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6 Reasons to Start an Affiliate Marketing Program for Your Small Business (+ How to Do It)

April 17, 2021

There are so many options available for small businesses to market their products and services. How can you decide which ones are the most profitable?

Often, the answer is that many different marketing strategies used in conjunction with each other are the best solution to maximizing time and resources and increasing profits. These strategies may include email, social media, SEO, PPC, and more.

small business guide to affiliate marketing

You've likely heard of these strategies and their benefits, but there's another strategy that can also help you avoid up-front costs and decrease risk while increasing sales: affiliate marketing. Have you ever considered this as part of your marketing arsenal? If not, you could be leaving a lot of money on the table.

In this post, we're going to cover:

  • What affiliate marketing is.
  • The benefits of affiliate marketing for small businesses.
  • How to set up an affiliate program for your small business.
  • Tips for finding affiliates.

What is affiliate marketing?

When a company or individual promotes someone else's products, they are participating in affiliate marketing. Affiliate marketing aims at generating revenue by promoting third-party products and services.

If a customer purchases through an affiliate link, the affiliate earns a commission. Affiliates are akin to salespeople for the company whose offerings they promote.

The affiliate model is based on revenue sharing. As a small business, you offer a financial incentive to others to promote and sell for you.

affiliate-marketing-model

Affiliate marketing is a performance-based marketing method that has proved hugely successful among SaaS business models, subscription-based services, and the product review sector. For a broad range of industries, it is a risk-free way to improve traffic, increase brand awareness, and generate more sales.

Statista projects that by 2022, companies will spend $8.2 billion on affiliate marketing. Are you ready to tap into this billion-dollar industry?

What are the benefits of affiliate marketing to small businesses?

Small businesses often have limited resources and budgets. Sometimes they do not even have a dedicated marketing team to promote their business. Affiliate marketing offers a cost-effective and efficient way to drive more traffic to your business and increase profits. However, while having a terrific affiliate marketing network is a huge advantage for small businesses, you still need to be selective in who you choose.

Rather than accepting everyone into your program, it is best to have a vetting process in place. In the same way that an ecommerce search marketing strategy impacts your brand's visibility, your affiliates also impact your brand image and reputation.

Much like the search engine strategies used in ecommerce, affiliate marketing will help increase your product exposure and increase sales. Here's a rundown of its benefits:

1. Boost brand awareness

Every business's online goal is to be easily recognized by as many potential buyers as possible. As affiliates drive more traffic to your website, they increase awareness of your brand and its reach. Because affiliates earn a share of your revenue, they have a vested interest in your success, are loyal brand advocates, and help build trust with potential customers.

2. Enhance social proof

Consumers today are more informed and have higher expectations than ever before. They rely heavily on social proof of a brand's reputationAccording to research, almost 95% of consumers read online reviews before deciding to make a purchase. When a company builds rapport with an engaged audience that trusts them, their affiliate product or service reviews provide credible social proof to prospective buyers.

3. Reach a broader targeted audience

Small businesses can tap into the audience of their affiliates and, as a result, expand their brand's reach. These new audiences might not have been easy to target and identify using other marketing and advertising methodsBy selecting affiliates who resonate with your brand, you ensure that the traffic you receive through an affiliate's link will be targeted to those who find your products or services useful.

4. Improve conversion rates

The ability to track how your business performs enables you to make operational improvements in the future. By collecting data from affiliate marketing tracking, companies can gain essential insights into where their customers come from and why they are buying.

Studying and analyzing the rich collection of data helps companies improve conversions by making changes to their website, offering more engaging visual creatives, and identifying which affiliates bring in the most revenue.

affiliate-marketing-benefits

5. Save money

When compared to the costs of advertising or other marketing initiatives, affiliate marketing is far more cost-effective. Because it is performance-based, affiliates are only paid when they generate a sale. Businesses set up the commission structure in advance and avoid wasting money on ineffective advertising campaigns.

6. Gain a higher return on investment (ROI)

For most marketing and advertising campaigns, determining ROI can be challenging and an unpredictable waiting gameThe performance-based model of affiliate marketing is built for profitability. Businesses are not paying for potential buyers through impressions or clicks, only for closed sales.

This is one of the primary reasons small businesses choose to utilize affiliates to promote and sell their products or services. By channeling your promotion efforts through an affiliate program, you are gaining influence and direct access to a receptive, highly targeted audience more likely to buy from your company.

How to set up an affiliate program for your small business

Before getting started, make sure you understand the Federal Trade Commission (FTC) guidelines about disclosing affiliate relationships. And do not assume that if you create an affiliate program for your small business, affiliates will automatically join.

First off, potential affiliates need to know your program exists. Equally as important is providing an incentive for someone to want to become an affiliate and promote your products or servicesFor example, Amazon, the most popular affiliate program, offers more advantages and benefits than its competitors.

affiliate marketing amazon

The massive range of products one can buy from Amazon is unbeatable. It is easy to become an affiliate, and there is no need to be a developer or web designer to use the tools they provide. No one can expect to compete with Amazon's affiliate program, but it is an excellent example to follow when setting up yours.

Below are the necessary steps to setting up an effective and successful affiliate marketing program for your small business.

1. Determine your goals

As you would do with all your marketing initiatives, determine what your overall goals are, including:

  • The types of customers you want to bring in through your program.
  • What types of affiliates do you want to promote and sell your products or services?

To help determine the level of success of your affiliate program, you should also set up some measurable goals, such as:

  • How much revenue you want affiliates to bring in per month, quarter, or year.
  • The conversion rate of affiliate link clicks that lead to a sale.

Ultimately, the amount of revenue brought in from affiliates is what matters. However, setting goals and measurable metrics will help you identify your program's strengths and weaknesses and make appropriate changes.

2. Check out your competition

Before setting up your own, analyze the strengths and weaknesses of your competitors' affiliate programs. To find out if other companies in your niche are using affiliate programs, you can search in Google for:

  • [competitor name] affiliate marketing
  • [competitor name] affiliates
  • [competitor name] affiliate program
affiliate marketing amazon associates

Or you can search through social media channels using relevant hashtags to find influential users.

affiliate marketing amazon hashtag

Look at their profiles to see if they are promoting any of your competitors through affiliate marketing.

Not only are you competing for business from your target audience, but you are also competing for the most successful affiliates.

Look for one or two competitors' affiliate programs and identify:

  • How they structure their affiliate commissions.
    Do affiliates earn a set amount or a percentage of the sale?
    Are affiliates paid in credits towards the brand's products or in cash?
  • Does the commission seem low or high compared to the price of the product or service?
  • Are affiliates recruited through an affiliate network or on their own?
  • How rigorous is the application process?
  • Look at the terms and conditions offered.
  • What are the requirements and rules defining how affiliates can promote their affiliate links?
  • Are there any restrictions on what and how affiliates can promote products and services?
  • How are affiliates trained?
  • What types of branding and promotional resources are provided to affiliates?
  • In what manner and how often does your competitor communicate with its affiliate partners?
  • How are tracking cookies traced back to a sale, and how long do they stay active for those situations when a consumer does not purchase on the first link click?
  • What are the strengths and weaknesses of your competitors' affiliate programs?

After analyzing everything you can find out about your competitors' affiliate programs, do you see an opportunity to provide something valuable or helpful that they missed?

3. Identify your commission structure

When deciding how you will pay your affiliates, keep in mind what you learned from your competitive analysis and make your structure more appealing. Will you pay in-store credit or cash? What percentage of the cost of the product or service will you pay to your affiliates?

Although you want to remain competitive, you must take your own needs into account. What are your customer acquisition costs, average customer lifetime value, and retention rate? Consider offering bonuses to your top affiliates who meet predefined goals to make your program more attractive.

4. Choose your network

Will you create your own program or use an existing affiliate network? If you have the time and resources to fully manage an affiliate program, there is nothing wrong with building your own.

But most small businesses often find it challenging to create their own program. Fortunately, there are numerous affiliate marketing systems where you can promote your products and services for a fee.

Affiliate networks are like a middleman or project manager for your affiliate program. They manage your program by providing services, such as recruiting, vetting, sales tracking, and commission payouts.

Below are a few of the more popular affiliate network platforms.

LeadDyno offers small business owners a platform to launch and manage their affiliate programs.

affiliate marketing leaddyno

Features include:

  • Commission payment management
  • Automated emails
  • Social media marketing
  • Affiliate tracking

Commission Junction (CJ) is a large, robust, and scalable affiliate marketing network.

affiliate marketing commission junction

With data-driven, innovative, and omnichannel solutions, CJ helps your affiliates drive more transactions by promoting your products and services.

ShareASale is one of the larger and more well-known affiliate marketing platforms.

affiliate marketing share a sale

ShareASale's innovative technologies provide real-time insights into affiliate activity and performance data to increase your business revenue.

How to find affiliates for your small business

Even if you opt for an affiliate marketing network, it does not mean you cannot find additional qualified affiliates on your own. It is all about building relationships. Affiliates will only want to promote the products and services of brands they trust. After all, they are putting their name and reputation on the line.

When vetting potential affiliates, consider the following factors:

  • Do they already have a platform, such as a blog or a website, with quality content?
  • Are they authentic when communicating with their audience online?
  • Have they mastered the art of show and not tell, meaning they are great storytellers that will draw customers in and persuade them to buy?
  • How much traffic does their blog or website generate? The more traffic, the higher the potential for sales.
  • Is their online presence professional, and does it align with your brand position?
  • Do they have a large or engaged social media following?
  • Is the affiliate ranking high for search terms related to your products or services?

Before accepting an affiliate into your program, evaluate the quality of the written and visual content they post on their website or blog. 

You also want to make sure they are using reliable hosting with fast loading times that drive traffic.

Look at their number of social followers, what they post, and the amount of engagement they receive.

Once you have recruited qualified affiliates, provide them with promotional resources, such as creative assets and banners, to include on their blogs or websites. This will also give you more control over your brand messaging.

Using Amazon as an example again, they explain clearly and make it easy to generate customized affiliate text and image links and stylish graphical banners.

affiliate marketing finding affiliates

Brief your affiliates on your program's terms and conditions and have them sign an agreement that they will abide by your rules.

Train them on your brand's fundamentals, answer any questions they might have, give them their affiliate links, and plan to check on their progress regularly.

Are you ready to start using affiliate marketing for your small business?

Like anything else in life, there are pros and cons to implementing an affiliate program. However, the digital world is moving towards an influencer model where businesses can cost-effectively reach massive audiences, create partnerships with affiliates, and increase their revenue.

As advertising costs rise, affiliate programs provide a powerful way to reach potential customers for a fraction of the cost.

Let's finish off with the key takeaways from this affiliate marketing guide for small businesses:

  • Affiliate marketing can increase your website traffic, boost brand awareness, enhance social proof, expand your reach, yield a higher ROI.
  • To set up an affiliate program, determine your goals, scope out your competition, determine your commission structure, choose your network and platform, and track your data.
  • To find affiliates, take factors into account such as the quality of their content, authenticity of their communication, and strength of their online presence.

About the author

Julie Weishaar is the Visual Digital Marketing Specialist who founded New Horizons 123. She works to help small businesses increase their online visibility and grow by leveraging the latest in internet and video technologies. Julie specializes in creative camera-less animated video production, custom images, content writing, and SlideShare presentations. She also manages HubSpot CRM, blog management, email marketing, marketing automation, and social media for her clients.

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