This guide will discuss how you can use affiliate marketing to grow your small business. We’ll discuss setting up an affiliate marketing program that can help increase customer acquisition rates and how you can support other businesses selling complementary products or services as an affiliate.
1. Prove Your Conversion Rates
Many businesses mistakenly think that offering high commissions is all it takes to attract affiliates to your business. Sure, offering a nice commission is attractive but the best affiliate marketers look past the attractive commission. They want to know the sales page conversion rate, Earnings Per Click (EPC), and refund rate.
Affiliates don’t want to send a lot of traffic to a sales page that doesn’t convert. They don’t want to support offers where most people who make a purchase ask for a refund within the first week.
Work on your conversion rate and minimize those refunds before setting up your affiliate program. Here are some baselines to consider:
Cold traffic conversion rate should be around 1-2%. That’s traffic coming from Google or similar.
Warm traffic conversion rate should be 5% or above. Warm traffic covers people who express interest in the offer. For example, a warm lead could be someone who clicks through to your site from a paid ad or clicks on a link from a promotional email.
The aggregated returns rate for eCommerce stores is 20%. Do everything you can to get below the average for your sector.
Keep in mind that conversion rates vary significantly by industry. You need to benchmark your conversion rate against the figures that are relevant to your industry. The graph below shows how widely conversion rates can vary.
Source: Marketing Profs You can run A/B and multivariate tests to improve the conversion rate on your sales page. Heatmaps and other consumer research tools can provide valuable insights.
You’ll need to work on your refund rate too. You can use post-sales questionnaires and other consumer feedback methods to gain insights from unhappy customers. Address any problems you identify.
Optimizing your conversion rates before launching your affiliate program will reduce affiliate churn. That’s important for the long-term success of your affiliate program.
For example, 22% of Amazon’s traffic is from affiliate referrals. That equates to roughly 500 million visitors a month. People are making those referrals because they know Amazon has a high conversion rate. When affiliates make money through your affiliate program, they will work hard to support your business.
2. Use a Suitable Affiliate Marketing Platform
Next, you need to choose the right affiliate marketing platform. There are many different platforms you can use for your business. Choose the one that best fits your needs.
Here are some important factors to consider:
Intuitive dashboard: you want something both you and the affiliates will find easy to use. The dashboard should show how many sales different affiliates are generating and which product/ service offering is performing the best.
Platform popularity: choosing a popular affiliate platform that many affiliates already use makes sense. It just saves on the hassle of asking someone to join yet another affiliate program.
Affiliate community: you might want to use a platform with an established affiliate community. Using a platform with a community based around it can make recruiting affiliates that tiny bit easier.
There will probably be some other considerations that are important for your business. Make a list of them before searching for a suitable affiliate platform.
3. Create a Joint Venture Page for Affiliates
Before you start recruiting affiliates, create a Joint Venture Page. A joint Venture Page is a sales page for your affiliate program. The page should include various resources affiliates can use to support your company, alongside important information about the program and the sign-up process.
Include things you think will help convince an affiliate to support your program. You might want to have a video demo of your products, share conversion rate data, total payouts, etc.
Build a JV kit for your affiliates too. It should include email swipes, graphics for marketing with banners, image covers, etc. You might also share effective strategies affiliates can try to promote your offer.
Spend a bit of time on the Joint Venture Page. Most businesses don’t put much effort into creating a good resource for affiliates. Having a nice Joint Venture Page will help you stand out and leave a good impression with affiliates. Both of these are big plus points.
4. Run Outreach Campaigns to Find Partners
Affiliates can be social media personalities, bloggers, influencers, and even loyal customers. What they all have in common are the affiliate links they place on their platforms for monetary exchange. Therefore, you will need a strategy to find affiliates.
One way to find affiliates is to review the best channels for referral traffic. You can gather this information from a platform like Google Analytics.
It makes sense to start by targeting the channel that drives the most traffic to your website. For example, if you were getting a lot of referrals from Instagram, it makes sense to try and find affiliates there. Alternatively, if most of your traffic comes from other blogs, then focus on bloggers.
Regardless of your initial approach, set some baseline metrics you can use to find affiliates. Logical factors to consider by marketing channel include:
General Consideration: the more overlap between your affiliates’ audience and your customer base, the better the results.
Social Media: the number of followers. Also, the content engagement rate.
Bloggers: how many monthly visitors the site gets. Ranking search content. Size of the email list if shared.
YouTube: the number of subscribers a channel has. The average number of views a video gets.
Once you’ve defined who you want to target, create a list of prospects and gather content details. Here’s an email template you could use for your outreach.
Hi NAME, I hope you’re having a great day. I’m the Affiliate Manager at COMPANY. I think there’s a great overlap between your audience and the products we sell. It would be great if we could find a way to work together. Here are three reasons I think a partnership would work :) 1. Awesome products: our products have a five-star rating on Amazon 2. Proven conversions: our sales pages convert at 5.3% and have a $2.47 EPC. 3. Great customer service: we will take great care of your customers. We have a 30-day no-hassle returns policy and a super low refund rate. You can find more information about our affiliate program on this page. I’d love to arrange a call with you to discuss our company and how I think we could work together. I hope to hear back from you. Best, NAME
The template is concise. You explain who you are and why you think it makes sense to work together. Those three bullet points are meant to address pain points affiliates might have that would hold them back from supporting your program.
Regardless of how you reach out to people, be genuine. That’s the best way of getting a positive response from people.
5. Offer Higher Returns For Your Best Partners
Naturally, some affiliates who support your business will outperform others. One way to incentivize your best-performing affiliates to support your business is by offering performance-based compensation. It’s a strategy many businesses use.
The hosting company WPX is a nice example of a company that takes this approach.
They have a great financial reward system set in place for their affiliates. It’s naturally tiered. The best-performing affiliates earn $30 more per sale. That’s a significant incentive to keep promoting the company.
The gist is that if you have a great reward system, your affiliates will work hard to support your business. Your priority is to foster and maintain a good relationship with your affiliates.
6. Look for Affiliate Program You Can Join
Setting up an affiliate program to promote the products and services you offer is a great way to grow your business. There should be plenty of opportunities to increase your revenue by supporting businesses that provide complementary products and services as an affiliate too.
Look for relevant affiliate programs to join. It’s a great way to learn about affiliate marketing, and it should help you provide better advice to your affiliates.
One common headache with affiliate marketing that you will encounter is that every affiliate program has its own dashboard, making it hard to get an overview of your performance. An integrated affiliate dashboard will centralize all your data.
In Conclusion
This guide discussed why you should use affiliate marketing to grow your small business and looked at some of the practicalities associated with this approach. One of the great things about affiliate marketing is there are no start-up costs and low ongoing costs because you pay your affiliates by commission. There is low risk because payments only go through when there is a commission. Finally, you get to leverage the skills and audience of affiliates to grow your business.
If you want to utilize affiliate marketing, you need a good conversion rate and low refund rates. Once you have that in place, select your affiliate marketing platform, and create your Joint Venture Page. You then need to try and hire affiliates and provide ongoing support. By following these steps, you should be in a great position to use affiliate marketing to grow your company.
Contributed by Domingo Karsten
Domingo has over 10 years experience in online marketing. He is involved with We Can Track. His writing has been featured in Fast Company among others. Follow him on Twitter at @domingokarsten.