Affiliate Marketing for Retailers – Setting Up Your Program for Success

If your company has decided to launch an affiliate program, you already know that utilizing affiliates is a great way to generate additional traffic and revenue for your business at a profitable ROI. But the way you set up your program can affect your affiliates’ ability to successfully promote your website, and ultimately determine whether or not your program produces the best possible results. Following these guidelines will help you set up your program to succeed from the start.

1. Determine your base payout rates.

A competitive commission rate will attract affiliates to your program, but you don’t want to sacrifice profitability by offering payout rates that aren’t affordable for your business model. Look at your company’s average order size and then deduct the cost of goods and other overhead costs to determine your average dollar profit. Divide this number by your average order amount — this is the maximum commission rate (as a percentage) you could offer affiliates in order to break even on every order. Next, look at your competitors’ affiliate programs and examine their base commission rates. Using these two metrics, you should be able to find a commission rate that is both profitable to your business and competitive within your industry.

2. Consider performance incentives and bonuses.

Let’s say your average profit on a typical order is 20% and you’ve decided to offer a 12% commission to affiliates. Because you’ll be making a 8% profit on the typical affiliate order, you may want to consider offering performance incentives or bonuses in addition to your base commission rate. By offering an increased commission rate when affiliates reach a specified sales goal, you’ll encourage them to drive more business to your website. Alternately, you can offer flat-rate bonuses based on the same sales goal. Both performance incentives and bonuses make your program more attractive to affiliates and provide you with some leverage when trying to increase the activity of your affiliates.

3. Offer a wide variety of link creatives.

Creatives are the banners and text links that you provide affiliates to promote your program. They include graphical banners, HTML text links, advanced links (such as search boxes or forms) and product links (typically generated by a datafeed). When setting up your program, make sure to provide a selection of different types of creatives in a variety of sizes. Some of the most popular banner sizes include 468×60, 120×600, 88×31 (for logos), 125×125, 120×240, 250×250 and 120×90. Since many affiliate websites utilize content to get organic search traffic, it’s critical to offer text links that can be incorporated into their pages. Try to create banners and text links for your company’s top-selling product categories and/or brands. And to give your affiliates the best chance of success, offer a redirectable text link that lets affiliates create their own custom links to specific pages on your website.

4. Be clear about search marketing policies.

Many affiliates use pay-per-click marketing to generate sales. If your company also engages in PPC marketing, you’ll likely want to set some guidelines for affiliates so that they don’t end up directly competing with your search marketing efforts. Because Google only allows one instance of each display URL per search result, most companies restrict their affiliates from using their URL in PPC ads. Additionally, you may want to prohibit affiliates from bidding on keywords that include your company’s trademarked terms and name. Regardless of what you decide, it’s important to clearly state your program’s search policy so that affiliates know exactly what they are and are not allowed to do when promoting your program. To assist them in their efforts, provide a list of your top-converting keywords for them to bid on — this will give them a head start when setting up their PPC campaigns.

5. Set a reasonable cookie duration.

Your program’s cookie length will determine how much time can pass between a click on an affiliate link and a resulting transaction for the affiliate to earn a commission. If your customers typically convert within a few days of visiting your website, you can make your cookie shorter. If you sell complex or expensive products that customers typically spend months considering before converting, you should make your cookie longer. In general, programs with longer cookie durations are more appealing to affiliates because it gives them more time to make a sale and earn a commission.

6. Decide on an application approval process.

When affiliates apply to your program, do you want an opportunity to review their website(s) and marketing practices before accepting them into your program? If so, you’ll want to manually approve applications, making sure to review them on a daily basis so that a backlog doesn’t develop. If you don’t have a full-time affiliate manager or just want to accept as many affiliates as possible, you can set your application process to automatically approve everyone who applies. However, this option should be carefully considered because there are likely some affiliates out there who won’t responsibly promote your program and this could have a negative effect on your brand’s reputation. Additionally, auto-accepting applications can give other affiliates the impression that you don’t care very much about your program.

7. Sell your program with a solid program description.

Your program description is an opportunity to sell your company, products and program to potential affiliates. Make your description compelling by including information on your average order size, conversion rate, competitive differentiation, special promotions, exclusive products, etc. By providing key information about why affiliates will do well with your program, you are more likely to receive more applications. And at the end of the day, the more affiliates that join your program, the more affiliates you’ll have promoting your program in the future.

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