Marketing Monday # 18 – Affiliate Marketing: Is It Right for Your Business?
Affiliate marketing is a sales technique that functions a bit as a referral program. In a referral program, a customer is compensated if they refer another customer who makes a purchase. In affiliate marketing, you pay companies who market your businesses product(s) a percentage of every sale that comes through their site.
Here is an illustration. My company runs Mastermind groups. I have signed up as an affiliate for a Mastermind Training Company. One of my group members sees the link on my site for the training company and decides he wants to start his own group and needs training. He clicks the link on my business site, which takes him to the Training Company and he purchases the program. At the end of the month, my company receives a percentage of the program price as payment.
There are definitely benefits to creating a program. Affiliate marketing is a great way for companies to reach people who may not normally be reached through organic marketing. This gives your business more exposure than it would have on it’s own.
You pay commissions on actual sales. This is a great benefit to you because your affiliates are marketing your product all the time. This, in itself, is a boost for your business. Adding the fact that you pay commissions on sales makes it an effective, efficient method to utilize.
However, there are some things to watch out for when considering implementing an affiliate marketing program. You give up control on how your company is marketed through your affiliate sites. Unfortunately, some affiliates, will false advertise, which can damage your company’s brand and/or reputation.
It also takes time to manage an effective affiliate marketing program. Commissions, (advertising) standards, and sales are a few of the things that must be tracked and kept up with when managing this type of program.
There are two paths to take when implementing an affiliate marketing program. For the budget conscious business, running the program yourself won’t cost you that much outside of time. You will need to purchase software initially, however, you can manage the rest yourself. The drawback to this is that it will take time. An alternative to this is to hire a Program Manager dedicated to running your affiliate marketing program. This person will handle all aspects such as recruiting affiliates, creating marketing tools for your affiliates, tracking sales, managing commissions and cutting checks, and more.
The other option is to join an affiliate network. The latter will handle many of the aspects previously mentioned, however, the network charges a percentage of the sales tracked each month. This is easier and less for your business to manage but comes with a cost.
Affiliate marketing is a great option for small businesses to build brand awareness and increase sales and traffic beyond their natural reach. However, some key necessities are required, one of which include an amazing product. Affiliates don’t want to do much work; your product must be great. You must also have a site that generates sales, prior to launching your program. It is the job of the affiliates to get people to your site but your site still needs to finalize the transaction. Without a website that has proven itself able to do this, your business will struggle with it’s affiliate marketing program. Lastly, create effective tools for your affiliates to market your product. Don’t just create a banner and expect it to sell. Create a variety of tools.
Do you think affiliate marketing is the next step for your company? If so, begin planning out your program and steps you will take. Reach out to us to get more information or assistance on your path to launching a great affiliate marketing program.