So your business is doing well and you are looking to grow the company. Then a little birdie whispered in your ear “affiliate programs are a great way to bring in additional revenue.” So you say “LET’S DO IT!”
Whoa! Not so fast there Speed Racer! You have to make sure this is the right fit before you go creating a program all willy-nilly. There are six big questions you’ll need to answer to determine if an affiliate program is a good solution for your business.
Question #1 – Do you have a global product?
The affiliate channel is focused primarily on advertising on other websites that will drive traffic to your site. Local products do not do well with an affiliate program, so if you don’t have a global product, or at least national, focus your marketing efforts elsewhere.
Question #2 – Is your site converting well on it’s own?
Good affiliates choose programs wisely. They are digital marketing pros that recognize a good brand when they see it. They don’t want to take chances on merchants that have a site that isn’t converting well. An appealing website with a smooth transaction process is necessary to start the conversation.
Affiliates also need assurance that people they are referring to your website will be able to make secure purchases and have a high level of satisfaction in dealing with your business. Sketchy policies for buying and returning products will be noticed and scare away affiliates. Bad websites will deter them even faster. A complicated check out process is a big deterrent for affiliates too! They don’t want your problems with customers to reflect badly on them.
Question #3 – Are your profit margins big enough?
Affiliates need enough skin in the game to spend time creating content. If your profit margins are solid, you should have enough to budget in commission.
Question #4 – Is the business generating at least $50,000 a month in sales?
$50,000 in revenue is a good baseline number to have before you jump into an affiliate program. This allows you to have a good client base built up, loyal customers, and natural evangelists of your brand. You can turn up volume of customer voices by incentivizing with affiliate commissions. However, if you aren’t generating at least $50,000 in revenue each month, you are not going to have the budget to launch a successful program.
If you aren’t to the $50,000 level yet, a good alternative to an affiliate program is a referral program, which can leverage your customers influence by offering free service or goods for their referrals. You can learn more about the difference between Referral and Affiliate Marketing here.
Question #5 – Have you already optimized your other channels?
Affiliate should be one of the last marketing channels you open up. The biggest reason behind that is the affiliate channel is a long-term play and proper management of the program requires commitment. It will take a minimum of 6 months building the program to see results that you are looking for.
On the other hand, depending on your product and budget, you’ll want to focus your marketing efforts on lower hanging fruit. Marketing channels like Facebook ads, Google PPC campaigns, and your lead capture/sales funnel will usually yield instant results. Don’t sleep on your organic rankings either, so make sure you’ve invested in SEO.
Also, do you know where your traffic and sales are coming from? Make sure that you have Google Analytics set up right and that your site index is clear.
Question #6 – Are you ready for a long-term commitment and to create the program the right way?
Contrry to popular belief, affiliate marketing is not a get-rich-quick scheme. The affiliate channel requires slow & steady growth. You can expect a minimum of 6-12 months of work before you see real results. However, once the channel is flourishing, the program will yield great value on a pay-per-performance basis.
During the planning phase, you’ll need to set aside a proper budget for this channel as it will be losing money early on. You’ll need to set realistic expectations within the company and on your marketing team. Hiring someone that is dedicated to this role is necessary for true growth (learn more about that here). Do you have the budget and bandwidth to hire another employee? If not, consider hiring Outsourced Program Management (OPM) after you launch the program.
Conclusion
If you answered YES to these 6 questions, you are prepared to take the next steps to creating the affiliate program your company deserves. Get it right, and your army of affiliates will be responsible for 20%+ of your sales within 3 years!
So what are the next steps?
- Competitive analysis
- Choosing a platform
- Commission structure
- Terms and conditions for partners
- Recruitment strategy
- Program management
- 30-180-365 day plan
Author Bio
Dustin Howes is the owner of Coalition Marketing, an affiliate marketing agency developing innovative techniques in publisher recruitment. Dustin has created an online course that coaches affiliate managers to prioritize time, recruit the right affiliates, and develop deeper partnerships. Check out the only online course that teaches you all these steps at https://performancemarketingmanager.com.
