Affiliate marketing is a commission-based system that allows your partners to promote your products or services. These partners are called affiliates.
They place links to your website on their blog, social media page, or their own website. You will pay your affiliates their commissions each time a visitor purchases through their affiliate link.
The concept may be quite simple, but running a successful affiliate marketing program can be challenging. For one, you have to find and train the right affiliates, determine the right commission, and create a plan to monitor your progress.
Fortunately, this article contains seven easy steps on how to create a successful affiliate business.
1. Set goals
Begin by setting goals for your affiliate marketing program. First, you have to establish your target audience. What type of customers do you want your business to reach? What type of affiliates may help you with that goal?
Your main goal is to grow your business. However, you should also set goals for conversion rates—How often do you expect potential clients who click on the affiliate links to buy your product? You may also create a goal for the average order value driven by your affiliates.
“Many people who get into affiliate marketing do so with the same mindset: making money first, and thinking of their audience second (if they think of them at all!). That’s a recipe for disaster or at least lousy results.”
2 Assess the affiliate programs of your competitors
While performing an analysis on the available affiliate marketing programs today, you will know where you stand, this will help you to position your program more competitively. Here’s how to do it:
- Find two to three competitors that have affiliate programs.
- Analyze how each competing program sets its affiliate commissions. What triggers the payout for commissions, is it a sale or a lead generated? Are they paid by a percentage of the sale or is there a set amount? What is the mode of payment, cash or in credits?
- Establish how your competitors find their affiliates. Do they recruit on their own or do they have an affiliate network? What is the application process?
- Determine the terms and conditions of each affiliate program. How do the affiliates promote their affiliate links?
- If you can, find more information on their affiliate programs. Do they conduct training? How often do they communicate with their affiliates?
- Run a SWOT analysis. Find out each of the program’s strengths and weaknesses. Determine the opportunities that you can take advantage of because the competitor missed them. Determine possible threats each competing program poses to your chosen affiliate program.
3. Choose the appropriate affiliate commission
Refer to your competitive analysis findings to guide you in structuring your own affiliate marketing program. Always compensate your affiliate if a sale is made through their affiliate link. It is not wise to pay for every impression or click.
Decide on the amount or percentage that your affiliates will earn. Establish if you are paying in cash or store credit. Typically, a percentage commission paid in cash will be more appealing to affiliates.
Then, decide on your affiliate’s commission. It is good to be competitive, but one-upping your competitors is not always a great idea, remember that.
4. Decide on other important aspects of the program
Aside from setting the commission, you have to consider the following:
- How will your affiliates promote the affiliate links?
- What are their marketing channels?
- What is the duration of the program?
- Do you intend to designate a dedicated affiliate manager to oversee your program?
5. Start looking for affiliates
At this point, determine whether you will choose an existing network of affiliates or build your own selection of affiliate network.
Existing Affiliate Network
They can quickly build a base of representatives since they already have existing relationships with other affiliates in your niche. They also can nurture relationships with other affiliates on your behalf since networks typically handle affiliate management.
However, take note that affiliate networks usually charge their own commission or finder’s fee on top of the commission that you’ll be paying the affiliates. It is usually up to 30% of the commission you charge.
Another disadvantage is that you don’t have direct control of your own affiliate data.
Creating a New Network of Affiliates
Even if you create your network of affiliates, you can still keep track of these affiliates and compensate them automatically using affiliate marketing software.
The software usually costs much less per year than the fee you need to pay for an existing affiliate network. In addition, you have full control over the affiliate data you need.
But how do you start forming your network of affiliates? Consider reputable websites, social media influencers, and bloggers that your target audience follows and trusts, who create good quality content, and perfectly fit in your brand. Then, make a list of people handling those accounts, these are the people to talk to.
Affiliates having prior knowledge of your product or service is better, though you shouldn’t make it a requirement. You may also open an application form on your website.
7. Keep track of your affiliate program
Regularly monitor the progress of your affiliate program, either via the affiliate software you have or the affiliate network you signed up for. Know which affiliates are bringing in the most sales.
Likewise, check how well your program is meeting the goals that you set during the planning, including the revenue performance. If the program is missing these goals, you might need to tweak your commission structure or rethink your member affiliates.
You are now ready to start your affiliate program on your own. Be sure to check the competitive landscape, then design a program that will set your brand apart in the affiliate’s eyes. Find and recruit reputable affiliates that can help you reach your goals.