Why eCommerce Need Affiliate and Referral Programs?

12/10/2020

by Alexey Maisuradze

Affiliate and Referral

There is a sea of ways how users can find your online store or marketplace: via search, banner ad, a link in the email, or by typing the URL of your site. The issue is not with the variety, but with the cost of sources to get potential customers. You put your business on the line when you use only one traffic source. A better solution is to apply a digital marketing strategy to include more sources. 

In this article, we will tell you what types of traffic sources can be keeping the main focus on affiliate marketing. We will also share some stories and tips from experienced online entrepreneurs.

What types of traffic sources can be?

Direct traffic

Direct inflow of visitors is the most lucrative piece of traffic. You don’t spend a dollar to get it. However, it's also hard to tell how the user found you. This is a sort of traffic, when visitors arrive to your site directly, not clicking on any other link. It’s free and unpredictable, and may be a sign of a good awareness about your brand. But it's not something to build a marketing strategy around.

Organic search and SEO

A prevailing traffic coming from organic search means that your content is very popular and engaging. People search for particular items, come across to your site through certain keywords, tap your link. Congrats, you got a new visitor who is definitely interested in what you’re selling. It’s almost free (unless you use a paid tool to optimize your site searchability), efficient, but difficult to predict.

Optimization of your site for search results is a huge discipline. You need to know the SEO rules when crafting your content before it can generate traffic without your active participation. Besides, even an optimized site won’t bring you customers in a month. It may take lots of time for search engines to trust and rank your site. 

Paid ads (per click/per search) 

PPC is the type of internet marketing when you get your traffic through paid advertising. You pay only when users click on your ad. The average price is from 1 to 2 USD. The most popular PPC tool is Google’s AdWords. Paying for ads per click, you bid for certain keywords and get visitors to your site. This is a totally managed instrument to boost traffic. You get instant results. However, one should be very careful with the budget to not blow all money as the price can be very volatile and depend on the bid your competitors offer to the search platform.

Emails

Getting your traffic from emails is very easy. All you need is a website, an email platform, and quality content. You get your content delivered to the intended audience as your subscription base is the people who have already demonstrated their interest in your site. You pay for your account on an email marketing platform and track for click rate to understand how emails work for you. It is less effective than PPC, but also less expensive. 

Referrals from other websites

Referral is what you get through links from other sites. Users see your source on another domain and click if they would like to know more about you. Social media is very similar to referrals, but usually is considered as a standalone source. Referrals are free: you gain your visitors by placing your content on another source. This type of content can include: 

• Your expert opinion, review, study;
• Infographic, video tutorials, or images;
• Industry news, stats, etc.

Other ways to get referral links are:

• Guest posts: posting your content on another blog to gain traction;
• Answering questions on knowledge-sharing platforms: industry-specific forums, Quora, etc.
• Commenting blogs to show your expertise with a link to your source;
• Taking part in industry-wise ranking aggregators, i.e. Clutch;
• Placing affiliate links.

Top 3 free classifieds to place your links as of 2020

1. US Free Ads;
2. GumTree.com;
3. Kijiji.com.

Affiliate marketing 

Affiliate marketing is what can cover all the above activities on promoting your eCommerce site on the Web. Here, you will need a strategy to make the best of all the opportunities. 

“Affiliate marketing is a strategy when external websites or individuals lead traffic to your website and get a commission from sales of their referrals. You can motivate them by paying sales commissions or giving bonus points for the next purchases. According to Business Insider, affiliate marketing accounts for 15% of all digital media revenue and for over 16% of all eCommerce orders in the USA and Canada”.

Your role in the affiliate and/or referral program may be different. Basically, there are 3 types of affiliate/referral program participants:

1. Merchant (other names: 'advertiser' or 'retailer' or 'brand');
2. Publisher (or ‘affiliate');
3. Customer.

Some statistics behind affiliate marketing (2020)

• 92% of customers trust referrals from people they know (Nielsen).
• Social media posts published by friends influence the purchase decisions of 83% of US online shoppers (PR Daily).
• Customers referred by a friend are 4 times more likely to purchase (Nielsen).
• People have a 37% higher retention rate when referred by other customers (Deloitte). 
• B2B companies that use a referral program have a 70% higher conversion rate (Bird Eye).
• Referred customers’ lifetime value is 16% higher than that of non-referred customers (Research Gate).
• 54% say that referral programs have a lower cost-per-lead than other channels (Forbes). 
• Referrals account for 65% of companies’ new deals (Forbes).
• 81% of brands rely on affiliate programs (Mediakix).
• Users clicked more than 5 billion times and the affiliate marketing networks carried out more than 170 million transactions worldwide (IAB).

Tips from experienced marketers about creating an Affiliate & Referral Marketing Campaign

We interviewed some of the most experienced marketers and asked them to share their omni-type experience. Here is what we’ve got.

Make your own affiliate program using add-on - Affiliate and Referral

Tip #1 Build strong referrals

James Boatwright is the CEO of Code Galaxy, a company that sells online programming classes for kids. While promoting his company courses, he got an extended experience in creating a referral program. Here is what he says about setting up a referral system:

James: “As the merchant, I am reaching out to current customers to entice them to refer to our services. I do this mainly through email outreach and have a program associated with the client profile that gives them account credits for every referral. Making sure we could track referrals correctly was our biggest challenge, but after a lot of testing, we have created a good process. I'd say testing is definitely key to making the process easy for everyone and avoiding issues!”

Tip #2 Plan beforehand 

Jon is an affiliate and founder of his own online marketing source, The Marketing Introvert. While setting up an affiliate program, Jon learnt some lessons. This is what he recommends to online retailers:

Jon: “Planning is the most crucial step in creating a successful affiliate site. From choosing the right products to your SEO and content you’re going to create”.

The Marketing Introvert was his second attempt at an affiliate site. While setting his affiliate program for the first time, he chose products that will give him a high commission and created some content around. There was no planning or strategy behind”.

Jon: “This time, I already made a few hundred $ (I believe it’s ~$350) in a span of 6 months, which isn’t bad. The main difference is that I took the time to plan my products and content and SEO. Basically, I have 40+ articles that cover specific products all laid out in a proper site architecture in order to get organic traffic fast. And it paid off.

The biggest problem I had was getting accepted into affiliate programs of some products I like. I only applied or chose products I believe in (as compared to my first venture). Unfortunately, I am not a resident of the US, which makes the application process harder because some products don’t accept non-US applicants. And if they did, you have to go through a manual process.

But after overcoming that, the next hurdle is content creation. SEO and organic traffic are what fuels affiliate sites, especially at the beginning. That’s why creating high-quality content at the beginning is crucial. This is where the planning stage became very important. If you don’t have a specific framework to follow, you’d end up randomly creating content around the products. But if you have a plan, everything you publish will all contribute towards that”.

Tip #3 Study all ins an outs of the program prior to launching

Steve Bourie is the CEO and author of the American Casino Guide Book and Website. His affiliate program was set up in such a way that the program affiliate members earn a 10% commission for every American Casino Guide book they sell. They will also earn a 10% commission for cross-selling any other item. Here is what he says about the program setup:

Steve: “We have an affiliate link setup so that when users click on that link to make a purchase, we know who is responsible for the sale. We sent the commissions over once a month on the fifteenth, and affiliates have to earn at least $25 in commissions before a payment is processed. We have been doing affiliate programs for a bit, but the biggest problem we have faced is with the affiliate link itself. Sometimes we run into an issue where someone will come to our site via the link but then ends up making the purchase at a later date, so we did not know that they originally came to our site via the affiliate link. We try and look at the data to see the first time they had come to our site and if it was through an affiliate link or not. While this is not always perfect, it’s a good start”. 

Tip from Steve: “For people thinking about having affiliate programs, make sure to iron out all of the rules in place prior to launching the program. The last thing you want is to promise someone 15% commission, just to change it to 5-10% later on down the road. Having a clear set up at the get go will help make the transition into an affiliate program much easier”.

Tip #4 Give only custom links to your affiliates 

Brandon is the owner of the brand Awesome Dice, an online dice store. He and his team are certainly the ones who learned plenty of lessons since launching their affiliate program. Brandon has owned eCommerce sites for over 10 years and even owned a digital marketing agency for 8 years. He has a unique experience being on the publisher side of an affiliate program and on the side of the brand owner. Here is what he has learnt from his experience.

Brandon: “When we launched, we wanted to incentivise our customers and social influencers in the tabletop gaming space to share our products and content. We even allowed them to easily create their own coupon codes. With a coupon code, they could post a cool product of ours and tell their followers to use their coupon code to save 10% on their purchase. Each time someone used their coupon, that influencer would receive a 10% referral fee. The cost to us was 20% but we felt it was worth it because it didn't cost anything to advertise our products to their followers. 

What we learned is that the coupons eventually find their way onto coupon sites like wethrift.com and dealspotr.com. When that happens, many customers who are in the process of buying will see the place where you enter a coupon code, they will go Google "awesomedice.com coupons," find a coupon, then enter it to save 10% on their purchase. Our affiliate's have done nothing to promote that sale which was going to happen anyway, and all we've done is lost 20% on the sale. We have now disabled the coupons from the GoAffPro app. We still allow affiliates to sign up but they now only receive a custom link they can use on their blogs or social media posts. Someone has to click that link in order for the affiliate to receive credit. We still plan to use the coupon codes but they will be during specific, time-limited partnerships with social media influencers”.

Tip #5 Know your audience: communicate, take part in trade shows

Keegan Brown is a Senior Marketing Manager at Easy On Hold, a consultative company that develops custom business audio solutions . He began launching a new Partner Program for the company in November of 2019. 

Keegan: “Our partner program is referral based, and reserves a wholesale option for select Partners (the merchant). The structure you choose depends largely on how important the sales team’s expertise is to the sales process. The pricing scheme gets complex and is best handled by our trained staff, thus we focus on referral partners. Referrals are tracked within our CRM and tied to the referring Partner, ensuring they get paid their commission on the same timeframe as sales employees. This allows our salesmen to handle the process and earn commission on that client as well. 

The business must then understand who has the best influence on target customers. Our Partners (merchants) are telecom resellers and managed service providers (MSPs). They handle the phone system for clients and advise them on services and technology that’s a good fit. We’ve found great success in networking via Trade Shows, with a list of 48 potential partners from our first event and access to insider networks to further educate other MSPs.

We also rely on organic inbound marketing to connect with Partners. We know that if someone finds our site or social media content and asks about a partner program, they are actively seeking a solution and can help promote us to others in their network. 

While setting up the program, we faced difficulties in many areas. The terms and agreements needed to be thorough and simple to understand, which took many rounds of drafts with our legal team. We needed to decide on what type of commission our profit margins would allow for and whether our Partners would accept a one time commission or prefer a lower % with recurring commission (this is usually the answer). We needed to set up manageable processes in our CRM and accounting software to ensure the commission schedule was clear. We also had to learn that not every potential partner is a good fit.

The way we overcome our problems was by constantly communicating with our target partners. Conversations with them helped us formulate a working Terms and Agreements document, we better understood what incentivizes our target partners and how recurring revenue is important to growing their revenue”.

Tip from Keegan:  “Our program has the potential to increase our revenue by 20% within the first launch year. Like with any project, continue to measure success for you and affiliates/partners and adjust as you go”.

Make your own affiliate program using add-on - Affiliate and Referral

More tips and hands-on recommendations about Affiliate Programs:

https://simtechdev.com/blog/affiliate-add-on-how-to-build-traffic-on-your-cs-cart-website/

https://simtechdev.com/blog/customer-vs-affiliate-pro/

https://simtechdev.com/blog/multi-tier-affiliate-tracking/

https://simtechdev.com/blog/affiliate-program-for-eCommerce-explained/