What You Need To Know To Start an E-commerce Affiliate Program
When you’re just starting, it can be difficult to get your first e-commerce sales. You may not have much money to put towards paid advertising, and even if you do, research is showing that costs are rising and there are fewer leads.
Affiliate marketing is one solution. It enables business owners to partner with content creators who then promote their products. Affiliate partners provide authentic, organic content that appeals to customers, and if you choose carefully, these partners are talking directly to your target audience.
The industry is worth more than $5 billion, and 81% of brands have an affiliate program.
The reason it’s so popular is because it works, and if you have a dropshipping ecommerce store, it can be just as successful as a traditional online store.
If you’re not sure whether an affiliate program is right for your business, read on to get an overview of affiliate marketing, the pros and cons involved, and how to set up your own affiliate program.
E-commerce and affiliate Marketing: the ins and outs
Affiliate marketing is a partnership between people who need to advertise products and online content producers; however, the payment structure works differently than traditional paid advertising. In an affiliate program, content producers are paid a commission, so business owners only need to pay for the advertising when it results in a lead or sale.
Although customer referrals and commission sales are found in brick-and-mortar stores, affiliate marketing is unique to e-commerce situations. This is because you, as the business owner, provide each affiliate partner with a unique tracking link that they use when promoting your products or store. Every time a customer uses that link and makes a purchase, you get a sale and they get their commission.
Affiliate partners are motivated to promote your products because that’s how they get paid, which is one reason why 38% of marketers say affiliate marketers are one of their top customer acquisition methods. Some brands use an affiliate network to start their program, while others create their affiliate program from scratch. Either way, the business is in control.
You can choose the commission rate, the graphics you provide for affiliates to share, and who you work with. You can even put a cap on how much they sell so that you can build slowly and keep up with demand. Most e-commerce platforms integrate easily with affiliate marketing initiatives, meaning it’s also quick and easy to set up.
Best Types of Affiliates for E-commerce Stores
E-commerce stores leverage their affiliate partner’s audience to find customers, so you can work with anyone that has reach. However, there are some types of content producers where e-commerce stores can start their affiliate search to find great value.
Bloggers often specialize in a specific niche, which means that you can find partners who reach your target market. Most also have active social media channels, so they’re regularly connecting with their audience.
Bloggers may use affiliate banners on their website, but they can also put affiliate links in blog posts. This means that they can focus an entire post on your product and produce evergreen content so that it keeps reaching customers into the future. Work with bloggers that speak to your ideal buyer persona regularly about issues that are related to your product.
2. Review sites
Reviews are an important source of social proof, with 76% of people trusting online reviews as much as recommendations from family and friends, and 93% saying reviews impact their buying decisions. As so many consumers seek out reviews, review sites are a good place to find affiliate partners.
Review sites that work in a specific niche also have good SEO, so they appear at the beginning of searches when people are ready to buy products like yours. Look for the top review sites related to your product and service, and sites that have thoughtful reviews that speak to the needs of your audience. From here, reach out to the business or writer and ask if they’d be interested in providing an affiliate link in their post.
3. Email marketing
Many content producers have large email lists that they use to communicate with their audience. These lists allow them to reach customers directly, so you don’t have to wait for them to visit a site or show up on a social media feed. Affiliate partners with large lists can talk about your products with a large audience; however, many people don’t like receiving advertising material in their inbox, so there’s a risk that too many emails can appear spammy.
Why start an affiliate program for your online store?
Affiliate programs are a simple choice for online business owners because they have a great return on investment. But other benefits aren’t quite as obvious.
1. Relatively cheap to set up
The biggest benefit of affiliate marketing is that it’s paid for after you get the sale, rather than before, which keeps ongoing costs low. Another benefit is that the initial costs are also low. Most e-commerce platforms integrate an affiliate program easily for a minimal cost, and if you need to pay for a plugin instead, these are still relatively inexpensive.
In addition to the technical side of setting up an affiliate program, there’s the cost of finding affiliate partners. Joining an affiliate network can help you find partners, though it generally costs a small monthly fee or a percentage of the partner’s commission. Otherwise, you can find affiliates yourself, which only costs you time.
2. Can drive sales
Affiliate partners want to send people your way because that’s how they make money, so they’re often enthusiastic about promoting products. You choose an affiliate partner because of their connection to your target market, which means they’re sending you high-caliber traffic. The people who click an affiliate link are already interested in buying your product, which increases sales.
Affiliate partners also send you consumers that you can cultivate. Once they buy from you, you get access to their email address and can market to them directly, creating loyal, repeat customers.
3. Boosts your brand awareness
In advertising, people talk about the rule of seven or the idea that customers need to see an ad seven times before they buy. When your affiliate partners talk about your product on their vlog, blog, or social media content, it helps build this awareness that can lead to a sale. Even when people aren’t ready to purchase, they are introduced to your brand and will come back to the recommendation when they’re ready to buy.
Brand awareness also translates to algorithms. Backlinks are essential at building SEO, so when affiliate partners link to your site, search engines like Google notice and reward you with a higher ranking in the search results.
Is an affiliate program right for your online store?
Although affiliate programs have many benefits for businesses, they aren’t right for everyone. For example, businesses with small profit margins may not be able to pay affiliates while still making a profit. Make sure to calculate your profits both with and without paying an affiliate partner to see if you can afford to pay the commission.
There may also be industries where affiliate programs don’t result in an increase in business. People offering offline services in local markets, for example, may not be able to reach their ideal audience through affiliates. You can check if affiliate programs work in your industry by seeing what competitors are doing. A Google search for “(your competitor) affiliates” or “(your industry) affiliate program” can show you which sites and industries have thriving affiliate programs.
Steps for developing your e-commerce affiliate program
Setting up an affiliate program can be a quick and easy process. Just make sure to go step-by-step so you don’t forget anything important.
1. Choose software to help with your affiliate program
Affiliate programs are very popular, so it’s no surprise that there’s a wide range of apps to help you run your program. When evaluating your favorite apps consider the following questions:
- Is there a free trial?
- Will it scale with your business?
- Does it integrate with your ecommerce platform?
- What are the reviews?
Many affiliate networks also manage to provide unique links, track analytics, and pay commissions. Some business owners may find this a better option than a stand-alone app.
2. Set goals and KPIs for your program
It would help if you established goals and KPIs for any initiative you implement in your business. These give you benchmarks so that you can evaluate whether the program is working as you wish. Goals for an affiliate program can include:
- Increase site traffic by 15% month-over-month
- Increase revenue by $10,000 within 12 months
- Increase the conversion rate by 20% each year
- Increase the average order value by $10 within two months
Once you have a set of objectives, think of the performance indicators that can help you evaluate your progress. People with affiliate programs often track clicks, the number of orders, commissions paid, conversion rates, and the number of people in the network.
3. Define the terms, conditions, and rules
Your terms, conditions, and rules are what help you keep control of the affiliate program and the integrity of your brand. So defining commission rates, the length of time that links are active, and when payouts are made are all details that need to be understood.
An affiliate can be essential in promoting your brand. Still, you don’t want an affiliate to come off as too salesy, aggressive, inauthentic, or unethical because those behaviors can reflect poorly on your brand. If you have policies and procedures in place, you can minimize the chances of this happening and ensure any instances are dealt with efficiently.
LARQ’s affiliate program page lists its commission rate and cookie window clearly. Although this promotion page doesn’t have detailed conditions, it does mention that it’s an innovative product that’s good for the environment, giving prospective affiliates an idea of how LARQ advertises their water bottles.
You can learn more about this, including affiliate sign up pages here.
4. Determine your optimal commission percentage
There’s a sweet spot you need to look for when determining your ideal commission percentage. You have to balance providing a proper incentive to affiliates and maximizing your return on investment. If a commission is too low, people won’t partner with you, or if they do, they won’t work as hard to push your brand. However, a commission that’s too high will eat up your profits.
Spend time calculating how different commission percentages impact your profit margin before making a final decision. Keep in mind your cost per acquisition, the conversion rate of customers generated via affiliates, and the lifetime value of customers you gain through affiliates.
On the affiliate page, Kelty not only provides the program highlights, but also includes a statement about the tiered commission structure.
5. Identify affiliates you want to seek out
The best affiliates are people who love everything about your brand, are dedicated to authentically promoting your products, and belong to networks and communities full of your target audience.
A great place to look is in your current customer base by promoting the program on your website and social media channels. Cosmetics company Bliss invites customers to join their community as an influencer, which can be a great way of connecting to potential affiliate partners.
You can also connect to influencers and bloggers in your niche. Look beyond people with giant audiences. Micro-influencers with fewer followers often connect with a narrow audience that may be exactly who you’re looking for.
If your company is just starting out, don’t be afraid to offer free samples for affiliates to review.
6. Track the performance of your affiliate
Once your program is running for a while and you’re seeing a steady flow of customers coming through your partners, you need to start tracking the performance. Tracking metrics lets you see what’s working and where you can improve. The KPIs you’ve already chosen are a good place to start when deciding what to track.
Keeping in contact with your affiliate partners is essential to having a successful program. If you find performance dropping, send an email so that your affiliates remember you exist.
Start your affiliate marketing program today
An affiliate program is a low-cost, low-risk marketing initiative that has the potential to bring great rewards. E-commerce stores can build brand awareness, find new customers, and get their name in front of a targeted audience, and they don’t have to pay unless there’s a sale. Choosing the right affiliate app and finding enthusiastic, authentic partners is key to making this online marketing program work for you.