chapter 45

Do Affiliate Marketing

Affiliate marketing can be an amazing sales channel for an online retailer. A lot of your success has to do with the type of products you sell and how well you pay your affiliates.

How Affiliate Marketing Works

(Source: http://www.cj.com/what-is-affiliate-marketing)

The basic premise is that you let other people market your products and send you website traffic. In return, you pay them a percentage of any sales that are made that originate from their efforts.

This is done usually by giving them special hyperlinks that they can post on their website. These hyperlinks usually contain an ID code which helps to track their efforts. Here’s an example of what an affiliate hyperlink may look like:

http://myonlineretailwebsite.com/blue-widgets/?affiliate-id=123456

In this example, a blogger might put this link on their blog to try to get their readers to click through to your “blue widget” page and hopefully buy something. If the visitor who clicks on this link actually buys something, affiliate tracking software will automatically (usually – depends on what system you are using) pay your affiliate a percentage of the sale.

Sounds Great! When Can I Get Started?

At first glance it sounds like the answer to every online retailer’s dream: let anyone in the world market your products and give them a cut of the sales. With enough volume, you can’t lose. Well the truth is affiliate marketing has some sticky issues – so you really have to align your stars just right to make it work.

Determine How Much of a “Cut” You Can Afford

You’ll have to do some math to figure out how much of a percentage you can afford to give up to do affiliate marketing. Can you part with 5% of the total revenue that comes from a sale? How about 10%? The higher the percentage, then generally the more affiliate traffic you will receive.

If you’re really interested in setting up an affiliate program, you may want to raise your prices to allow margin to pay affiliate marketers.

Joining an Affiliate Marketing Network

The easiest thing to do is to sign up for an affiliate marketing network like Commission Junction. They provide a marketplace where your affiliate program will be advertised to other affiliate marketers. They also provide the tracking software for your affiliates so you don’t have to build your own tracking system. In some ways this is better because it takes care of the trust issues. Affiliates are always suspicious of whether or not they’re getting credited for the sales they generate. By having an intermediary take care of transaction tracking and payments, the fear of being cheated is alleviated. 

Affiliate networks will also take a cut of your sales or charge fees to use their network. You’ll have to weigh this additional cost to see if you can afford it. 

Be sure to check out these webpages of other affiliate networks that are out there:

Building Your Own Tracking System

If you don’t want to use an affiliate network, you can build your own tracking system. For example Shopify shops have plugins and modules that you can install to start your own affiliate marketing program. It’s just up to you to advertise your program well enough to get affiliate marketers to join.

There is a lot to be said for independent and home grown affiliate marketing programs that are trustworthy and pay well. You may find that news will spread quickly about your program and attract hungry affiliate marketers who appreciate the high payouts and less “red-tape”.

Why You Shouldn’t be Stingy Towards Your Affiliates 

If you think about how much you spend on advertising, you may find that giving bigger percentages to your affiliates is equivalent to how much you spend on advertising. Additionally, don’t forget that affiliates are not only bringing you sales, they are bringing you new customers.

Think about how much one customer will bring in over the lifetime of your relationship with them, it’s worth spending more up front to acquire that customer.

Finally if you have an army of affiliates sending you traffic because you’re generous, your daily revenue may jump several-fold. It’s important to do the math to see what kind of scenarios affiliate marketing will provide. So get out a spreadsheet and see if affiliate marketing will be the blast your online business has been waiting for.

Next chapter

46. Build Relationships with Suppliers

2 min

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