Affiliate Marketing 101

Did you know 37% of online shoppers made purchases through affiliate links last year?

It’s no surprise that affiliate marketing is everywhere, as the strategy benefits all parties involved:

  • Brands ➡️ Tap into a cost-effective marketing channel, build brand awareness, and reach a larger audience.
  • Creators ➡️ Make money sharing products/brands they love with their audience.
  • Consumers ➡️ Learn about new products/brands from sources they trust and support creators monetarily.

Sounds like a win 👏 win 👏win 👏 right?

So, if #winning is what you’re about, here’s the low-down on how you can get started with affiliate marketing and bring in quality customers at a fraction of the cost of other channels! 👇

💰 Determine your commission

Technically, the definition of an “affiliate” is someone who is ONLY paid for sales… unlike “influencers,” that can be compensated in a variety of ways.

(However, it’s not uncommon for brands to lump them together under the same program and pay structure. There’s nothing wrong with that if it works for you, but for the purposes of this article, we’ll be talking about affiliates in the traditional sense!)

Affiliate marketing typically works like this:

  • Brand partners with Affiliate
  • Affiliate promotes Brand’s product using a unique code or link
  • Brand pays the Affiliate a commission for every sale made via their code/link

So before bringing any affiliates on board, you’ll want to determine how much you’re comfortable shelling out in commission.

Here are a few tips for figuring out your ideal payout structure:

✔️ Commissions are typically paid as a percentage (%) of sales, with 5-30% being standard in eComm. If you have products at different price points, % commission is recommended (it can motivate affiliates to promote higher-cost products or a higher AOV!) However, you can also pay out flat rates ($) if that makes more sense for you.

✔️ Research to find out what other brands in your space are paying their affiliates so you can remain competitive.

✔️ Take into account your product margins and customer acquisition costs. Are you willing to take a loss on acquiring new customers (for example, if you can make up the costs on recurring purchases)? If so, you may be able to give out higher commissions to affiliates.

✔️Use your average customer LTV as a guide. Your affiliate commission payouts should be well below this to be sustainable and profitable.

✔️ Will your affiliates also want to provide their audience with a discount? This may cut into their commission rate and/or your profit margins, so it’s something to consider.

✔️ You may want to start your commission on the lower end of the range so that you have room to increase it later, develop a tiered commission structure based on performance, or offer special bonuses.

Overall, you want to build a payout structure that is both a) attractive to affiliates and b) makes financial sense for your business!

🔗 Set up your tech

Before you start, you’ll need to know how to track sales from all of your affiliates. Not only is this necessary for paying commission, but it’ll also allow you to see which partners and mediums are converting best for you!

While you can certainly take a DIY approach to tracking (using Google Analytics, for example), this method can be time-consuming and technical to set up.

Luckily, there are tons of built-in tech solutions nowadays for affiliate management. 👍

“We are on GRIN. It's a relatively expensive platform, but it comes with additional perks outside of revenue tracking, for example, product stipend management, UGC harvesting, etc. I'd definitely advocate for using some type of affiliate management software from the get-go .”  – Matt Vaden, Partnerships Manager at Kion.

So, if you’re willing to invest a little bit up-front, management software can make your life much easier in the long run.

Here are a few affordable options for getting started in the eComm space:

  • Dovetale (free service for Shopify customers)
  • GoAffPro
  • Lead Dyno
  • ClickMeter
  • FirstPromoter

🔎 Find your affiliates.

Once you have your tracking and payout foundations in place, it’s time to find your affiliates!

This is arguably the MOST important part of your affiliate program, and it starts with understanding your customer base.

Who’s your “ideal customer?” Where do they hang out? What kind of content do they consume? Who do they follow on social media? What podcasts do they listen to? What blogs do they read?

Once you know the answer to these questions, you can search for potential affiliates that resonate with your target customer… Podcasters, bloggers, TikTok influencers, professional yo-yo’ers; the sky’s the limit!

🔥 Insider tip: Sometimes the BEST affiliates are… your customers!

“Finding affiliates within your current customer base is the lowest hanging fruit. It’s a great place to start… I've onboarded a ton of partners who originally tagged Kion on an Instagram post/story. So a brand with a strong CTA for their customers to a) follow the brand's organic social channels, and b) tag them in their content can pay huge dividends for partnership purposes.” – Matt Vaden

Think about it: these people already know and love your brand and use your products regularly. That means they can speak authentically and positively about you… which is exactly what you want in an affiliate! 💕

Other ways to find awesome affiliates:

  • Run a social campaign inviting applications
  • Search in Facebook groups or other online forums
  • Send an email campaign to your existing customers
  • Reach out to top bloggers and podcasters in your niche
  • Create a landing page and have it accessible on your website

💬 Stay in touch

Once you onboard your affiliates, the fun doesn’t stop there…

A key to growing and maintaining a successful affiliate program is regularly communicating and engaging with your partners.

Here's exactly how Matt keeps Kion's affiliates engaged:

  1. Monthly newsletters to update them on what's happening
  2. Quarterly check-in emails to see how they feel the partnership is progressing
  3. Sneak peeks to upcoming product launches
  4. A complimentary monthly product stipend to ensure that they are actively using the products and can promote them genuinely. Plus, Kion gets the benefit of leveraging the UGC they create
  5. Re-share outstanding organic creator content on our channels to help get them more exposure (this works wonders for nano influencers who are looking to grow their audience)

“I also like to go the extra mile early in the relationship – sending a quick personalized ‘congrats’ email when an influencer generates their first conversion is an awesome way to let them feel appreciated. 👏

Overall, the more tapped-in your partners are to your brand, the better they can communicate about you to their audience — resulting in more sales for you and commission for them!

✋ Oh, and make sure to CYA with the FTC

One last word of wisdom: If you’re interested in paying people to promote your products, you’ll need to get cozy with FTC guidelines.

The FTC requires that affiliate marketers disclose their financial relationship with any brands or products they’re promoting. Basically, in order to stay compliant with the FTC, your affiliates will need to tell their audience whenever they’re getting compensated for promoting your products. Here’s more info on FTC guidelines.

Now, what are you waiting for? Go start that affiliate program!

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