Do you know the most cost-effective way to generate a steady stream of new customers? If your answer is “no”, you’re not alone. Hundreds (if not, thousands) of business strategies exist–each one having their own advantages, disadvantages and expected return.
A model that might make its way onto your “to try” list is affiliate marketing.
After all, it’s an industry with an estimated worth of $13 billion.
I’m here to tell you the reasons why you need to be working with affiliates to grow your ecommerce business.
Oh, and don’t worry: I’m not going to share any case studies of spammy websites who’ve made millions through affiliate marketing. Those stories often lie pretty close to the “make $500/second with dropshipping in two weeks” BS stories.
But, done right, affiliate marketing can be a way to grow your business–fast.
Ready? Let’s dive in.
What is affiliate marketing, anyway?
Before we take a look at why you need to be using affiliate marketing to your advantage, let’s get the basics covered and understand exactly what it is.
Here’s the simple explanation:
Affiliate marketing happens when a group of people (known as ‘affiliates’) promote your products online, in return for commission. These affiliates have special links with tracking codes, allowing ecommerce retailers to track:
- Which product an affiliate has sold
- How many products an affiliate has sold
- The total revenue an affiliate has generated
Affiliates can be bloggers, influencers, social media stars, vloggers–you name it. If they’ve got their own online community, they’re a potential affiliate for your online store.
Affiliate marketing vs. influencer marketing
…That’s a pretty fine line–and something many people get wrong.
Unlike influencer marketing (where priorities are often to improve trust and brand awareness), affiliate marketing focuses heavily on sales.
After all, an affiliate can’t generate their commission if they’re not driving sales.
Can you use influencers as affiliates? Absolutely. But it’s worth noting that influencer marketing is more of a marketing strategy, and affiliate marketing is a business model.
5 reasons to create an ecommerce affiliate program
“Do I really need an affiliate program?”–that’s a question on many retailers lips.
My hope is that once you’ve read these five reasons why they’re great for ecommerce businesses, you’ll answer with confidence, “yes.”
1. Affiliate programs are cheap to set up
We all want to generate the highest possible profit margins, and reduce customer acquisition costs (CAC), right?
That’s why affiliate marketing programs are excellent for online retailers.
You don’t need 15 fancy tools, a dedicated team department or a hefty advertising budget to get started. Software to manage affiliate programs is very cheap, and your program can kick-off with just one team member taking responsibility.
David Barbour, Co-founder of Vivio Life Sciences, told me how this cost-effective element means there’s no better time to start affiliate marketing. He said:
“With simple, cost effective platforms that centralize everything from; automatic payments, affiliate registration, affiliate link generation, file storage that both merchant and affiliate can access, and message boards for direct contact, it has never been a better time to work with affiliate.”
Want to use one of those tools David mentions?
2. You don’t need a salaried sales team
The average salary for a full-time sales representative is $61,740 per year. That’s a huge expense to pay, especially considering the (albeit small) risk of them failing to generate any sales.
Affiliate marketing? You only pay your affiliates when they’ve sold your product.
Using the $61,740 salary and a base commission rate of 20%, you’re guaranteed to generate $308,700 in sales for the same salary expense when using affiliates.
(Bear in mind that commission rates can vary from 5% to 50%, so the potential returns could be even higher.)
With affiliate marketing programs, no customers = no affiliate payouts. It really is as simple as that.
3. You’ll build backlinks from your affiliate’s promotion
You likely already know the benefits of a strong SEO strategy. More backlinks lead to higher rankings, which lead to paying customers. You know the cycle.
But what you might not realize is the promotion your affiliates are doing could help you see SEO benefits sooner. That’s a fantastic advantage–especially when SEO takes up to 12 months to see results, on average.
To make sales and generate commission, affiliates need to share their tracking URLs:
- On their social media profiles
- On their blog or website
- In their video descriptions
Guess what? That leads to a nice, juicy, ranking-boosting backlink to your ecommerce site.
If you’re using influencers as affiliates, they’ll have strong websites. High Domain ity, Page ity and existing ranking power could see some of that pass through to your retail store–boosting your own SEO and the chance to hit the top spot for competitive keywords.
Oh, and not to mention the short-term boost of referral traffic, as explained by Gregory Golinski, Head of Marketing at Your Parking Space:
“Affiliate links strategically placed on influential websites with lots of traffic can very quickly multiply an ecommerce website’s number of visitors, who might become customers.”
4. Consumers trust influencers
Did you know that digital influencers areTweet