Affiliate programs are used for businesses when you want to promote your product or service to affiliates. It can be done either through companies and networks like Awin and Tradedoubler or individually.
Affiliating through networks can be rewarding though it has a few drawbacks. Indeed your business can grow up quickly as there are teams who look for affiliates for you. However, this can be costly, around 30% of your charge of affiliates.
On the other hand, building your own affiliate program can be an enjoyable experience and also beneficial for your online business. You can affiliate people and groups via different sources. LinkedIn is one of the best know social networks for connecting and affiliating. If you want to recruit affiliates you need to advertise your business with a few words. You can mention your conversion rates as well as your preferences what you are looking for. For example, affiliates with product review experiences might be preferable to you, though you should opt for possible testing to each interested party.
So what are the benefits of having an affiliate program?
First of all it is much cheaper, around 5 % for each commission. Also, contacts are more direct because key affiliates can be contacted immediately to arrange promotions. This makes it easier to get a better understanding of the product and the needs of the customers. Also, you can have a complete control of the affiliate program.
A few disadvantages should be considered with this type of affiliating. You will have to take care of all the payments and commissions. It might be difficult to monitor the performance and variables as it can be time consuming for one person to do it.
When affiliating, it is important to set your aims and objectives. You may want to increase sales over a year or to increase the order value in a defined period of time. After you have defined the aims you need to build the strategy of how to find the right affiliates. There are a few steps of this strategic engagement. You must clarify how the affiliates can promote you. Then, you must define what will be promoted through cost-per click and one of your aims can be to increase your visibility within search engines. There are other things to think about, like linking to your website straight away or by using your URL.
Next you will have to define the cost you are ready to spend on a new customer. Calculating the commission is important because the profit and costs must relate to visitors, leads and sales. It means you decide how you want payment to go: per click, per lead or per sale so that you improve your conversion optimization.
Speaking of affiliating marketing strategy, there are many more details to take into consideration, such as customer retention rate, customer lifetime value and the ability to calculate the optimal commission without putting your business into a financial risk.