Everything You Need to Run a Successful Affiliate Program

Creating a Successful Affiliate Program

Affiliate marketing is a multibillion-dollar industry poised to experience substantial growth over the next decade. The concept is nothing new; the earliest iteration of affiliate marketing goes back to 1989. However, the rise of the World Wide Web made it a compelling marketing tactic as e-commerce started gaining traction. Today, it's a huge part of modern digital marketing efforts. The latest surveys show that over 80 percent of brands use affiliate programs to broaden their reach, increase awareness, and maximize sales!

Starting an affiliate program can lead to huge rewards for your business. It's a unique tactic that takes advantage of our influencer-centric society to attract attention and reach untapped audiences! Of course, creating a successful affiliate program is no easy task, but this blog will cover the bases to get you started and start reaping the rewards for your business.

What is it?

An affiliate marketing program is an initiative in which brands partner with content creators, influencers, bloggers, streamers, website owners, and more to promote their products or services. The individuals or groups you partner with to market your brand are called "affiliates." The idea is that you pay others to help raise awareness about your business and its offerings.

However, affiliate marketing operates on a different principle than standard paid posts or influencer marketing tactics. Instead of paying affiliates outright for promoting your business or products, you reward them with a small commission whenever their efforts result in a conversion, be it a sale or lead generation.

It's a simple concept that can have a huge impact! However, there are some legal logistics to navigate. Affiliates must obey laws related to advertising, consumer protection, privacy, etc. It's important to consult with attorneys and experts to understand the legal aspects of creating and managing a program.

How Does it Work?

The unique thing about affiliate marketing is that it relies heavily on technology, allowing you to gain insights into how your efforts pay off, which affiliates have the most reach, etc. There are many ways to run an affiliate program and track conversions from your affiliates. The most common is to use unique codes and affiliate links. Codes and links connect to a specific affiliate, and links often have tracking technology or cookies.

Codes and affiliate links are how you attribute conversions to your affiliate. It works like this:

When an affiliate signs up for your program, they receive unique codes or affiliate links they can use to promote your brand. Depending on the type of content they create, affiliates might provide codes on social media posts, embed links onto their websites, etc. Whenever a member of that affiliate's audience clicks on the link, they get sent to your website or e-commerce store. If they purchase a product or service after clicking that link or use the unique code affiliates provide during checkout, your affiliate network records the transaction details and attributes it to the affiliate who brought that new customer your way. Then, your program pays the affiliate a commission!

Commission sizes vary. Some programs pay a percentage based on the product or service's value, while others provide a flat fee. Either way, the arrangement is a win-win. Your business gets more exposure to an untapped audience, while affiliates earn passive income for their promotional efforts.

Set a Goal For Your Program

The first step in creating a successful affiliate program is to set clear goals for what you want this endeavor to achieve. Many companies assume they can go into this process with no set objectives. Everyone wants to gain more exposure and increase sales. That's a given, but you need more than vague intentions.

Setting objectives for your program will help guide you in the right direction when contacting affiliates, developing a commission model, and more. Furthermore, clear-cut goals make monitoring key metrics to measure your program's success and ROI easier.

Consider what you want your program to accomplish. Your aim may be to tap into a specific audience or demographic. Define who those people are! You may also want your program to help boost revenue. Establish how much of an increase you hope to see! Your program will also impact what people think of your brand. Consider brand guidelines and rules you must set to preserve your image.

The key is to be specific. Once you have clear objectives, you can determine KPIs and metrics to track. Furthermore, you'll have all the necessary information to make crucial decisions moving forward.

Research Competitor’s Marketing Programs

Competitor analysis is a crucial part of doing business. It's no different with affiliate marketing! Affiliate programs are plentiful these days, and you need a competitive edge to attract the best partners to promote your brand. Research your biggest rivals and check out their affiliate programs. The goal is to understand how the competition in your niche uses affiliate marketing to their advantage. 

Here are a few questions to ask during your research:

• What types of affiliates does your competition work with?

• What commission models do they use?

• What's the average commission rate?

• What actions trigger a commission?

• How do your rivals pay affiliates?

• How do they recruit affiliates?

• How many affiliates do they work with?

• What are the terms and conditions of the affiliate agreement?

• What support, training, and resources does your competition provide to affiliates?

You want to gather as much information as possible about relevant competition. Then, you can scrutinize those programs. Understand the strengths and weaknesses of rival affiliate programs, identifying areas where you could do better. Your research should highlight opportunities to do things differently to give your program a competitive edge.

Create a Structure

Your next challenge is to create your program's structure. As mentioned earlier, there are many ways to run an affiliate marketing program. They seem simple at face value, but there are many moving parts and details to iron out. 

You should focus on the key logistics when creating your program's structure. For example, you need a system to track key metrics, monitor affiliate results, and ensure proper attribution. You must also determine how you'll manage the program, including providing support and training to affiliates. Your structure should also detail the rules affiliates must follow, what platforms you want them to use to promote your brand, and the resources you'll provide.

This step is among the most time-consuming, so don't breeze through it. The goal is to establish how your program will operate. The more you strategize and plan, the smoother things will go once your program gets up and running.

Develop a Pricing Model

A great pricing model can make or break an affiliate marketing program. Remember: Affiliate marketing is a reward-based initiative. You must make your affiliates' time and effort worth it. Lackluster commissions and poorly thought-out pricing models will turn potential affiliates away, making your program dead on arrival.

Affiliate programs use two main pricing models. The first is a flat-rate commission, which rewards affiliates with a set dollar amount for each sale. The second is a percentage commission, which grants the affiliate a set percentage of the sale amount. The latter is the most common, but there is no one-size-fits-all approach. 

Here's where having set goals and researching the competition comes in handy. You can use what you learn about rival programs to see what affiliates expect based on your niche. 

Take a look at the products or services you want to promote. Affiliate programs rarely have a blanket pricing model. Generally, successful programs create product categories and set a specific commission for each. This is the norm because some products are easier to sell than others. The average commission percentage is between 5 and 30 percent, but food and drink products typically have a 10 percent commission, while pricier tech and health products have 20 to 30 percent! If you want to promote a particularly challenging product, you may consider setting a generous flat fee.

Take time to consider all factors. Look at industry norms, compare potential pricing models to your competitors, and consider what works for your business needs and goals. The good news is that you can make adjustments later. It's common for brands to adjust commission rates as they learn what works and what doesn't.

Recruit Affiliates

You can do a lot to set your affiliate program up for success, but the results you get largely depend on who you partner with! Recruiting great affiliates is key, but it's not as easy as offering open enrollment and letting anyone join. The types of affiliates you recruit can make or break your program's success. Choose the wrong ones, and your efforts can backfire, harming your brand.

Consider your program's goals and your overall brand. Think about the type of person you want to promote your company, the audience you want to attract, and more. The best approach to recruitment is to create an affiliate profile. Think of it as your "dream" affiliate. Your profile should cover the following:

• The platforms they use to reach audiences.

• The demographics of their audience.

• Industry experience and niche.

• Reputation and trustworthiness.

• Follower count and overall reach.

Don't take the recruitment process lightly. Remember: Your affiliates are representing your brand. Content creators, influencers, and other potential affiliates are all people with unique attributes, skills, and audiences. Choosing someone who isn't relevant to your brand or an individual who constantly draws controversy could reflect poorly on your business!

Do your due diligence. When you're ready to start recruiting, you can reach out via social media or email. Present your affiliate program and invite them to join. Provide relevant information like rules, examples of your pricing model, etc.

Manage Your Recruits & Program

Managing your affiliates and program can be daunting, but it's crucial to success. You want to maintain open lines of communication and provide support whenever needed. Forge strong working relationships with your affiliates. Take time to help them learn about your brand, familiarize themselves with the rules of your program, etc.

Once your program starts moving, monitor all relevant metrics. You should already know what metrics you want to track. Keep tabs on your program's performance, paying close attention to ROI, total affiliate sales, top performers, total payout, and more.

As with anything in business, you shouldn't rest on your laurels. There's always an opportunity for growth and improvement with your affiliate program. Track relevant metrics and use them to fine-tune your program. Communicate with affiliates often and collaborate to increase your program's ROI and success.

Benefits

Launching a successful affiliate program takes hard work and plenty of planning, but your efforts will pay off. Here are several benefits you have to gain from running a great affiliate marketing program.

• Improve brand awareness

There's only so much you can do to improve brand awareness in-house. Working with affiliates is a fantastic way to spread the word about your business. Think of it as digital word-of-mouth. When others promote your brand, you reach a broader audience that may have never known about your products or services.

The right affiliates offer great exposure, helping more people become aware of your brand.

• Increase leads and sales

With more brand awareness comes the potential for increased leads and sales. Several studies show that this marketing tactic can significantly boost revenue for businesses that invest the time and effort to achieve results. Affiliate marketing goes beyond traditional advertising, utilizing the power of influencers and content creators to promote your brand. That expanded reach makes a difference, resulting in quantitative results.

• Cost Effective

Affiliate programs are a cost-effective way to grow your brand. Unlike traditional forms of advertising, you're not paying for blind marketing. It's not the same as paid posts from influencers or targeted ads. You only pay for results! Affiliate marketing is a rewards-based system that pays commissions whenever you get a sale or lead. As a result, your business receives that expanded reach at a fraction of the cost of pay-per-click ads or other advertising methods.

• Low Risk

Affiliate marketing has some risks, but you can easily overcome them by doing your due diligence and choosing the right affiliates. Compared to other marketing tactics, affiliate programs are low risk. Your business only pays for successful referrals. Therefore, you're not spending a fortune to hire an influencer for lackluster promotion. You only pay out when an affiliate's efforts lead to a conversion.

• Track the ROI of Word-of-Mouth

Word-of-mouth referrals can greatly impact your business but are notoriously difficult to track. For example, you can pay an influencer to speak highly of your brand, but there's no real way to measure the success of that investment. That's not the case with affiliate marketing. As mentioned earlier, affiliate programs are tech-heavy, using tracking technology to attribute sales to partners. You can track many metrics to gauge the performance of an affiliate and monitor your overall ROI.

• Access to Recommendations From Popular Creators

Finally, an affiliate program is a great way to leverage the power of social media influence! Popular content creators have massive audiences that trust their guidance and recommendations. Working with affiliates is an opportunity to tap into their audience. Getting that badge of approval from a well-known creator can make all the difference, sending a slew of new customers your way.

Is This Marketing Tactic Right For Your Business?

Before you follow our tips to establish an affiliate program for your business, it's important to consider whether the tactic is right for your brand's needs. Affiliate marketing is powerful, but it's not the right strategy for every company. Some industries benefit more from affiliate marketing than others.

Consider your industry and niche. Then, examine your company's goals. Affiliate marketing is generally a great choice when you want to drive traffic to your website and offer products/services that appeal to a wide audience. It's also a fantastic approach for brands that frequently launch new products and have the opportunity to turn one-time customers into long-lasting advocates.

There are many factors to consider before starting an affiliate program. Consider your company's goals and how affiliate marketing may help achieve them. Weigh all your options, consider the resources required to manage a program, and assess how a successful program might boost your bottom line.

Get Started With Dots Today!

When you're ready to launch your company's new affiliate program, check out Dots. Dots is a payouts API that can benefit affiliate programs in many ways. It eliminates the frustration of manual payouts, automating the payment process to ensure your affiliates receive their commissions on time without any hurdles. With Dots, you can send batch payouts to affiliates worldwide, offering several payment options that meet their needs. With built-in security, tax reporting tools, fraud mitigation features, and more, Dots can help you reap the rewards of affiliate marketing while getting a competitive edge over the competition.

Schedule your Dots demo today and see how it can streamline your approach to paying affiliates!