Affiliate marketing, a strategy within the class of joint ventures, is a powerful marketing strategy that companies utilize as a platform to take their business to the next level. Whether you own a small or large business, affiliate marketing can significantly increase your revenues, often exponentially.
The Fundamentals of Affiliate Marketing
Fundamentally, affiliate marketing is an incentive-based program to promote a product or service. Instead of spending significant portions of your budget on internet advertising and PPC, you build a massive sales force known as affiliates. In affiliate marketing, you will pay your sales force based on their performance or output. In short, you develop an absolutely risk-free and investment-free way to market your business. Indeed, the reason this marketing strategy is so powerful is because it’s in the affiliates’ best interest to promote your company.
Affiliate Marketing vs. Traditional Online Advertising
There are several advantages to using affiliate marketing over online ads. Affiliate marketing can help you generate higher sales, without any additional risks or funding on your part. To capitalize upon this strong marketing strategy, you simply need to prepare the affiliate marketing materials and ensure your site is running perfectly. You then let the affiliates handle the sales lead generation and negotiations. The result? You gain higher sales, more customers in your mailing list, and a more cost-effective means of marketing your business in comparison with your in-house employees.
Conversely, affiliate marketing is not a perfect business model. Because this strategy works on a commission basis, some abuse the system by exaggerating product claims just to make a sale. If your affiliate marketing program becomes largely popular, it will be difficult to strictly monitor false ads about your products or services. This deception will lead to customer dissatisfaction, numerous complaints, higher sales returns, and damage to your reputation.
How to Manage an Effective Affiliate Marketing Strategy
To properly capitalize upon the potential of affiliate marketing, there are three major management issues you must consider:
1. Business Objectives. Be specific about the purpose of your affiliate marketing program. Do you want it to simply generate more leads or close sales? The role of your affiliate marketing program must be clear and consistent with your marketing campaign. Moreover, you must decide on their limitations. Because affiliates will use different channels such as e-mails, article directories, search engines, or even offline tactics just to close a deal, you must be clear on their focus or channels. Otherwise, their actions may not be in line with your business goals.
2. Incentive program. Your commission structure must be lucrative to attract effective, professional affiliates. Remember, the better your incentive program, the more the affiliates will work to promote your company. The best way is to study the affiliate marketing programs of your competitors and other related companies, providing you with a competitive market perspective on current incentive offers. You will also need to decide how to pay your affiliates. The payment structure can be based upon clicks, leads generated, or sales closed. Review your business objectives to select the best payment structure.
3. Recruitment. Choosing the right people to promote your business is a crucial step in creating an effective affiliate marketing program. How you choose to promote your affiliate marketing program plays a large role in the affiliates you attract. You can post the program on your website, advertise in online magazines, or e-mail your client list and offer discounts to your customers if they become affiliates.