Why Affiliate Marketing is Important

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Summer Updated: October 01, 2021

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Affiliate marketing, an appropriate marketing solution for every eCommerce store? It may be the common question each business like you concern when they have known about Affiliate marketing and needed to find a way to improve their work.

Walking in your shoes, I also try to answer in my way by digging deeper the effects on the business efficiency. The more study, the more clearly I realize that it is not necessary to create an Affiliate program. However, Affiliate marketing is capable of making your existing troubles better and easier. Although it seems to be confused, let follow this post to understand why I say that.

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About Affiliate Marketing

About Affiliate Marketing
About Affiliate Marketing

In affiliate marketing, affiliates or independent marketers are responsible for promoting a brand’s products or services in exchange for commissions.

In other words, they will earn a piece of the profit from each website visitor, sale, or lead they generate. From the perspective of businesses, the number of affiliates able to participate in a brand’s affiliate program is unlimited.

The modern model of an affiliate program for eCommerce

The traditional model of an affiliate program has 4 parties:

  • Affiliates or Advertisers: Use their own ways to entice potential buyers to take action (for instance, clicking on the link, filling out a form, making a purchase, etc.). In exchange, they will receive a commission for each sale
  • Consumers: The determining factor for the success of any affiliate program. They reflect the marketing results of affiliates. Each consumer successfully converted contributes to the final commission the affiliate get from the brand
  • Product creators or merchants: Who create and provide the products or services
  • Network: The bridge connecting brands and affiliates. It’s usually in the form of an online platform where both merchants and affiliates can join in to find suitable partners

In order to meet the needs of eCommerce merchants, along with the advancement in technology, this traditional model has the appearance of a new component - The agencies.

They play the role of monitoring the whole process of an affiliate program, including:

  • Help to find right affiliate partners for the brand
  • On behalf of the merchants, negotiate with affiliates for a commission accepted by both sides
  • Measure the performance of affiliate programs

For networks, we know they are online platforms with the participation of several brands and affiliates. Meanwhile, agencies are experts supporting the brand in starting affiliate programs successfully.

6 Benefits of Affiliate Marketing for eCommerce business

Benefits of Affiliate Marketing
Benefits of Affiliate Marketing

A new stream of profit

A potent affiliate program is made up of long-lasting relationships between the 2 most essential parties: The brand and affiliates.

With proper implementation, affiliate marketing will become one of the most profitable sales channels, resulting in your sales and brand awareness. 3 points make affiliate marketing a potential stream of profit:

  • The merchant can gain several leads, traffic, and sales by partnering with influencers or experts who match the business’s core audience
  • Unlike the in-house sales team, affiliate marketing functions as a passive sales funnel that works 24/7
  • Affiliates and your sales team can be a great combo when they’re working well together. In most cases, affiliates raise the interest of consumers (cold traffic or leads). The sales team is responsible for nurturing and converting these leads into customers

Cost-Effective

Win-win relationships lead to value creation. It’s not exaggerating to say that affiliate marketing is one of the most cost-effective marketing tactics these days.

Why? Let’s evaluate it from 3 angles:

  • Most of the marketing activities are done by affiliate marketers. In other words, it’s the affiliates (not the brand) who bear the chunk of attached costs
  • The nature of affiliate marketing is commission-based. So obviously, you only have to charge affiliates from the sales they generate
  • In terms of cost, this marketing tactic is far more effective and budget-friendly than paid advertising that requires you to charge for every click

Beyond the aspect of cost-effectiveness, lost cost also means low risk. As mentioned above, you only have to pay affiliate commissions when there’s an actual conversion. That’s also why affiliate marketing is recommended for businesses on a tight budget.

Increase Competitive Advantage

Over time, affiliate marketing has become a popular marketing tool for global marketers. This also makes the competition between affiliates more intense than ever.

However, you can more or less increase your business’s competitive advantage via the indirect influence of the affiliates. And whether the promotions of affiliates succeed or not, their marketing effort still has a positive influence on your brand awareness.

A new approach to audiences through influencers

Another great benefit is the opportunity to approach entirely new audiences. By offering influencers in your niche and popper deals, you could quickly achieve new customers and improve your brand awareness.

In other words, affiliates take money to promote your company and products. Without wasting much effort, you’ve broadened your audience. But the best part is you, at the same time, gain reputation and trust within audiences.

Learn from affiliates

Each affiliate marketer has its own methods and marketing strategies to promote a brand’s products or services. Affiliates with impressive performance bring back various marketing ideas to apply in your company’s workflows.

Things you can learn from the best publishers in your affiliate network:

  • The affiliates’ audience data
  • The communication style they use with the audience
  • How they address their audiences’ needs and link these issues to your business’s products/ services
  • Channels they use to approach your target audience and which is the most effective one

All provide valuable insights helping you improve the effectiveness of your marketing activities.

Easy to track and manage affiliate performance

The more data you can extract from affiliate programs, the more you can modify it for better results. Affiliate marketing analytics contain 2 main components: KPIs management and affiliate performance analysis.

Some of the key metrics that you can (and should) track in your affiliate program:

  • Revenue/ Return on Investment (ROI)
  • Orders and AOV (average order value)
  • Clicks/ Impressions/ Leads
  • Percentage of earned commissions of affiliates
  • Conversion rates
  • Cost Per Acquisition (CPA) of customers and the affiliates
  • Onboarding length customers and affiliates
  • Customer lifetime value (LTV)

Especially via the trackable affiliate links businesses proactively provide affiliates in the program, the process of tracking and analyzing affiliate activities with their results is easier than ever.

Affiliate Marketing draws more profits than you expect

Let’s imagine that your store is running as you have not heard about Affiliate marketing. You still continue to sell products as well as make a great effort to create fantastic promotion program to boost your sales. As you know, the purpose of advertising is giving the customers a rare opportunity to encourage more their purchases. Thus, it is counterproductive if the promotion is too much and frequent.

On the contrary, Affiliate marketing is an opposite solution. If you want to go fast, go alone. But if you want to go far, go with friends. Because of that, Affiliate program helps you build your sale force called as Affiliates. They are empowered to promote products more widely, especially, they can take care of new clients who is referred before by them instead of that you must take over in the past.

However, What is the reason to ensure Affiliates always try the best to work for you? and What is the motivation to persuade the customers to make a purchase through Affiliate’s referral? The questions are the highlights you only see here, the beneficial relationship in Affiliate marketing. The Affiliates will receive an amount of commissions which is the reward name while referred visitors will have favorite items with the significant discount and have rights to be an Affiliate to make money. Especially for you, the revenue comes from not only the sales of ordinary selling products but also the sales of Affiliates. As a result, Affiliate marketing has an influence on your turnover through the effectiveness of Affiliate network.

How to build a robust Affiliate network?

If you want to start with Affiliate marketing successfully, focusing on Affiliate network is imperative. In this post, three key points are recommended for you

Invite to join Affiliate Network

Recruiting Affiliates is quite complicated but it’s a quick way to expand your Affiliate network, and it impacts strongly on your Affiliate program. Don’t be put yourself in the passive situation, let make an effort to contact and invite people to join your network. At the same time, you can also encourage the existing Affiliate members to recruit more sub-Affiliates for theirs. It is possible to point out the major benefits if they are joining with you as reward commissions per order, buying any product at your store with the best price, etc.

Make bonus policy clear

Generate an individual award for Affiliate is the foundation of your Affiliate program. However, the approach needs to be clear, straightforward and easy to follow with the necessary information like what to do, how it works and how much money is awarded. The following image is Amazon’s example showing how to make money when advertising Amazon products.

Amazon Affiliate Marketing

Promote Affiliate program

In my opinion, one of the useful way to help you attract as many Affiliate as possible is increasing the reach of your Affiliate program, and this means you need to promote your own program. Some suggestions I offer to you, you capably advertise the program on social channels put a popup banner introducing the Affiliate program whenever there is a new registration. But don’t forget to take advantage of your available Affiliate channel from the existing Affiliates to promote. The more people are aware of it, the more new Affiliate members join in your Affiliate network.

Pick potential products for affiliate marketing

Generally, a business will have a large variety of potential products for affiliate marketing. However, not any product is viable for affiliate marketing programs. Below are some characteristics you can consider to pick the most optimal affiliate products

  • High end or high margin
  • Scalable
  • Fit a specific niche
  • Growing trend
  • Social traction
  • Shareability for virality

We advise you to pick the products with a compelling commission that benefits the brand and publishers. This will attract more affiliates to your program. Thus, the high margin is the first criteria in the list to evaluate the potential of an affiliate product.

Furthermore, instead of generating affiliate links or everything, focusing your resources on a clear product quickly results in more effective campaigns. In some cases, you can consider contacting your ideal influencers first, then work together to choose the products that show potential for those affiliates.

Recruit the right Affiliates

Recruit the right Affiliates
Recruit the right Affiliates

Choose the right Affiliates

Having a solid base from the start can help you extract more benefits of affiliate marketing to achieve your marketing goals. To build an effective affiliate marketing strategy, you need to define clearly:

  • How your industry works
  • The niche you want to target
  • The list of most influential publishers in the targeted niche

Then you can sort potential affiliates into different groups (micro-influencers, review sites, bloggers, etc.). Select the affiliate partners related to your niche and most profitable from your perspective.

When searching for affiliates, ensure that your chosen partners can create the following qualities and resources to the table:

  • Own quality digital assets: The content represented on the affiliate’s social media platforms and websites should be attractive to your target audience in both form and function. Irrelevant or “spammy” digital assets may negatively affect your brand image
  • Align with your business focus: For example, if you’re selling makeup, it doesn’t make sense to choose a professional athlete to be your affiliate
  • Communicate well: You should choose affiliates with strong written and interpersonal communication skills who can promote your brand professionally and effectively

Build a win-win relationship with Affiliates

Build a win-win relationship with Affiliates
Build a win-win relationship with Affiliates

A win-win relationship is a condition for a long-lasting value. Affiliates earn commissions from the brand. On the other hand, merchants pay for affiliates to generate more sales.

In other words, the profit is shared with both the brand and its affiliates. The more benefits the affiliates get, the more effort they put into promoting your brand. Thus, try to motivate them with an appealing commission and communicate with them frequently for the best results.

Apart from that, some notes for you when working with your affiliates:

  • Get into the habit of measuring affiliate results weekly. Then you can reevaluate partnerships with those who have poor performance
  • Reward top performers with a higher level of commissions or free products and services
  • Schedule monthly or quarterly meetings with your top-performing affiliates to keep up with their marketing activities while improving the partnership with one another

Leverage technology power for Affiliate marketing

For Magento users, creating an affiliate program perfectly integrating with their sites can be quite a daunting task. This difficulty results from the complexity and high involvement of coding knowledge when it comes to Magento Open-source editions.

Leverage technology power for Affiliate marketing
Leverage technology power for Affiliate marketing

That’s when a Magento 2 affiliate extension comes into play. With support from an affiliate extension, you can perform many tasks within an affiliate system with no coding requirements, such as:

  • Set multiple affiliate programs with various commission tiers
  • Allow automatic commission withdraws via popular payment methods (PayPal, Bank Transfer, or offline payment)
  • Support displaying affiliate links in the form of banners on the publishers’ personal pages
  • Track transactions and performance of all affiliates in your program

Is Affiliate Marketing necessary?

I said that it is not necessary but I can not refuse its benefits, which are waiting for you ahead:

  • Boosting online sales dramatically
  • Keep most of your profits (only pay commissions your affiliates who directly help you sell)
  • Drive more traffic to your site
  • Expand size of potential customers
  • Extend the approach of your brand
  • Manage your affiliates and ads well

Thus, take you back to the main question, you can find Affiliate program not really necessary to improve your revenue, but it helps you achieve the target of business quickly and easily. With the above checklist, you will discover that Affiliate Marketing fit in your expectation of business.

The bottom line!

In summary, affiliate marketing is definitely one of the most affordable and low-risk investment options for eCommerce businesses.

Still, for small businesses or startups, it can be not easy at first to find and attract influential affiliates to your affiliate program. With proper implementation, it’s just a matter of time to make your affiliate program a second revenue stream for your Magento store.

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