The decline of traditional advertising to promote your business, coupled with the rise of social media, is giving new life to affiliate marketers. But how can you tap into this opportunity?
This beginner’s guide will walk you through how to set up and manage an affiliate program for your online store.
Start your affiliate program today 💰
What is an affiliate marketing program?
Affiliate marketing is a reward-based system that encourages partners to promote your products in exchange for a commission.
A customer, advocate, or industry marketer signs up for your affiliate program and sends visitors to your Shopify store through their special referral link, and any sales that you make as a result of their promotion earns the marketer a reward.
An affiliate program will pay via a flat dollar amount or a percentage of the total sale, but incentives could also be free or discounted products. It’s a win-win for both parties. Target, for example, gives affiliates 8% commission on every qualifying purchase made through an affiliate link.
The affiliate marketing strategy is used both in business-to-consumer (B2C) and business-to-business (B2B) campaigns. Recent data from IAB UK also shows that the two biggest sectors for affiliate operations are retail and travel.
Affiliate programs remain a cost-effective and diverse way to find new customers and help a broad range of marketers—including bloggers, publishers, retailers, and rewards sites—make money online.
What’s the purpose of an affiliate program?
Marketers surveyed by IAB UK agreed that affiliate marketing performs very highly for customer acquisition and ROI compared to other activities, ranking 7.83 and 7.6 out of 10, respectively.
And there’s real-world evidence that affiliate marketing is effective: Wirecutter, a consumer site owned by The New York Times, runs exclusively off affiliate commissions and subscriptions. Wirecutter’s affiliate income is part of the Times’ “other” revenue category, which generated $42.8 million revenue in the second quarter of 2021, up 8.7% from a year earlier.
At the end of 2020, the Times stated in a press release that other revenues decreased 12.1% in the fourth quarter, primarily as a result of lower revenues from live events and commercial printing. However, the declines were partially offset by higher Wirecutter affiliate referral revenues.
But affiliate marketing isn’t just for third-party publishers. Ecommerce brands like Healthish use affiliate marketing to build brand awareness, launch products, and generate sales. When launching its keystone product, the WB-1 bottle, Healthish worked with Instagram influencers to create content and sell the bottle at scale.
Learn more by reading The Pre-Launch Strategies of a Million-Dollar Brand.
Is affiliate marketing right for your business?
Affiliate marketing isn’t right for every business. If you have small profit margins, for example, it may not make sense: it would be difficult for a business owner to pay affiliates and also turn a profit.
Affiliate programs need to pay a portion of each sale in order for it to be worth the promoter’s effort and money, depending on their approach to promoting your products. One of the best ways to find out if an affiliate program is a good fit for your business is checking to see if other companies in your industry have created them.
For instance, BarkBox has been running a successful affiliate program for nearly 10 years now.
A program with that kind of longevity implies it’s working and is producing solid returns on time invested for BarkBox. If you dig through popular dog accounts on Instagram, many will have a BarkBox affiliate link or code in their bio.
That’s meaningful reach and entirely built on the existing work BarkBox does to keep its affiliate program running. It’s a nice win for both BarkBox and the Instagram account owners.
How can you see if other businesses in your niche have successfully learned how to create an affiliate program? A simple Google search targeting competitors can dig up sites that have affiliate referral programs of their own. Your searches could be:
- “(your competitor) affiliates”
- “(your competitor) affiliate program”
- “(your competitor) affiliate marketing”
You can also look at relevant hashtags on social media. A search for hashtags related to your industry will reveal influential users. You can check out their profiles to see if they’re promoting your competitors via affiliate marketing.
Now that you’ve determined that it’s a route you’d like to explore, let’s take a look at how to create an affiliate program for your Shopify store.
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How to create an affiliate program, step by step
1. Choose high average order value (AOV) products to promote
Your first step is to choose which products you want to include in your affiliate program. You can include all your products, but it’s smart to focus on high AOV products to increase revenue and affiliate earnings per click.
Think: a 10% commission on a $80 product is more attractive than a 10% commission on a $5 one. Tell affiliates exactly which products to advertise and offer them a few promotional tips like:
- Promoting free shipping on orders over $50. Nine out of 10 shoppers say free shipping is the number one incentive to shop more online.
- Offering a first-time buyer discount. Give new customers an extra discount for their first purchase. You can then remarket to them through email and Facebook ads.
- Buy more, save more discounts. Offer a scaled discount sale to increase average order value. For example, save 20% when you spend $50, or 25% when you spend $100.
Offering affiliates valuable products and promotional tips can help them sell more, which, in turn, leads to more sales for your business. You can always add or remove products from your affiliate program and tweak your messaging if your strategy isn’t working.
2. Decide your affiliate pricing and commission
Once you’ve chosen your products, you’ll want to decide on a commission package. Ideally, cash is the most appealing reward. Some ecommerce brands can get away with giving free products or offering store credit. But aim for cash if possible.
The next step is setting the rate. There are two routes here:
- Percentage commissions, or a percentage of each affiliate sale
- Flat-rate commissions, or a set dollar amount for each sale
According to ReferralRock, the most common is percentage commissions in affiliate programs, with the average commission being between 5% and 30%.
Shopify experts HeyCarson breaks affiliate commissions down by category, with commissions ranging between 10% and 40% of sales.
For comparison, the typical Amazon commission income rate ranges between 1% and 20%, depending on what products you’re promoting.
Choose a rate based on your category listed above to start. You can always raise or lower your pricing if it's not a good fit for your business. Or create different offers using multiple commission types.
3. Choose an affiliate management app
Thanks to Shopify’s partners and app developers, figuring out how to create an affiliate program for your Shopify store is easy, as you can start by simply installing an affiliate app of your choosing.
From there, each app will take you through an onboarding process that will get you up and running with an affiliate program catered to your online business.
It’s up to you which app you want to use, but here are a few examples of some of the affiliate marketing apps available in the Shopify App Store. And if you need help installing an app on your site, head over to our official documentation to learn more about the Shopify App Store.
Refersion is an incredibly powerful affiliate platform. With over 879 reviews and a five-star rating, it’s certainly one of the apps you’ll want to check out. It offers a fully loaded affiliate and influencer marketing platform so you can launch a program in minutes.
Refersion makes it easy to recruit, track, and pay affiliates. All Refersion customers also get access to a marketplace with over 5,000 potential partners to take advantage of your offer.
- Quick start up
- Easy to find new affiliates and influencers
- Quickly sign up affiliates on your registration page
- Affiliate dashboards to track performance
- Coupon code conversion triggers and tracking
- Product level commissions
Best of all, Refersion scales with your business. Start out with a free trial of its professional plan, and as you see the need to expand your affiliate offerings, upgrade to an Enterprise plan.
Another popular affiliate marketing plug-in is LeadDyno. LeadDyno processed over $200 million in affiliate sales in 2020 and offers top-notch customer support through live chat, email, and phone. You can easily track orders from affiliate links and coupons and access tools to engage, reward, and pay affiliates.
LeadDyno integrates with your Shopify store with just a few clicks and is highly customizable. Pay your affiliates automatically or with one-click approval using PayPal, Dwolla, or even Coinbase. LeadDyno totals and pays out affiliate commissions for you on the fly.
- Simplified affiliate management tools
- Personalized dashboards for each affiliate
- Digital marketing tools to engage affiliates and grow your program
- Automated outreach programs
- Ability to create affiliate groups, commission tiers, and more
- Robust tracking system without third-party cookies
- Excellent customer support
Start using LeadDyno with a 30-day free trial. The Starter plan begins at $29 per month.
UpPromote is the top-rated affiliate marketing app in the Shopify App Store, with over 1,270 reviews. UpPromote is an automated, all-in-one influencer and affiliate marketing solution where you can build a professional affiliate campaign easily.
You can manage your affiliate program in just a few clicks. Create default commissions, customize registration forms, and set up payments with ease. It also offers tools to convert customers into affiliates and a robust tracking system to keep track of clicks and conversion rates.
- UpPromote Marketplace, where you can find potential ambassadors and influencers
- Reliable tracking process with various click tracking methods
- Customizable management platform to match your brand
- Dedicated support team ready to assist you
- Ability to sync affiliate contacts with Shopify customers
- Advanced offer options to attract more affiliates
UpPromote offers a 3-day free trial, plus a free plan with unlimited affiliates. Paid plans start at $21.99 per month.
Learn more: The Best Affiliate Marketing Software to Track, Manage, and Invite Affiliates
4. Recruit your affiliates
After you’ve figured out how to create an affiliate program, you’ll need to recruit the right kind of affiliates to join it.
Some affiliate programs, like the one used by Twitch, a video-game-centric streaming platform, only accept especially noteworthy applicants. For affiliates in those programs, acceptance is akin to a badge of honor and something to brag about.
But not all brands have the luxury of Twitch’s status. That being said, there are a few ways to attract affiliates to join your program and promote digital and physical products.
Announce your affiliate program on your own social media marketing channels. Vianetic announced its affiliate program on Instagram, encouraging followers to learn more and apply. It reiterates the benefits of being an affiliate to draw more interest.
If you have an email list, use it. Requests over email have the greatest impact on affiliate engagement compared to all other channels. Tell your subscribers about the affiliate program and encourage them to apply and help spread the word to others who may be interested.
If you have specific affiliates you want to reach out to, you can send them a personal email. Use the following outreach template to make contact with them.
Hi [affiliate name],
I am with [your company], and we’re interested in working with you on a marketing campaign. The campaign would be centered around [describe what the campaign will look like and what the affiliate would do], and we think you would be a perfect fit.
We’re targeting a kick-off date of [target date] for the campaign, and I wanted to see if this opportunity is something you would be interested in. Our commission rate is between [your rate range]. I would love to discuss this in greater detail and answer any questions you may have.
[your full name]
[your phone number]
[your company with link to your website]
Visitors to your website are already familiar with your brand to some extent, making them potential candidates for your affiliate program. Plus, this is where affiliate marketers can find out about new programs.
Promote your affiliate program on your site with a link in an out-of-the-way but still easily accessible place, like your footer. You’ll want to create a landing page dedicated to the program and highlighting the benefits of joining. Fill your website with high-quality content so that when affiliates come looking for partnerships they know you’re a legit company to work with.
Remember that after an affiliate joins your program it’s their job to promote your products, but it’s your job to promote your program. Make a compelling offer and make it easy for them to apply. Katari Skin Care, for example, has a simple Google Doc that those interested in joining its affiliate program can submit to get started right away.
When promoting your affiliate program, make sure you’re including information that potential promoters want to know. Generally, the most influential parts of your program are the product/service relevancy, affiliate program reputation, and affiliate network or tracking platform. Make sure you include that information when you promote your program.
Join affiliate networks like ShareASale or Rasuren Marketing. These networks give you access to millions of established affiliates for your program. They are low-barrier entries for entrepreneurs and small businesses and can help you build an affiliate marketing program easily. Plus, they often offer training resources to become an affiliate marketing pro in no time.
Retailers like Blume use ShareASale (alongside other networks) to promote its program online.
Blume’s listing is simple and concise. It tells potential affiliates a bit about the brand and its products, the program benefits (like a 30% commission rate), and directions for how to get involved.
5. Manage affiliates
Once you’ve recruited your affiliates, you’ll want to keep tabs on them and the performance of your program. Regular communication is essential to establishing a strong affiliate program, and this can happen via email, as that’s the preferred method of communication for most affiliate marketers.
Make sure your affiliates know the rules of the program and become familiar with your brand. Creating a stable of content that they can use, including tutorials, webinars, graphics, pre-written social posts, and a list of approved (or even mandatory) hashtags will keep all of your affiliates on the same page.
Understanding the effectiveness of your affiliate program is crucial for sustainable success. Identifying your top-performing affiliate marketers, for example, can help you double-down on what’s working.
Why are they so effective? Were they very loyal to your brand before becoming an affiliate? If yes, then maybe you need to contact your most frequent shoppers about joining the program.
Some metrics you’ll want to consider paying extra attention to:
- Total affiliate sales
- Sales per affiliate
- Average order size (especially compared to sales not attributed to affiliate marketing)
- Total payout
- Payout-to-sales ratios
- Gross margin
- Total number of affiliates
- Number of new affiliates
- Number of affiliates who’ve left the program
The affiliate management apps mentioned above have excellent tools to manage affiliates. With features including custom registration pages and onboarding, affiliate tracking, and analytics, you can find and manage affiliates quickly and easily.
Building your own affiliate program
Now that we’ve taken a look at how to create an affiliate program for your Shopify store, it's your turn to get started! Head over to the Shopify App Store and find a solid app to build a creative, professional program today. It’s quick and easy, and many apps offer a free trial.
Illustration by Martina Paukova
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Affiliate program FAQ
How can I create an affiliate program?
- Choose high AOV products to promote.
- Decide your affiliate pricing and commission.
- Choose an affiliate management app.
- Recruit your affiliates.
- Manage affiliates.
What’s the difference between a referral and an affiliate?
What is a good strategy for recruiting affiliates?
- Join affiliate networks.
- Promote your program on your website.
- Send an email to your subscriber list.
- Promote your program on social media.