and AOV. If your program isn’t hitting these expectations, it’s likely time to adjust your commission structure or restructure your affiliate list.
Wrapping things up
You’re ready to start a program of your own now that you know how to succeed with affiliate marketing. First, examine the competitive landscape. Then create a program that distinguishes your brand in the eyes of potential affiliates, offering a lucrative commission. Of course, locate and recruit appropriate affiliates who will assist your company in reaching sales targets.
As you can see from the recommendations we’ve given, if you want to run an affiliate program with your own network, you’ll need affiliate marketing software.