Affiliate Marketing ... Let Others Do Your Selling!

What is “Affiliate Marketing” and Does it Make Sense For You?

In simple terms, affiliate marketing is paying others for selling your products and services. In a bit more detail:

• Your “affiliates” place advertising links on their Website(s) linking to a shopping page on your site where these site visitors can select an item for sale, choose a quantity and add it to your shopping cart.
  
• The links on the affiliate’s site can be graphical advertising content provided by you or ad copy of the affiliate’s design. It’s normally the former.
  
• The ad link on the affiliate’s site contains a specialized “affiliate code” allowing you to recognize which of your affiliates generated the in-bound link to your site and credit that affiliate with any resultant sale.
  
• Your site handles the checkout, credit card authorization, acknowledgements, etc. just like any other online sale you make. You also handle the order fulfillment and after sale customer service (if required).
  
• You “batch” commissions due your affiliates and pay them periodically. Typical terms would be paying your affiliates by the 15th of the month for all sales made in the preceding month. Affiliate commissions are often held until they reach some minimum threshold, say $100 total.
  
• Returns and charge-backs are debited to the affiliates account.
  

What Commission Rate Should You Pay?

This is totally up to you. As a guideline, Amazon’s starting commission rate to their affiliates starts at 4% and increases in steps to a maximum of 8% as sales totals grow. Other affiliate programs less well known than Amazon, as everyone else is, pay commissions up to 75% and in a few cases even higher. Obviously very high commission rates can only be paid on items with no tangible product costs (like software and eBooks). Typical rates are 20% and up. Remember that you compete with other sites with affiliate plans; the higher your commission rate, the more affiliates you’ll recruit.

It all comes down to what you deem to be an acceptable “Cost Per Sale” (CPS). You may be thinking: “Wow, I only pay my in-house sales people x%!” True, but consider the following:

• You don’t have to offer everything you sell to your affiliates. Pick and choose only the items that make the most sense.
  
• Unlike other advertising alternatives such as banner ads or pay-per-click, you’re not paying for site visitors who may or may not buy something. You’re only spending money for actual, real, completed sales!
  
• Your affiliates’ Website promotion methodology, content and constituencies will vary widely. Most will reach demographics that you would have otherwise never communicated with.
  
• Unlike your direct sales force, you have little if any overhead costs with your affiliates.
  
• These are “incremental” sales, sales that you likely would not have realized other than through your affiliates. It’s rare that an affiliate sale is one that you “would have gotten anyway.”
  
• New affiliate generated customers go on your mailing list for potential future sales.
  

What’s Involved in Setting Up an Affiliate Program?

In a word … a “lot” but I can assist with every aspect including:

• Authoring the terms and conditions of your affiliate program.
  
• Adding affiliate tracking and accounting software to your Website and interfacing this software to your eCommerce system.
  
• Creating a series of textual and graphical advertisements for your affiliates to download and use on their Websites.
  
• Creating “auto-responder” Email notifications to advise both you and your affiliate when a commission has been earned.
  
• Adding an affiliate self-service portal function to your Website allowing them to:

  • Sign-up for your affiliate program.
  • Download advertisements and other marketing materials.
  • Login and check their referrals, sales and commissions.
  • Refer other affiliates (two-tier affiliate program).
  • Communicate with you.
• Interfacing your affiliate tracking and accounting software to other systems (such as accounts payable).
  
• Listing your affiliate program on Websites that specializing in communicating affiliate opportunities to interested site owners.
  

I look forward to discussing your affiliate marketing needs and opportunities!