What is Affiliate marketing and why is it important for my business?

Affiliate marketing is selling something and earning money for each sale you make. On the internet, lots of blogs and websites exist solely as a means to promote high-quality products to their audiences. Whether you’re an e-commerce business, merchant, services provider, or affiliate marketing agency, building out efficient sales and marketing channels is important for success. 

For business owners, affiliate marketing is especially useful because you only pay for the promotion when an agreed conversion is made by an affiliate. Unlike traditional advertising which is difficult to measure, affiliate marketers can bridge the gap between your products and paying customers by honestly reviewing your products and comparing them with others in your niche. 

In 2019 alone, Affiliate Marketers made a whopping 6.4 billion U.S dollars in revenue for products that they promoted. If you’re starting a new business, or had bad experiences with “branding” experts who deliver no results, you should consider building out an affiliate marketing program for your business. The section below offers more insight into the benefits of affiliate marketing for a business. 

Why should I build out an Affiliate Marketing program for my business?

Tap into engaged audiences 

Affiliate marketing has become one of the best ways to sell online because it scales traffic and audiences efficiently. Why? With affiliate marketing, you gain the ability to expand your reach to near infinity. With low setup costs , you reserve the option to deploy different offers based on market segments across multiple affiliate channels. Not only does this provide great marketing intelligence at scale for smarter resource allocation, but you also bypass the value-destroying tendency that generic, non-customized offers have on sales and profit. 

Although you can decide to promote your product or service on your website, landing page, or blog, you’ll only be reaching a small fraction of your potential audience. However, by building a network of affiliates for your product, who are experts at their craft, you gain the ability to promote your offering at scale across the internet with highly targeted and engaged channels such as social media, native ads, Facebook groups, Reddit, influencers and many more while only paying when the agreed conversion takes place. 

Benefit from pre-built trust

With affiliate marketing, you get the opportunity to leverage off the trust that the marketers have built over time with their audience. While trust-building is often time and cost-consuming, the right affiliate marketer can transmute the trust customers have in his platform to your products or services resulting in instant sales. 

However, as you build your affiliate marketing product, it is important to ensure that honesty and transparency are values that your affiliates uphold. Since starting a website or profile is so easy, many dishonest people run affiliate scams. Over time, customers have learned to recognize what is truthful from what is not. For a business owner, this means that you need to build quality products to attract trusted affiliates that will accurately show case the benefits of your offering. 

Pay-per-conversion, forever. 

With affiliate marketing, you pay only when the agreed conversion is made. This means that once you’ve got the right product, you can embed affiliate costs into your pricing model. If you’re a small business owner, or work in an industry with tiny margins, having the ability to control your price in this manner is invaluable! 

In addition to the obvious, profit-saving value of the pay-per-conversion model, only paying when the a potential customer takes the agreed upon action of completing a sales, entering in complete information (first name, last name, full address, phone number), entering a value email, installing an app on their phone etc. When an affiliate promotes your products on their property (website, blog, social media page), you’ll get the opportunity to run A/B tests in real-time and learn what different audiences respond to. Having data such as this can help you optimize your paid traffic and allocate resources to highly profitable audiences. Also, you can test your products on multiple, local, and global audience segments in real-time and at no cost whatsoever unless a conversion takes place. 

Control the risk

Beyond the costs of product development, affiliate marketing ensures that you’re able to manage risk by controlling who displays your products, when, and how they do so at scale. In doing so, you can carefully craft audience perceptions of your product or service without resorting to traditional branding or media buying (They’re often over-priced anyway). 

Also, because there’s no initial investment required for sales, it is perfect for new product launches or if you have market validation. Furthermore, affiliate marketing decreases the risk for a business by reducing customer acquisition costs, boosting profitability margins, and providing a measurable metric vs. traditional advertising media since you are only paying when the agreed conversion takes place. When used properly, affiliate marketing can be a very profitable channel for growing your business.

Outsource the tough stuff

With the operational pressures of being a business owner, the intricacies of sales and marketing often fall behind to issues such as customer service and product fulfillment. However, sales and marketing are extremely important for business success and so, ignoring them will lead to business failure. For lean business teams on tight budgets, affiliate marketing is the best option to growing your sales. Once your products have been fully developed, affiliate marketers can take on both sales and marketing functions for any company that does not has single in-house marketing staffer on their payroll. 

How can affiliates hurt my business?

When you engage with affiliates, it is important to remember that they are not employees. They are in business for themselves and unlike you they might not care about how your brand is seen by customers after they have been paid for a conversion. If you’re out here long enough, you will most likely run into a few bad eggs. One way to mitigate this problem is to actively screen and have on going discussions with both potential and current affiliates to build a mutual relationship. They need to understand where you stand and you need to understand where they start with regards to the promotion of your product. They only want to this is by building trust with each other and never rely solely on only a few affiliates to generate conversions for your business. You always need to be prospecting new affiliates and nurturing your current relationships in order to diversify how many conversions are generated by individual affiliates. 

Conclusion

If you’re a business owner in 2021, the odds are not in your favour. While this may seem like gloomy news, it is not. As restaurants reel from the effect of the COVID-19 pandemic, take out restaurants are gaining a foothold using affiliates such as UberEats or DoorDash to bring in new customers. This means that with the right product/service, the willingness to adapt, and a good strategy, you can thrive just like many others are despite the economy. 

Affiliate marketing provides a great path to growth for any business that has validated their idea and has a product market fit because you pay only when you get a conversion. However, while affiliate marketing has many advantages, there are also pitfalls to be considered. To this end, smart business owners like yourself should make it a habit to plan and deploy affiliate marketing with a coherent strategy for optimal success.