Affiliate marketing is a low-risk strategy to grow your business and increase sales. Roughly 80% of brands have an affiliate marketing program — here are six steps to create one for your business.
[Read more: Guide to Affiliate Marketing]
Choose the right affiliate tracking software
For your affiliate program to be successful, you need the right software to track and manage sales. There are many excellent options on the market, but the best choice for your business will vary depending on the features you’re looking for.
One of the most important software features to look for is automated payouts. New affiliates join your program mainly to make money, so you want to pay them as quickly as possible. Automatic payouts ensure your affiliates are paid commissions quickly and they minimize the likelihood of humor error.
You should also look for software that provides automated rewards tracking. This feature shows you the amount and frequency you’ve paid your affiliates. It helps you see who your most valuable affiliates are.
Decide which products you’ll promote
Next, you must decide which products you’ll include in your affiliate program. Some of your products may not be a good fit for the affiliate program, so you need to research industry trends.
For example, health supplements, online courses, and pet products are all popular affiliate marketing products. Monitoring Google Trends or following social media conversation trackers can also help you identify upcoming trends.
[Read more: What Is Digital Marketing?]
Standard affiliate commission rates can vary between 5% and 25%.
Determine your commission structure
Setting the commission structure is crucial, because you want it to be generous enough to attract new affiliates while still being realistic given the cost of acquiring a customer. Start by calculating the profit margin for any products or services you plan to offer. This helps you determine how much you can afford to pay with profitability in mind.
Physical products typically pay lower commissions because the transaction fees are higher. In comparison, digital products and services pay higher commissions since there aren’t any fulfillment costs. Standard affiliate commission rates can vary between 5% and 25%.
Outline the terms and conditions
Every affiliate marketing program needs terms and conditions outlining the relationship between your business and its affiliates. The terms and conditions set guidelines around how affiliates can use branded materials and the rules governing paid advertisements.
The terms and conditions also explain the commission structure and when affiliates will receive payouts. While a standard template can help you get started, you may need to add more information based on your business.
Determine whom you want to work with
Before starting your program, outline the types of affiliates you want to work with. For example, are you looking for health and wellness bloggers? What size audience should they have, and what social media channels should they use to promote your products?
Look for affiliates whose values align with your business and audience. It’s also important to consider the quality of their content and online reputation. Being selective about the types of affiliates you want to work with can increase your program’s odds of success.
[Read more: How to Monetize Your Website]
Track and measure your results
To get the most out of your affiliate marketing program, you need to track and measure your results. The following metrics can help you determine your program’s success:
- Clicks: Monitoring the number of clicks on affiliate links helps you see which affiliates send you the most traffic. This information then helps you determine your most and least valuable affiliates.
- Conversion rate: The conversion rate is the number of clicks that actually turn into sales. It’s a good idea to track this metric for your entire program and each affiliate.
- Cost of sale: Monitoring the cost of sale helps you see how much you’re paying for each sale.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
Become a small business member and save!
Become an integral voice in the world’s largest business organization when you join the U.S. Chamber of Commerce as a small business member. Members also receive exclusive discounts from B2B partners, including a special offer from FedEx that can help your business save hundreds a year on shipping. Become a member today and start saving!
