Are you spending money on ad campaigns that never seem to work? Low ROI isn’t just a custom metric. If you don’t generate as much (or more) cash than you spend on your campaigns, it is not a sustainable way to expand your business.

It may be time to turn off your underperforming ad campaigns in favor of affiliate marketing. One report found that 16% of all online orders are generated through affiliate marketing.

In this guide, we’ll explain the step-by-step process you can use to capture that big expense. We’ll also discuss how to recruit affiliates for your business and, most importantly, get sales from your partners so you can grow faster (without spending money on increasingly expensive online ads).

What Is Affiliate Marketing?

Before we get into the details, let’s find out exactly what affiliate marketing is. Here is a simple definition:

Think of it as your own army of brand evangelists who get paid when you do this. As Business Insider illustrates:

This type of marketing is so popular that people create businesses using affiliate techniques as their main source of income. Sites like Groupon, TopCashback and MoneySavingExpert make money when their audience buys products they recommend.

But what about on the business (or business) side: the companies that use these affiliate powers to advertise their products or services to a large audience and reward the site with a commission? The big advantage is that they only pay commissions to their affiliates when they actually make a sale.

Unlike advertising (where you can spend thousands of dollars for a small volume of conversions), you only pay a fixed commission to your affiliate when a product has been sold and the money from the sale is in your bank. This means you know exactly what you are spending, your profit margins on each product, and you don’t pay customer acquisition costs up front.

AlanLaFrance of Lawnstarter adds that:

“You can also get significant SEO value from affiliate links. Although Google sometimes rewards this with penalties, it’s a heavy game across the board. In fact, many affiliate marketing setups are simply for getting links and improving organic rankings, rather than earning actual income from the program. “

There’s a reason 81% of brands have created their own affiliate marketing strategy (including Amazon, Net-a-Porter, Nike, and Bloomingdales), and spending is expected to hit $ 8.2 billion by 2022 , against $ 5.4 billion in 2017:

Here are several other reasons why you should consider affiliate marketing:

• Searches for “affiliate marketing” increased 30% in one year
• 20% of the publisher’s annual revenue is generated through affiliate marketing.
• The most popular affiliate marketing categories are Fashion, Sports, Health/Wellness.
• An influencer produced $ 7 million in affiliate marketing in a single year

How To Start An Affiliate Program For Your Business

Now that you are fully aware of the benefits of affiliate marketing programs, let’s discuss the seven-step strategy you can use to create one.

Incentivize People To Become An Affiliate

Affiliate marketing is based on incentives. If people don’t have a reason to actively promote your product, you will have a hard time generating sales with your affiliate team. This is why you need to set a commission rate for your affiliates – the percentage of revenue they will earn for each product they sell.

The average commission rate is between 5% and 30%. However, it is difficult to say what percentage of commission you should give to your affiliates, because each sector is different.

Let’s take a look at some popular affiliate programs for a handful of different industries and the commission they offer:

• Auto Barn (automotive): 8% commission on every sale
• Net-a-Porter (e-commerce): 6% on net sales, excluding shipping, taxes, and returns
• BigCommerce (SaaS): 200% of their first monthly payment or $1,500 per enterprise customer

You can find the most appropriate commission level for your partners by looking at the competitors in your specific industry. Are they giving a 40% commission on the first sale or 5% of the monthly recurring income they generate during the lifetime of the customer they refer to?

You’ll want to set your commission somewhere in between (or above) average.

However, this is a double-edged sword. Set your commission too low and you won’t find motivated affiliates to promote your product. But set a very high commission percentage and you risk damaging your profit margins.

Once you’ve perfected your commission percentage, you’ll also need to decide how you want to pay your affiliates. This could be:

One-off: Pays a commission per sale, which is best suited for eCommerce businesses. For example, if an affiliate sells a $ 40 product with a 10% commission, you will pay $ 4 when the sale is complete.

Recurring: Pays the commission on a monthly basis, which is best suited for subscription-based businesses (such as SaaS or member sites). For example, if an affiliate sells a subscription to a customer for $ 100 per month and the customer receives a 10% commission, you will pay $ 10 per month until the referring customer cancels their subscription.

Join An Affiliate Network

Once you have defined the terms and conditions of your affiliate network, it is time to create a template that allows you to accept invitations and make it easier for your partners to promote your products.

There are two models you can choose from:

Affiliate Program: They are managed by your internal team and affiliates sign up to become partners through your website.

Affiliate Network: These are huge networks that handle the sign-up process for you and allow people who have already signed up for your network to become affiliates for you.

Not sure what to choose?

An affiliate program can be more beneficial in the long run because you are the full owner of your network. They are not a group of third parties who have never bought your products before.

However, affiliate networks are the best starting point. They have an existing community of affiliates looking for businesses, people with experience selling products as affiliates. You also don’t need to manually screen everyone who signs up to become a partner. Furthermore, they act as a mediator between you (the merchant) and your affiliates.

For this reason, we recommend starting with an affiliate network like:

• ShareASale
• Commission Junction
• Clickbank
• Rakuten
• PepperJam
• Amazon

As we mentioned earlier, the networks you join will partner with affiliates and manage their commissions. You can also upload branded materials that your partners can use to promote your products, such as exclusive images, emails, or social media videos.

Do you want to know how these affiliate networks make money? Affiliate networks act as mediators between both parties. They will introduce you to a group of affiliates who are already on their platform and you will pay for their services:

• Pay a fee to the network (similar to your affiliate commission, but generally much lower) for each sale you make through their platform.
• Pay an initial “activation” fee to start using your network
• Pay a processing fee for each time you receive income from affiliates or pay your partners

Check the fees associated with the affiliate network you plan to join before signing up. You will need to make sure that you are not sacrificing your profit margins to start using affiliates to promote products.

Actively Look For Partnerships

Once you’ve set up your affiliate network, you don’t have to rely on your audience to build your army of partners. You can actively search for people who are already selling similar products in your space and invite them to join.

To do this, start by finding people who sell similar products. Can you find a way for them to add your product to the back end? It can be an upsell or downgrade, or even a product integration.

Syed Farhan Raza explains how you can find these potential affiliates:

“Enter your search term in the Instagram search. Look for the profile of people who are promoting things that you also have in your store or that may be in the same niche. Check their profiles and make sure they are not your direct competitors, but promoting products from other stores or recommending them in some way. You can do the same on Twitter.

Go to Google and discover blogs in your niche that have posted reviews on products similar to yours. Again, make sure they are not your direct competitors. “

These people are the perfect affiliate because a simple adjustment to their workflow can lead to a large number of affiliate sales.

Let’s put this into practice and say you are looking for affiliates to promote your organic candle wax. Find a website that sells courses on how to create DIY candles. The person who teaches this course would be a great affiliate because:

• They already have an established audience with an interest in your products.
• People who buy the course are more likely to buy organic candle wax because it is something they need for the course.

The affiliate generates commissions on the sales of their standard courses and you generate more income from the clients they bring. It’s a win-win situation, right?

Meet Affiliates Directly

Regardless of the marketing or advertising strategy, you are using, you will need to take time into account to stay current. Things are constantly changing, and a strategy that works now will not always be future proof.

This is why you need to find affiliates directly and see what’s going on in the industry. There are many events and conferences you can attend, such as:

• Affiliate Summit
• iGB Affiliate
• Affiliate World

It is true that participating in affiliate related events can be a huge investment of time (and money), especially if you are traveling to participate. But it’s worth it.

As we mentioned earlier, your affiliates need an incentive to promote your products and a relationship can improve business. By the time you meet some of these people, they are much more likely to generate traffic (and sell your product).

Hire an Affiliate Manager

You have built your affiliate program and you have a constant stream of people signing up to promote your products for a commission. Feel stressed? Time to hire an affiliate manager.

If you try to run an affiliate program on your own, you will quickly fall into the trap of accepting all affiliates who apply to promote your products, and that’s not always a good thing. You have to be strict with which affiliates you accept because accepting dubious affiliates, those who want to make money off everything and don’t genuinely care about their products can start putting your work on dubious sites. This will not help your reputation or your SEO strategy at all.

But an affiliate manager takes care of everything for you. They will screen their affiliates before accepting them as partners, handle payments, and participate in the events we just talked about.

Having a single person who “owns” your strategy also makes it easier for people to build relationships with your partners. They will know who to email when they have a question and receive valuable feedback that can help make your program more successful. Isn’t that the goal?

Not sure whether to hire an in-house Affiliate Program Manager (APM) or a Third Party Program Manager (OPM)? Check out this comparison chart from Consorte Marketing:

Track Affiliate Programs with Software

An affiliate manager will handle the payments you send and receive from customers and affiliates, along with the network you are using.

You can make their lives easier by using third-party software to manage payments, such as:

• TUNE
• Tapfiliate
• Omnistar

Of course, a spreadsheet can work for small-scale affiliate programs. But people make mistakes, and you don’t want affiliates to protest on social media because their commissions weren’t accurately paid for the sales they made.

A third-party affiliate program solves this problem. They are typically automated so payments are made accurately over time, at all times, even if your affiliate manager is sick or on vacation.

Final Thoughts

Ready to build an army of affiliates to make more product sales? Whatever industry you operate in, you can benefit from affiliate marketing.

Remember to position your commission rate generously (without sacrificing profit margins), choose an affiliate network that will do the groundwork for you, and actively find people who will be great partners. You will see a lot of new clients in no time!