Affiliate marketing is a good tool.IF YOU ARE LIKE MOST BUSINESSES, IT IS A REAL challenge to attract paying customers to your site and still meet your ROI needs. Many companies who are successful in this area have reverted to a very traditional, real-world selling technique. They have taken this technique that has been successfully used for centuries and have finessed it into
cyber world. It is called Commission-based selling. Its embodiment in online world takes form of affiliate programs.
The easy definition of an affiliate program is “Gain more customers through smaller sites run by others, which usually have a strong, loyal following. The small guys get a commission on sales that they send bigger guys’ way.” In a sign that affiliate approach is working, a 2002 Forrester report said spending toward affiliate marketing increased by 50% while budgets for portal deals, e-mail, and banners all decreased significantly. Forrester also says that affiliate marketing is now driving $10.5 billion, or 15%, of online sales. By 2005, this figure will jump to $54 billion (Forrester, “eCommerce Brokers Arrive,”). Today, 97% of online marketing deals have a performance component. Growth rates for pay-for-performance spending will be seven times growth rates for CPM- based spending through 2006.
“Pre-sell / Warm-up” Phenomena The most popular model is where Affiliates do not “sell” merchant’s product, they “Pre-sell /Warm up” their visitor and send them to merchant’s Web site in an open-to-buy frame of mind.
Some affiliates even have syndicated content from merchant on their site and they take visitor as far as possible before switching transparently (one hopes) to merchant when visitor is ready to put a credit card to use.
In best situation, visitor doesn’t even realize that a switch from smaller affiliate site to larger merchant site has even taken place.
Affiliate Revenue Models Sales Commission:
Affiliate receives fixed % of sales as a commission. Traffic exchange: One qualified clicks from my site is exchanged for one qualified click from yours. Pay per contextual visitor Or Qualified Lead: Merchant pays a fixed amount to affiliate per qualified click or lead. Hybrid Model: A custom solution with two or more components of above revenue model.
What do affiliates look for when considering your affiliate program? Product Profile: The Product plays a very important part in success of this program. The basic criteria of product qualification are:
• Products / services should be a purchasable item online. • Your catalog and offering should have sufficient content about product or market segment • Miscellaneous, complementary accessories and services that will boost sales •A perfect sales pitch with pictures. • Mass appeal is an added plus. • Competitive Price.
High commission
Depending on profit margin, merchant should offer a good commission to their affiliates. The simple way to determine commission is to calculate current cost (Cost per acquisition) to make one sale by means of existing online marketing efforts using banners, paid placement, and other traditional Internet media.
Let’s then assume that cost is 15 % of existing revenue. It is safe to offer 10% commission to affiliates with other 5% assigned to administration of program. One can calculate same formula Based on Cost per acquisition too.
Lifetime commission
Many affiliate programs just set identifying cookie to last for a short period of time (perhaps 24 hours, some only for duration of visit to merchant’s site). If visitor doesn’t buy within short time cookie is set, visitor is no longer identified with referring Webmaster and there is no commission paid to that Webmaster.
Good affiliate programs not only set cookie for longer, up to a maximum of 10 years, they also use database tracking on merchant’s system. So, whenever a visitor that has been “tagged” and referred comes back to merchant and buys, merchant credits referring Webmaster and pays commission. This long-term cookie and database backup enables merchant to provide affiliate with a “lifetime customer”. Now that really is looking after affiliates!
Customer Service and Call Center Effective customer service and call center support can make or break your affiliate program. Many online buyers would like to call when they make an online purchase. Well-managed CRM activity adds creditability in your offerings. A separate toll free number for each affiliate can add affiliate value by personalizing experience for customer and making certain proper credit is given to affiliate for call center reservations.
Syndication Capabilities: You can affiliate with web sites in two ways—first, by placing offers on your affiliates’ sites that link back to your company servers, where sale is made; second, via hybrid models. The program models come in six basic types, and your company can offer any or all of them to potential affiliate partners: Banner or text links, Storefronts, Pop-ups, Embedded commerce, Email, Hybrid
Some merchants that go all out to support their affiliates and help them succeed offer newsletters, promotional ideas, up-to-date information, even whole web sites devoted just to affiliate support.
