You’re always looking for a good recommendation, right?
Chinese food, car mechanic, or the latest tech gadget – we want confirmation from someone we trust that it’s a good buy.
Essentially, affiliate marketing is the eCommerce version of product promotion through an online influencer.
Affiliate marketing can be the strategic move you need to increase sales and connect with clients you otherwise would never reach.
- By 2020, U.S. affiliate marketing spend is expected to rise to $6.8 billion.
- 81% of brands use affiliate marketing programs.
- 16% of all online orders are generated through affiliate marketing,
What is affiliate marketing?
Affiliate marketing is one of the only marketing channels that offers a 100 percent return on investment every time. It’s one of the only tactics that allow you to pay for marketing spend after the sale.
The affiliate marketing process involves the merchant – that’s you – and the affiliate. The affiliate, or publisher, is the company or individual that promotes your products and brand on their website. Your affiliate receives a commission when someone clicks through to your website and makes a purchase.
The best affiliates will have:
- A trusted website that generates traffic.
- Updated content.
- Influence on their audience.
- Valuable content (blog, product reviews, how-to guides).
Since the affiliate is counting on commissions, you’ll need a game plan for converting your site visitors to product buyers. It’s all about providing affiliates with the highest earnings per click (EPC). Even if you work with the best affiliates, they’ll promote your products less and switch their concentration to other eCommerce sites that have higher conversion rates and EPCs, so you need to be strategic in your approach.
With 38% of marketers calling affiliate marketing one of their top customer acquisition methods, it’s worth adding to your eCommerce strategy.
Here are 10 ways affiliate marketing will transform your eCommerce business.
1. Indirectly grow your sales team
Your entrepreneurial juices are flowing and you’re ready to grow your eCommerce business without limits. If you’re just one person or a small group, affiliate marketing can instantly expand your indirect sales team to include experts in your niche and beyond.
Affiliates are skilled in driving quality traffic to your site.
Quality traffic = More conversions.
More conversions = Higher revenue.
Higher revenue = More opportunity to grow your eCommerce business.
A highly qualified indirect sales team that doesn’t waste time designing traditional ads, getting them approved, and tracking their progress? We’ll call that a marketing win.
2. Improve customer loyalty
Customers that continue to support your brand over time will spend 67 percent more than new customers. Affiliate marketing allows you to benefit from the trust and expertise of your chosen affiliates.
When a social influencer, affiliate marketing blogger, or celebrity signs off on your product, they bring their audience with them. G-Shock has its own set of fans and customers, but now they’re benefitting from @elorabee and her nearly 183,000 Instagram followers.
3. Multiple paths to conversion
What does success look like for your eCommerce business? Unlike digital advertising, affiliate marketing allows you to choose what your successful conversion will be through manually setting incentives. Choose from conversions like:
- Sale of a particular product.
- Email capture.
- Filling out a survey form.
- Downloading a how-to guide.
You can manually set incentives through affiliate marketing by offering commissions on the success of your choice. Your eCommerce business is unique, so how you rate success should be just as distinctive.
Plus, affiliate marketing quickly gets your eCommerce website in front of more eyeballs by featuring your products across the web. Instead of working on getting 1,000 new visitors to a product page, you can leverage a high-traffic affiliate site and get visitors to your site that way.
Make sure to work with your affiliate partners to optimize the path to conversion. You should have them focus on your highest average order products and send traffic to your highest converting pages to maximize impact.
4. Better budgeting and ROI
You don’t have to spend loads of cash hoping your ads hit the right audience or that Facebook and Google’s algorithms won’t change overnight.
It doesn’t matter if your marketing budget has a couple of commas or you’re shaking your piggy bank, affiliate marketing allows you to more precisely budget for marketing campaigns.
It’s simple: Choose your conversion target. Offer commissions. Make money.
Because you only pay out when products sell, you can use your marketing budget for other revenue streams – sponsoring social media influencer posts, social media, or unique content creation optimized with your keywords.
Plus, eCommerce affiliate marketing has an incredible ROI. Since you’re paying a small percentage for each sale generated (typically 3-10%, based on your vertical), you can see a return on ad spend of 10:1 or more. After factoring in your products COGS (cost of goods sold), profit margin, and affiliate commission, you should still have room for some solid profits.
Most eCommerce affiliate marketing commissions are paid out based on a percentage of the product’s sale cost. And you can set different commissions for different affiliate partners. For example, you may want to send a coupon or loyalty site an IO (insertion order) with a commission of 3%, while sending an influential blogger an IO with a commission of 10%. Get creative! Inside your affiliate platform, you can create multiple offers for your affiliates. You just want to make sure you are as competitive as possible – check your competitor’s affiliate programs and match or beat their commission rates.
5. Enhance credibility
When an affiliate promotes your service or product, you can use that promotion to add credibility to your business. Use images, icons, or text to publicize where your brand has been used and reviewed.
Chelsea Krost, a top influencer, showcases where her brand has been publicized with an “As Seen On” section on her homepage.
6. Develop brand ambassadors
People are talking about your brand, and if you’re not leading the conversation, you may be unaware of what prospective customers are reading. Affiliate marketing puts your brand in the hands of influencers who help create brand ambassadors.
When trustworthy influencers blog about your products, post photos of them or feature them in videos, they’re telling all their fans and followers that your brand is awesome. It’s approved, and 82 percent of consumers say they’re highly likely to follow a recommendation made by an influencer.
According to a survey of more than 4,000 social media users from the U.S. and Europe, an influencer:
- Has 10,000+ followers.
- Is someone who brands contact to help promote products and services.
- Shares info on brands they love and reviews popular products.
- Is considered an expert in their niche.
The influencer’s fans become your new brand ambassadors by trying the products, posting about the products, and sending even more traffic to your eCommerce site.
7. User-generated content overload
Have you ever sat down at your computer and had nothing? It’s a couldn’t-create-something-good-if-the-business-depended-on-it kind of day. One very evident way in which affiliate marketing enhances your eCommerce business is with UGC (user-generated content).
Even for the Instagrammers who don’t have mass followings, this can make a difference. Here’s why:
- The vast majority of consumers (92 percent) say they turn to people they know for referrals above any other source.
- Twice the amount of sales are generated through word-of-mouth compared to paid ads.
- Nearly three-fourths of all consumers depend on social media for information about a product.
- 84 percent of consumers say they’ll go with peer recommendations above all other advertising methods.
When your fans and followers snap photos, leave reviews, or post videos about your product, use that content as marketing power. It’s always better to have someone else say what a killer brand you have than to proclaim it yourself.
You need an affiliate marketing strategy to enhance your relationship with customers and strengthen partnerships with businesses and social influencers you admire. While the method will call for your time and energy in the beginning, you’ll soon be well entrenched in your specific niche with time to focus on what matters to you – running your business.