One of the best things you can do to grow your business is to set up an affiliate program. Instead of investing money upfront through other marketing efforts, you can harness the power of referral marketing. Let’s be honest. What’s better than having others market for you? Nothing, that’s what.
From Shopify to Wix to Amazon, many of the top Internet-based companies are powered through affiliate marketing. There’s a reason for that. Not only is the affiliate model insanely cheap to implement, it’s also easy to maintain, whether you’re just starting out or you’ve been in business for a while. In this post, we’ll discuss how to set up an affiliate program that works for you.
What’s an Affiliate Program?
An affiliate program is a rewards-based system. In an affiliate program, the company pays a commission to its referral source for producing a new, referred customer. In this setup, both parties are winners. You, as the company, benefit because you gain a new customer and the referral source benefits with a financial reward (usually a percentage of the sale).
Although the obvious drawback of an affiliate program is that you’ll share a substantial chunk of your earnings with a referral source, it can also be argued that you wouldn’t have that new customer without a referral source.
It may be useful to think of an affiliate program as a different form of marketing. Instead of paying up front for the marketing, you pay after getting the customer.
The Benefits of Affiliate Marketing
Before we discuss how to set up your affiliate program, let’s discuss a few of the benefits, in case you’re still on the fence about it.
Affiliate marketing is affordable – You don’t have to conjure up the cash before getting a customer. With an affiliate program in place, you’ll only pay after you’ve been paid.
It’s low risk – You pay your referral source based on their performance. If they don’t perform, you don’t pay. With other forms of marketing, you have to pay first, cross your fingers, and hope for the best.
It increases your exposure exponentially – You’re a small business with limited marketing reach. When you use affiliate marketing, you can reach people who may have never heard of your service otherwise. You can reach new prospective customers without reaching into your pocket first to do it.
It builds customer loyalty – Most affiliate programs are built on the backs of a company’s customers. If your customers are rewarded for simply sharing the news with others, they’re much more likely to stick around and tell even more people about your services.
It allows for personalized marketing – Personalization is huge these days. So many companies miss the mark by trying to appeal to a huge audience in one ad. Because affiliate marketing is usually person to person or person to smaller audience, your referral source will be able to tailor their marketing message.
It allows you to track your top producers – Most companies benefit from word of mouth marketing, but wouldn’t it be great if you could determine who sent you your new customers? With an affiliate program, you can track your top producers and reward them, too. Doing so will improve customer loyalty (and keep those referrals coming).
How to Create an Affiliate Program
Now, let’s discuss how to develop an affiliate program that will net you more customers.
Think Carefully About Your Rewards System
The most important thing to consider when setting up an affiliate program is how much you’ll pay your affiliates. Go too low and you won’t attract any decent referral sources. Go too high and you’ll threaten your bottom line.
Depending on pricing strategy, you may be limited to offering a somewhat small 5% commission. On the other hand, if you have enough padding in your pricing, you can go as high as 50% or beyond (if you dare). When you first start your affiliate program, it may be best to start off with a smaller commission offering until you figure everything out.
Keep in mind that the more you can offer to your referral source, the more attractive your affiliate program will be. Before implementing your affiliate program, research to find out if your current customers are actually interested in making money from referrals.
The easiest way to do this is simply to ask. You can ask by surveying customers when they’re on your website, or go with the more personal approach of emailing your customers. In your survey or email, ask the customer if they’d be interested in taking part in your upcoming affiliate program. Don’t expect an email back. Instead, direct the customer to a landing page where they can learn more information about your affiliate program and sign up.
This strategy allows you to gauge your community’s level of interest in an affiliate program.
Reward All Participants
When developing your rewards system for your affiliate program, avoid playing favorites. There’s nothing worse than an affiliate program that only rewards the top referrals. This type of system is discouraging for a new affiliate partner.
Instead, pay a commission for each referral. This is what keeps referrals coming through.
Also, avoid capping commissions. As long as the person is bringing in new referrals, they should be rewarded for their efforts. If you limit your top producers, you’ll sabotage your affiliate program.
Pay All Participants
Now, let’s focus on payments.
To avoid constant payouts after every referral, you may wish to implement either a payment threshold (i.e. payout at a specific amount) or a quarterly date when you send payments (i.e. sending payments out every three months).
Whatever you opt for, be sure to also choose an affiliate platform so that you don’t need to manually process payments. If you’re using WordPress, you have a lot of great affiliate plugins to choose from. Your affiliates should never have to wait beyond an agreed upon time/ payment threshold in order to receive their rightful payment.
Also, get clear about how you’ll pay. For many SaaS, PayPal is the easiest option because it’s accepted internationally, which is a consideration if your affiliate partners are located throughout the world. However, not everyone uses PayPal, and may prefer checks via snail mail. To better decide on your payment options, survey your affiliate partners to determine their preferences.
Also, if you’re working within the U.S., you’ll need to send your U.S.-based affiliate partners a W9 form for tax purposes if they’ve earned at least $600 through your program.
Market Your Affiliate Program
The irony of setting up an affiliate program is that it doesn’t actually market itself. You’ll need to market your program to prospective affiliate partners. Here’s an easy guide to marketing for your affiliate program:
Create a landing page to discuss the program
On your landing page, explain how your affiliate program works. Videos would be awesome to include. Add an email form on your landing page to capture those who are interested in signing up for your affiliate program.
Market your affiliate program to your current customers
Use email to reach out to your customers and let them know about your affiliate program. Use a call to action link that connects them to your landing page.
Advertise your program on your website
Don’t just tuck it away in your footer section. Add a banner or a popup on your website to promote your affiliate program.
Advertise on social media
Don’t forget to market your program on social media, too! In addition to making posts on your page, you can also set up a limited-run paid campaign where you target only your customers. Encourage your customers to sign up for your affiliate program, linking back to your landing page.
Remember that affiliate marketing doesn’t replace good ‘ole SEO, social media marketing, content marketing, and other forms of inbound marketing. As grandma always said, “Don’t put all of your eggs in one basket.” Affiliate marketing is part of your overall marketing strategy, and can be an effective way of expanding your reach, getting new customers, and rewarding referring ones all at the same time. Although affiliate marketing can be slow to build, you’ll eventually be rewarded with an ever-expanding customer base.