February 22, 2011 §
Affiliate programs, where you generate incremental traffic to your site through third-party publishers who are compensated on a performance basis, can be a highly effective and efficient way to extend the reach of your brand. Unlike with paid search or display advertising, affiliate marketing transaction costs can be relatively stable, and after scaling up to cover the initial program infrastructure – team, technology, tracking, etc. – the leads that come through can be highly profitable. It’s no wonder that many brands have grown affiliate networks to 10 – 50% of their total sales volume.
Here’s a summary of what it takes to operate a successful online affiliate program, gleaned from years of running one myself. It’s not entirely comprehensive (it assumes, for example, that you have a product or service that customers demand, and still requires the hard work of getting the word out), but if you can check off each of these items in the affirmative, you’ll be well on your way:
- Pay affiliates well – they’re doing the hard and sometimes costly work of generating leads, so compensate them appropriately. Make sure you’re in line with competitors’ programs. If your brand is comparatively weak or unknown, expect to pay more.
- Provide growth incentives – reward strong volume performance with higher commission tiers, bonus payments, or other incentives, to further motivate your affiliates to reach their full potential. No doubt, this can be difficult to track. Some affiliate platforms offer tools to manage this. If you plan to manage commission tiers in house, make sure your accounting is right.
- Pay affiliates quickly – there can be quality/control issues with immediate payments, but generally speaking, the shorter the time between lead generation and payment, the more motivated your affiliates will be to drive new sales. The most aggressive policy you can have is to pay for every lead (as opposed to a converted sale or even further out, a service installation). But if you pay this way, expect an inverse relationship between volume and activations – higher volume but lower conversion. Make sure your economics support your decision.
- Pay accurately – one of the most common criticisms of affiliate programs is that they lack the necessary tracking to ensure that affiliates get paid for everything they are owed. Once you get poor reputation in this regard, it’s very challenging to reverse it.
- Convert well – if you pay based on converted leads, a high commission alone will only get you so far. Regardless, you’ll need to achieve strong conversion rates for the long term viability of your business. Make continuous improvement a company priority. Maximizing order flow conversion (or minimizing cart fall-out, if you prefer), is a topic in and of itself. For now, let’s just agree that it’s a never ending process.
- Provide tangible support – no matter how well designed your program is, your affiliates will inevitably need support in one way or another … custom creative, program approvals, reporting, troubleshooting, etc. FAQs and Wikis alone won’t suffice. Make sure you have the appropriate number of staff allocated to the program.
- Along with providing tangible support, you have to be responsive to your affiliates. Troubleshoot quickly, and they’ll be back on their way to generating sales for your brand.
- Help your affiliates to be successful — provide them with tools they need to close sales, such as a wide array of creative elements, content management, compelling acquisition offers and promotions, and so on.
- Establish clear guidelines – you will no doubt be concerned with issues such as channel conflicts, brand protection and so on. Provide your affiliates with guidelines that you expect them to follow. Then police aggressively by conducting keyword searches and at least sampling a set of affiliate pages on a regular basis. Let your affiliates know that non-compliance will not be tolerated. Keep in mind that most affiliates want to do the right thing, but often times, programs are unclear, or don’t make it easy to comply. The ones who follow the rules (or who mean to) will thank you for ridding the program of those who don’t.
Don’t launch your program until you’re in a position to provide the above. Once you are, promote aggressively. At a minimum, post a sign-up link in the footer of all your web sites. You may also test paid search, and certainly organic search and free directories. You may also want to participate in the large affiliate marketplaces, such as CommissionJunction and/or Linkshare, but note that you will be asked to pay a significant sum to do so. But you may find it worthwhile, especially if you don’t have the resources to build a support platform in-house, and can benefit from their reporting, payment and communication tools.
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