As with any endeavour, the first-step to success is usually your ‘plan’. Affiliate programs contain a number of absolutely essential components in order to function successfully. The key components of an affiliate program are:
This section deals with looking at each of these components in detail.
Make sure that you meticulously plan every single aspect of your affiliate program before you implement it.
When planning an affiliate program it is imperative that you understand what your affiliates want out of the program.
The number one thing that every affiliate wants is... to be treated as a genuine ‘partner’. In order to truly implement a great affiliate program you will need to be totally focused on providing a great win-win partnership for your affiliates. Affiliate programs are far more about partnership than they are about cheap advertising.
Most potential affiliates will be looking for the following:
- Commission model
- Affiliate systems
- Sales materials
- Affiliate agreement
- Training
- Management
- Promotion
- Monitoring
This section deals with looking at each of these components in detail.
Make sure that you meticulously plan every single aspect of your affiliate program before you implement it.
When planning an affiliate program it is imperative that you understand what your affiliates want out of the program.
The number one thing that every affiliate wants is... to be treated as a genuine ‘partner’. In order to truly implement a great affiliate program you will need to be totally focused on providing a great win-win partnership for your affiliates. Affiliate programs are far more about partnership than they are about cheap advertising.
Most potential affiliates will be looking for the following:
- Partnership!
- Strong, motivating commission structure
- Account management & ongoing support
- Training
- Excellent sales materials
- Up-to-the-minute reporting
- Clear, formalised affiliate agreement.
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Commission ‘Models’
There are a number of different commission models for affiliate programs. The most common commission models are:
Pay-Per-Click (PPC)
In the PPC model an affiliate is remunerated every time their visitors click the link through to your (merchant’s), website. Be careful with this model, as it is possible for affiliates to use software to ‘fake’ clicks in order to increase their commissions each month. Be sure you have effective reporting systems in place to minimise the chance of this happening, if you decide to use a PPC model.
Pay-Per-Lead (PPL)
In the PPL model an affiliate is remunerated every time they generate a new lead for the merchant. A ‘new lead’ depends on your ‘definition’; it may be a product or service enquiry, or a new subscription to a mailing list.
Pay-Per-Sale (PPS)
The PPS is the true pay-for-performance model. With the PPS model an affiliate is remunerated every time their link generates a new sale for you.
There are two common methods for setting the commission levels for an affiliate program:
- Flat-rate commissions
The affiliate is paid a flat-rate commission. This type of commission structure works well for PPC and PPL models.
- Percentage-based commissions
The affiliate is paid a percentage of every sale that is made. This type of commission structure works well for the PPS and PPL models.
Some affiliate programs also contain some advanced options that you may wish to consider:
- Recurring commissions
If an affiliate refers a visitor to your website and the visitor purchases some products or services, you pay the affiliate a commission for that sale. Most customers will return to buy many more times from the merchant. So recurring commissions occur when a merchant pays commissions to the affiliate on all future sales the referred customer makes as well.
- Residual commissions
Residual commissions are sometimes paid on items that have ongoing payments. For example– newsletter subscriptions, computer leases and credit card fees, all have ongoing fees associated with them. When an affiliate is part of a sale made on an item that has ongoing fees, some merchants pay an ongoing residual commission on that item.
- Lifetime commissions
Lifetime commissions are a combination of both recurring commissions and residual commissions. The affiliate is paid a commission on everything that is bought throughout the ‘referred’ customer’s lifetime.
- Two-tier structures
In a two-tier structure affiliates are rewarded not only for referring customers that purchase products and services, but also for referring customers that become new affiliates too. When an affiliate refers a new affiliate they will receive a second-tier commission on every sale that the newly ‘referred’ affiliate makes.
The benefit of this sort of structure is that your affiliate network builds itself. The downside is that it is sometimes hard to know about, and therefore ‘screen’, these larger numbers of affiliates, as well as ensuring their suitability.
As part of an affiliate’s commission structure you will need to make it completely clear how often you will ‘pay out’ commissions. Common payout intervals are monthly or quarterly.
- Flat-rate commissions
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Affiliate systems
The systems used within your affiliate program are absolutely vital to a successful program and a happy affiliate.
The most important component of your affiliate systems is ‘tracking and reporting’. Your affiliates should be able to log-in to your special ‘affiliates section’ on your website. These pages should provide your affiliates with up-to-the-minute reporting on their referred traffic and commissions. Your tracking and reporting systems need to be tailored around the parameters of which commission model you are running.
The key things that your tracking and reporting system might need to track are:
- Impressions – the number of times your promotions are ‘served-up’ by your affiliate to a prospect
- Click-throughs – the number of visitors that have clicked on the affiliate’s promotion
- Orders or leads – the number of orders or enquiries received as a result of the affiliate’s promotion
- First-tier commissions earned – the commissions earned by the affiliate, in the current period
- Second-tier commissions earned – any second-tier commissions earned by the affiliate, in the current period
- ‘Clawed-back’ commissions (refunds, credit card charge-backs etc) – any commissions that need to be ‘clawed-back’ due to refunds, credit card chargeback’s, etc
- Total commissions earned – the total commissions earned by the affiliate to date.
Good systems will provide even more tools than these for helping you manage your affiliates. Some of the key tools that you may want to look at are:
- Monthly email newsletter (with automated commission/performance report attached)
- Affiliate forum
- Manuals & tutorials
- Sales materials
- Linking systems
- Contests
- Surveys
- Gifts
Zeald.com has an affiliate module that is designed to provide you with all the tools necessary to successfully run and manage an affiliate program. Talk to your Zeald.com Account Manager for information on this module.
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Sales materials
One of the key things that will ensure your affiliates advertise and promote you well, is the quality of the sales materials that you give them. Choose what types of sales materials you think you may need for each of them:
- Text advertisements
Writing great text advertisements is very similar to writing great classified ads. Read the section within the ‘Promote’ module on writing great advertisements. You may want to offer lots of ads that are targeted at different target markets. An affiliate can then pick an advertisement that suits their target customers, as well as the content on their website.
- Banner advertisements
As for text advertisements, see above.
- Email advertisements
Email advertisements are ads within email promotions. Make sure you offer both an HTML and plain-text version.
- Pre-made web pages / long sales copy
It is a good idea to provide your affiliates with a number of complete web pages that can be uploaded and linked into their website. Remember what we said about long sales copy? Make sure you provide different versions of your long sales copy that work with different target markets. Create copy that will work for many different audiences.
- Free articles
Consider writing articles that are closely related to your product or service. Provide your affiliates with copies of the article that can be used on their website. Articles are great tools for building your company’s brand and credibility.
- Testimonials / Case studies / Endorsements
Testimonials, case studies and endorsements are all extremely powerful methods of building credibility. Provide your affiliates with as many of these materials as possible.
- Free informational gifts
Consider writing a free e-book or a free report that can be packaged and offered as a free gift.
Make it as easy as possible for your affiliates to promote your products or services. No one knows how to sell your products or services better than you, so provide your affiliates with as many tools and materials as you possibly can. Remember, their success means your success.
- Text advertisements
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Affiliate agreement
A clear, well-written and well thought through affiliate agreement is mandatory. It needs to be written in ‘plain English’ and cover all aspects of the relationship. The key components of most affiliate agreements are:
- Acceptance criteria
- Code of conduct
- Limitation of liability
- Term
- Governing laws
- Confidentiality
- Affiliate and merchant responsibilities
- Commission structure
- Linking criteria
- Tracking systems
- Exclusivity
Talk to your Zeald.com Account Manager for help with drafting Affiliate Agreements, and for a list of recommended lawyers.
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Training
An important part of any affiliate program is the training. Your training might simply be your affiliate’s manual. But it is important that you have a ‘formalised’ process for following-up with your affiliates and ensuring they understand everything you’ve sent, etc.
Look to formalise your training ‘systems’ so that each new affiliate goes through a standardised training process.
Consider providing two versions of your affiliate’s manual – a full version and a ‘quick start’ version.
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Management
It is important that you have one key person within your organisation that takes responsibility for your affiliate program. The key skills of a great affiliate manager are:
- they are a ‘people person’
- relationship building
- good communication skills – both written and oral
- strong product/service knowledge
- solid Internet skills and technical skill
- customer service skills
- the ability to update materials for affiliates.
These ‘managers’ will be required to perform the following tasks:
- promote the affiliate program in a professional manner
- review, accept/decline affiliate applications
- answer affiliate requests for support in a timely fashion
- compose monthly affiliate newsletters
- compile monthly reports on affiliate performance
- create and update affiliate materials on a regular basis
- plan and run special offers, promotions
- motivate the affiliates (using things like competitions and prizes etc).
Ensure that your affiliate manager will have the time and motivation to handle the tasks. A sure way to destroy your affiliate program is to have an affiliate manager who does not have the time necessary to devote to the program.
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Promotion
Now that you have your affiliate program, you’ll need to promote it in such a way as to attract and sign-up great affiliates.
Just about every single affiliate program demonstrates the 80:20 rule; that 80% of your results will come from just 20% of your total affiliates. Affiliates are usually broken-down into four categories:
- Super affiliates – are the 20% that drive 80% of your results. They are enthusiastic, understand Internet marketing and are completely committed to achieving results.
- Up & comers – have great websites or email databases but for some reason their site is not converting visitors into results. ‘Up and comers’, with some training and motivation can become ‘Super affiliates’.
- Onesies – have small websites with little traffic. They are often small operations that will drive just a few results every year. Often ‘onesies’ make up the bulk of the final 20% of your results.
- Untouchables – are exactly that, ‘untouchable’. No matter what you do, you probably won’t improve results from an ‘untouchable’. They usually have no understanding of Internet marketing, and the basics of building a website that works, and … have no desire to learn.
The key to any great affiliate program is targeting and attracting as many ‘super affiliates’ as possible and providing the training and support necessary to help ‘Onesies’ and ‘Up & comers’ move to the ‘Super affiliate’ category.
So how do we target ‘Super affiliates’? One of the first keys to targeting ‘Super affiliates’ is to have a well-thought-out program. Once you have that program in place, put together a section on your website that promotes your affiliate program. This should include the following:
- Affiliate program details
- Benefits of the affiliate program
- Revenue projections
- Existing affiliates, testimonials and case studies
- Demonstrations and screenshots of your affiliate systems.
The affiliates section of your website is like a mini-website. Therefore, you need to give it the same sort of focus as your main website. Follow the ‘Websites that Win Business!’ process; Plan, Design, Build, Load, Go-Live, then Promote & Tune.
Once you are ready to promote your new program, put together a list of possible affiliates. Look for prospects that have great websites with strong persuasive copy, high traffic and a solid email database (if known).
Once you have built a targeted list, approach each of your prospects via email or phone. Make sure you have plenty of details to give to each of the prospects. Be prepared.
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Monitoring
Now that you have your affiliate program you need to be able to monitor and maintain it. Like with everything on the Web you should track, measure and improve.
The key figures that you will want to know about your affiliates are different depending on whether you have an E-Commerce, E-Profile or E-Catalog website...
E-Catalog & E-Profile affiliate metrics:
- Impressions – the number of times your advertisement or promotion has been ‘served’ to a viewer through your affiliate
- Click-through rate (CTR) – how often a visitor has clicked on your affiliate’s advertisement or promotion
- Clicks/visitors – the amount of clicks that you have received from the affiliate
- Conversion rate (visitors) – the percentage of visitors from your affiliate that made an enquiry
- Enquiries – the number of enquiries made by visitors generated by your affiliate
- Conversion rate (enquiries) – the percentage of enquiries from your affiliate that resulted in orders
- Orders – the number of orders generated
- Average sale – the average value of each order
- Revenue – the total amount of revenue generated by the affiliate
- Gross margin – the percentage of your revenue generated by your affiliate that is profit
- Gross profit – the total amount of profit that you have made
- Cost-per-sale/click/lead – the commission that you have paid the affiliate for each sale, click or lead
- Total cost – the total cost of your affiliate
- ROI – the return on your affiliate (gross profit divided by the total cost).
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