You are missing a major opportunity if you are not engaging in affiliate marketing at the moment.
Read More: Mavie Ultron
The idea behind affiliate marketing is straightforward:
if another website sends you a visitor who ultimately becomes a customer. The referring website should be compensated for its efforts.
Although the foundations of affiliate marketing remain the same. The industry has evolved to a point where it is much more complex than it once was. You want as many sites as possible to promote you to their audience in the hopes that their readers will click through to your store and you’ll want to compensate each of these sites fairly according to how much revenue they bring in for your company.
In this article, I will discuss some of the basics of affiliate marketing that any beginner should know:
(1) The optimal compensation plan for your company
2) Which network
(3) would be the best to collaborate with considering the affiliate base that each has and the types of affiliates that each typically attracts.
Thirdly, you must know how to promote your brand on the websites of your affiliate network’s most important partners.
4) Develop novel incentive programmes to entice affiliates to promote you instead of your rivals.
Creating a compensation plan for your affiliates Expenses associated with acquiring new customers should be the primary focus. If you know the lifetime value of your customers, you can use this information to calculate the affiliates’ commission.
Clients that were acquired within a month’s time frame may be the greatest candidates for tracking spending over several years to determine a customer’s lifetime value. You will inevitably lose some of these customers but keep others, so a sizable sample size is necessary.
1000 customers recruited in June 2008.
After two years of purchases totaling £1,000,000, you may calculate a client lifetime value of £1,000,000. However, your cost of goods sold was £700,000.
In terms of regular expenses, the company incurred a total of 100,000 GBP.
Over 80,000 GBP was spent on “variable” business expenses.
So, over the course of two years. We may expect to earn 120,000 GBP from these 1,000 consumers, or 120 GBP from each.
This is clearly a very crude fag packet example but it is important conducting this exercise. So that you can then establish the profitability of all of your marketing channels via looking at what their cost per new business client obtained is and comparing it to the customer lifetime value.
Anyway, to keep from steering too wide form the point of the post… Based on this number. You may set a maximum limit on how much you are prepared to spend on affiliate marketing for each new customer.
However, not all orders are from “new” customers so you could do one of 2 things:
1) Assume that one-fourth of your clients are brand-new, and base your compensation rate on that number. This gets you to a 6% commission rate.
(2) Set a higher commission rate (say, 10%) for orders from new clients and a lower rate (say, 5%) for existing clients (although you will need to have the backend website functionality available to track different customer segments).
You must include a network cost in addition to the cost to the final affiliate. This is a rough estimate of the affiliates’ share of the total commission. This means that if you’re paying your affiliates £1000 per month, you’ll also need to pay your network a fee of around £300 per month.
If you want to be able to increase commissions for seasonal promotions, rewarding top-performing affiliates, etc. You should always set your commission levels at a slightly lower rate than you can actually afford.
Which affiliate programme will help me the most? The affiliate networks’ willingness to share information with you is a function of your negotiating skills and the potential size of your business for the affiliate networks.
It is recommend that you contact the major networks (Tradedoubler, Buyat, Linkshare, Commission Junction, Affiliate Future, and Clickbank) and explain that you are planning to launch an affiliate marketing programme and would like as much information as possible on why you should go with them.
Put the question to them:
What was the number of affiliates who contributed to a sale in the past 30 days?
In order to facilitate meaningful comparisons of scale and scope
If you sell anything online, how many affiliates are advertising merchants in your industry?
So that you may gauge their height relative to your own
Just how much money did they generate for your business sector as a whole last month?
To evaluate the financial health of your industry. When feasible, you should also examine the percentage of income contributed by each affiliate. For instance, what percentage of revenue is generated by the top five affiliates? Is the affiliate marketing potential for the long tail/small businesses substantial?
Can you tell me how many new partners they signed up in the past 30 days?
In order to evaluate their growth and initiative.
When was the last time you checked how many new business owners they signed up in a single month?
As well, are they a haughty and unproductive network?
How many of your company’s merchants are working with them? (It’s smart to go with the greater number. As there will be an established network of affiliates eager to push your brand if they’re already doing so for your competitors).
Who are their top five affiliates, if any?
What are the top five affiliates in your industry with them?
When making a sale, what percentage of the total amount will they take as commission?
Is it possible for them to manage numerous commission structures?
Can they generate leads for a set price per lead. Or do they have to pay every time someone contacts them?
What exactly do you get for your management fee? How available will they be to assist with matters such as affiliate recruiting, reporting, troubleshooting, and industry updates?
What distinguishing technological advantages do they provide?
The more information you have on each of these points. The better prepared you will be to enter the bargaining phase and use them as bargaining chips. Naturally the size of your business and the income you will bring the affiliate networks will primarily determine the amount of power you have and how far you may go. Get the networks interest in your marketing and expansion strategies.
At this point, you should follow your tastes, the information, the best bargain, and your instinct. Going with a company is a good idea if you genuinely like and get along with the people working there and if you believe they will take your business seriously and spend time promoting you, but only if the commercials and their business proposition are solid as well. Promoting your brand among the most influential affiliates in your industry. When you are ready to begin the first step is to compile a list of prospective affiliates to promote your business. If the affiliate network makes a mistake and gives you the sensitive data (unlikely). You should ask them to rank the affiliates in order of income produced (obviously without the sensitive info).
If your affiliate programme offers a higher percentage commission and your conversion rate is on par with or higher than that of your competitors. You will quickly win them over. Affiliates are businesses in their own right and are only interest in promoting the merchant who can earn them the most cash. Review the most converting affiliate programmes EPC here (earnings per click). Then, you must figure out how to provide them with the means to earn more than this with you by applying the following formula: (site conversion rate x total number of sales)
Send an immediate email to all of the other affiliates, introducing yourself as their support at your company and explaining your proposition.
Affiliate programme terms (commission rate, etc.) and the fact that you have an unbeatable offer for the first month that is going to have sky-high conversion rates.
Don’t go broke on your top affiliates; offer them something unique in exchange for prime placement on your site by setting aside a little extra money in the promotional budget.
Do not be disheartened if you are unable to get a hold of or hear back from many affiliates on your list. This is normal affiliates are busy people.
Once you have the top 10 on board and are recruiting the long tail through email, pick up the phone and work your way down the list, getting more and more affiliates on board.
Just think of creative methods to capture their attention and use whatever connections you have inside the network to help you make contact with the affiliates.
You need to keep the pace up for at least the first three months, and then it should start to become easier as you have some strong connections that do not need too much maintenance. Keep in close contact with the network and let them know that you will make them work for their commission. Affiliates and the networks themselves are affect by this.
Updated affiliate programmes that incentivize partners to promote you rather than your rivals. This is obviously a complex issue with no simple solution. However, there are several guidelines that I would follow:
Keep things straightforward; affiliates have a lot on their plates. So if your promotional concept is particularly intricate (even if it’s entertaining). They may lose interest before you can sell it to them.
Don’t give your affiliates the same old promotions every month; if they already know how it will do on their site. There’s no need for them to keep advertising you and trying new things for you.
Incentives for your best affiliates should be tailor to their site and the products they’re selling the most of. If you sell T-shirts and cushions and one site is doing very well with the cushions. For example you might offer them discounts on those products.
Read More: Mavie Ultron
Take use of the information at your disposal following the conclusion of each promotion to determine. Who is responding to your efforts and what kind of content they are interested in receiving from your site.
It’s important to put in an appearance at affiliate gatherings. Network with other professionals, do favours for others and have a good time. All of which will reflect positively on your business relationships.