Benefits, Common Practices, and Responsibilities of An Affiliate Program

One of the best things you can do for your business is create an affiliate program. An affiliate program is a setup that allows people…
  • Joel Holtzman
  • Magento Development Lead
  • June 5, 2012 Estimated reading time: 6 minutes

One of the best things you can do for your business is create an affiliate program. An affiliate program is a setup that allows people to refer your website to people they know, or even refer their own customers to your website using a special url that tracks their referral. For example, if you are selling T-shirts at $20 and an affiliate brings in a sale for you, their special affiliate url will record their sale and make note that you will owe them a specified amount for that sale such as $4 (20%).

A lot of e-commerce sites fail to see the benefit of an affiliate program and some might feel that sharing a percentage of their sales is a bit too risky especially if they are not confident they can generate enough sales over time to justify it. This line of thinking can be dangerous because there are benefits to an affiliate program that cannot be ignored if an affiliate program is run is run properly. In short here are some of the benefits, where I will discuss the first two and then explain some common practices and responsibilities of an affiliate program:

  • Drive traffic to your site
  • Increased sales
  • Generate qualified leads
  • Extend the reach of your brand
  • Better search engine rankings

Free Traffic

One of the biggest benefits of an affiliate program is that you receive free traffic to your website that you never have to pay for. The advertising, word of mouth and social marketing promotion is done on your behalf without you having to spend any time or money. If you have a well run affiliate program, along with highly motivated affiliates, you will find that their boost in traffic is the equivalent of free advertising or a dramatic uptick on response rate from your ads while slashing ad costs.

Consider placing $200 a month in advertising and receiving 1,000 visitors for your efforts. This may not be the most accurate snapshot of most advertising campaigns but I will use this as a simple illustration to prove a point. Imagine, after 3 months of these results, you find that a new headline in your advertisement sent you 1,000 extra visitors. You have now doubled your traffic at the same cost. It goes without saying that you would take those results in a heartbeat.

When it comes to an affiliate program, you get the same benefit without having to pay for advertising as well as not having to tweak your ads in order to boost your click through rate. With that said, while traffic is key, you want to convert your visitors into sales.

Free Sales

Unlike advertising, affiliate sales are honestly free because the work to get those referred visitors to your website did not come from your advertising efforts. The money you save on this free traffic and the money you earn from the extra sales can either be used for more advertising or even used to create a more effective PR campaign that can hopefully land you free publicity.

A Few Things To Be Aware Of

While it is may sound exciting that you can receive free traffic and sales from an affiliate program, it must be understood that running an affiliate program comes with a few responsibilities that need to be taken seriously.

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Be Upfront With Payment Schedule And Be Consistent With Payments

When people join your affiliate program they are going to want a straight answer as to how much they earn per sale and they will want to know what the pay period is. A lot of websites will offer payment a few days after the month ends and send a batch payment. One great solution for this method is to use Paypal and use the Paypal ‘Mass Pay’ feature. This allows you to import a CSV file of your affiliates’ Paypal email, as well as their monthly affiliate sales total, and import it into your Paypal Profile’s ‘mass pay’ section which will record their totals earned and allow you to pay all of your affiliates, those with a Paypal email, by clicking one button. It goes without saying that you want to make sure that you have your funds either in the bank account tied to the Paypal account or in the Paypal account. This is why it is important to focus on the percentage of a sale you can afford to give for each sale.

Provide Advertising Materials

Whether you provide template ‘Google Adwords’ ads or articles with their custom affiliate url embedded (Or you at least provide instructions on how they can do this), you will want to provide them with  material they can send their customer list or newsletter readers that will make it easy for them to mention your product or service without them having to put a lot of work into it. People who believe in your product will want to sell it for you but they will want to know you are doing your best to assist them in this process.

Confirm With Pay Provider You Can Support One

Before you get started, make sure you are with a merchant account or payment provider that can support this method. Paypal is ideal, in my opinion, because of the flexibility involved in paying your affiliates with one click of the button. If you are interested in an affiliate program but do not use Paypal, you can probably use any other payment provider as long as you track the sales and are able to cut checks for your affiliate each month. Just make sure that your payment provider does not have a strict terms of use that forbid affiliate programs or, if they forbid certain types of products from being used as an affiliate program, make sure to consult with them beforehand. Most of the time you should be fine but it is always better to do your research and play it safe instead of sorry.

Do Not Use ‘Affiliate Program’ As A Selling Point

This is a point that never gets talked about a lot but it is very important. Some websites in the ‘internet marketing’ niche, which mainly consists of websites selling information (i.e ‘how to make money on the internet’), have figured out the benefit of an affiliate program. Unfortunately, sometimes a website will go too far and tell visitors that they can only join an affiliate program if they purchase a product. I highly recommend not doing this. You may find you are violating a terms of service of a pay provider and you will find that you will receive a higher rate of ‘bad customers’ who will, in turn, have more incentive to request a refund or, best case scenario, not be the kind of long term customer you are looking for.

Summary

Like any other aspect of your business that you make public, an affiliate program will represent your business and help people determine if they want to do business with you. Take the time to research everything involved in setting one up so you can have fewer headaches in the long term. This includes figuring out the perfect percentage of your sale to offer each customer as well as the kind of promotion tools you want your affiliates to be set up with.

If you would like to discuss ways to set up an affiliate program with your website, please contact us so we can be of assistance.

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