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Affiliate Marketing is frequently said to be one of the most influential online programs for marketing. This one is especially the case with the small businesses.
This is simply because there is hardly any risk attached with the affiliate marketing. The affiliate marketers are only paid when they deliver results. For each lead or sale generated you just need to pay a referral fee to your affiliate partner.
Affiliate marketing is often said to be the partnership businesses as you are partnering with others for helping you to sell your services.
Now the industry involves 4 factors – customer, affiliate, network, brand. But all these affiliates may not be at play all at the same time. In some cases, the businesses have an affiliate program and manage them directly. In other cases networks provide the affiliates to select from and they also deal with the payments.
There are many affiliate programs on the internet today. That is why you have to set your foot very carefully to grab the attention of the professional affiliate marketers. That is the most vital step which is bound to set you apart.
So should you run in house or opt for network?
Well, If you —
- Are actively looking for affiliates the first time
- Need a reporting system
- Worked out your commission rates
- Need to take care of the affiliate relationship
- Got Creatives ready
- Need tracking technology
Then you must go for an affiliate network.
But if you are not ready with these then you should build your Affiliate program in house. Though time-consuming, this can be extremely profitable and rewarding.
Recruiting the Affiliates
The first thing is to create a list of affiliates. Though you cannot find any list of affiliates online but you can use LinkedIn Groups. Search for CPA affiliates, affiliate networks and related network. After joining the group you can post your intention there and recruit the new affiliates.
In your pitch state that you are going to pay continuous commissions and the kind of affiliates that you look for should also mentioned clearly.
In house Affiliate Marketing benefits you in the following ways –
- Quicker turnaround on offers that are time-sensitive
- Better understanding of the customer needs and company products
- Much more cost-effective than networks which might charge a 30% over-ride while you pay just 5%.
- Complete control over affiliate program
Now 80% of sales come from 20% of the affiliates. So you should give a chance to everyone while recruiting affiliates. You have to build a Balanced Scorecard based on the quality of traffic, information, commission request, volume, sales funnel, affiliate type, and traffic delivery speed.
In order to be successful at affiliate marketing, you must fulfil 3 requirements –
- Create a Solid Game Plan – A plan regarding how you can build and attract traffic to your website is essential and figuring what sets you apart from other publishers will improve chances of winning.
- Commit to Affiliate Marketing – If you are not committed as an affiliate publisher you won’t make money
- Know Your Stuff – If a publisher account does not generate commissionable transactions, it will be deactivated and the account will be assessed after a certain period.
- Set the Right Strategy and Objectives
It is vital to establish the right strategies. Some of the common ones are –
- Increase the sales volume by 5% every year
- Enhance the sales by 1% every month
- Increase the number of active affiliates by 30% by the year end
- Increase the average order value by some amount by the end of February, 21.
Once the goals are defined you must set up the strategy that will help to achieve them. These are divided into 4 parts –
- Terms and Conditions (That define what can and cannot be promoted through PPC)
- Setting PPC values
- Approach to Validating Rules
- Recruiting the Right Affiliates
- Calculate Final Commission
CPA or Cost per Acquisition
The simply way of doing this is calculating the CPA, which is done by dividing Marketing Expenditure by Customers.
CRR or Customer Retention Rate
You should pay attention to your customer retention rate if you are in the business for a few years. For calculating the CRR you have to take into account –
- Customer Number at the beginning of the period – S
- New customers acquired during that period – N
- Customers at the period End – E
Now the formula is
Customer Lifetime Value
In order to offer the right commission offer.
Calculate the Customer Lifetime Value (CLV) with this formula
Repeat Transactions Number * Average Sale Value * Average Retention Time in Years or Months.
Now on the basis of these 3 formulae, you should calculate your final commission.
These are just some of the things brought forth by the experts of reputed digital marketing agency in India for starting an affiliate marketing program. Though this strategy is not perfect but it will get you started and you can slowly move towards success as you progress and learn with time.