AmWay, Avon, and MaryKay are just a handful of companies that have a model that relies on sales representatives or associates for the sale and marketing of their products. Each of these companies has been around for years using the model successfully. In the online world we have affiliates. Affiliates are very similar as they work off of a commission on a sale and or a price per lead. The number one reason why you should consider an affiliate program is cost versus conversion. In the Google AdWords world you pay for a click and hopefully it results in a sale, but on average only about 3.5% of a well ran program will actually convert. The value of an affiliate program is you pay based on a set goal. The goal may be an individual signed up for a specific program (converted lead) and or it could be that the visitor actually purchased from the website (converted sale).
Regardless of whether it was a converted lead and or a converted sale, what you didn’t do is pay for traffic that did not in turn provide you with revenue. Website startups should think long and hard about including an affiliate program in their marketing plan for the simple fact that the initial investment for setup is fairly inexpensive and you can begin to see an immediate lift in traffic. You can leverage the traffic and sales to fund other marketing programs such as Google AdWords, Social Marketing, and or SEO.
Larger websites that have a long running program have over 6,000 affiliates. 6,000 sales reps around the web talking about their brand, products, and or services. In the offline world that would be a fairly large sales team. The key to getting the value you need out of an affiliate program is to understand that the programs are targeting two distinct areas. The first area is brand awareness and online brand building. The second targeted area is traffic and sales. The key in a well-managed program is to drive the traffic and sales while still maintaining control and protection of your brand.
Understanding that brand building, traffic, and sales are the purpose of launching an affiliate program, it is important to monitor your program closely to ensure that the affiliates are working for you and not against you. For example if you are selling Christian books you are not seeking affiliates that operate pornographic websites to advertise your product. Be careful in your approval and recruitment of affiliates as they can diminish the value of your brand online just as quickly as they can build your brand online. Most affiliate networks will allow you to set approval mode on whereby each affiliate seeking to partner with you must be approved. I would recommend in the early stages of your startup that you utilize this option to ensure only high-quality websites join your program.
Getting started with an affiliate program is fairly easy. You can go to LinkShare, Commission Junction, Share A Sale and sign up for the program. Read through the agreements thoroughly though as the programs differ in terms of upfront cost and monthly volume commitments. As your program matures you may find value in partnering with more than one affiliate network in order to reach targeted affiliates. Working with a service or firm that can assist in launching, recruiting, and managing affiliates can help you grow your business at a much faster pace as they can leverage their existing relationships. Pay close attention to your marketing mix as the channel grows to make sure you do not over leverage affiliates. With the top affiliates you are going to see a much higher marketing cost over the life-time of the customer. Profitability will commonly depend on managing the appropriate mix of channels to the right contribution to revenue.