A Reality Check PRIOR to Launching Your New Affiliate Program

Building trust and gauging interest levels are two keys to launching a successful affiliate program. Merchants should not expect that top affiliates will flock to sign up and will spend their resources promoting your offer without addressing their basic needs:

  • Affiliates need to be confident they will be paid the commissions they rightfully earn.
  • Affiliates need to know there is sufficient demand for your offer and that an acceptable level of the prospects they refer to your site will convert to buyers.

Introducing what you have to offer the world of affiliates must be done with poise and tact in order to create a foundation of trust that will attract and maintain a solid team. Once your name and business is established as affiliate-friendly, finding marketers will be easier.

Even before launching your affiliate program and putting yourself ‘out there’ for affiliates to evaluate your website and what you have to offer, it’s critical that you work to maximize your conversion rates and possibly your average order sizes as well. You may not get a second chance to make a positive first impression, therefore your website needs to be ‘selling successfully’ before you embark on affiliate marketing.

An Affiliate Program is not a Panacea for Marketing

Often, new merchants especially, with be drawn to affiliate marketing because of its performance based commission structure and intend on having an affiliate program be their primary source of new customers. For most merchants, this is not a wise strategy. The possible exception is highly targeted niche products that typically have a very short product life cycle — like e-books and other electronically delivered products where merchants regularly share the majority of the revenue with their affiliates.

Merchants often adapt this approach because of the following fallacies:

Fallacy #1: “Since I’m paying only for performance (typically a percentage of referred sales) there’s no real risk or investment to launch an affiliate program.”

Fact: Launching and growing an affiliate program requires the proper exposure, management expertise and time to develop an active affiliate base — each of which require an investment. Furthermore, the typical affiliate program does not show a return on investment until three to six months from launch.

Fallacy #2: “All I need is an affiliate program and my affiliates will do all the marketing for me.”

Fact: For most successful merchants, a well-run affiliate program typically represents just 20 to 30 percent of their overall online sales.  Natural search initiatives, paid search (pay-per-click) programs, social networking, general/CPM advertising, email marketing and other channels should be undertaken in order to maximize your reach/sales.

In fact, I always recommend merchants engage in paid search marketing/pay-per-click ads prior to launching an affiliate program. What you learn when you engage in a paid search campaign (and your resulting website analytics) is critical in evaluating your strengths and opportunities.

Once you’re confident that your conversion rates and average order sizes are acceptable, then it’s time to move forward with your affiliate program. Prior to your actual launch, you’ll need to decide on a tracking solution, what your compensation terms for affiliates will be, and the types of promotions you will provide to your affiliates.

Jim Gribble of LinkProfits has been managing affiliate programs for over a decade.

Start by Hiring an Experienced Affiliate Program Manager

If you do not have the funds in your budget to hire a full-time in-house Affiliate Program Manager, then consider an outsourced affiliate program management company like LinkProfits. Generally, this is a much more cost-effective way to ensure the maximization of your program. An outsourced program manager can hit the ground running and truly knows what affiliates want and can connect with them on their level. Even more importantly, an experienced program manager already has connections and relationships with top affiliate marketing websites. This is what’s going to get your affiliate links the exposure needed to drive sales!

If you are a merchant interested in pursuing a robust affiliate program, I invite you to contact me to discuss your particular situation and objectives.

Running a Private Label or In-house Affiliate Program vs. an Affiliate Network Program

Should we run an ‘in-house’ program or join an affiliate program network?

It’s a question that Affiliate Program Managers have wrestled with for years and there’s no clear cut answer, but after you learn the advantages and disadvantages of each approach, you’ll be in the best position to make the decision that’s right for your business.

With the multitude of choices available today for one to run an affiliate program, there is not always a clear distinction between what is commonly referred to as an in-house vs. a network program. First let’s discuss some terminology and definitions…

Below are some basic attributes of each solution type and some examples:

Affiliate Networks: Refers to a place where multiple merchants/advertisers promote their affiliate programs, campaigns and offers to multiple affiliates/publishers who in turn promote these programs to their audiences. (Please note: For simplicity sake, and also because I do not generally recommend them, I am not including a discussion of “CPA” or lead networks in this article.)

Examples of Affiliate Networks include: Commission Junction, LinkShareShareasale, eBay Enterprises (formerly Pepperjam Network), LinkConnector, and AvantLink.

In-House Program: This usually refers to an affiliate program that is not offered through a public affiliate network. Sometimes called a private label program, in-house affiliate programs are typically administered using:

  1. Off-shelf Software purchased outright or on a licensed basis that is installed completely at the merchant’s site and runs independently. iDevAffiliate is one of the most popular affiliate program software products.
  2. Shopping Cart Plug-ins are often available to merchants, as shopping cart software commonly includes an ‘affiliate program module’
  3. ASP Solutions usually licensed on a month-to-month basis are very commonly used. Virtually all aspects of the affiliate program are administered through the solution vendor’s website. Program managers log in to the site to: set up program terms and affiliate compensation levels, run performance reports, provide promotions to affiliates, communicate with affiliates, etc.. Affiliates log in to their accounts to grab promotions and run reports of their activity. Examples of ASP solutions include:

DirectTrack is a very popular ASP solution, but over the years it has evolved into a solution that’s best for those who want to run their own affiliate network with multiple offers/campaigns. Using DirectTrack to manage a single program has become cost prohibitive for most. Years ago, DT costs $50 a month to run a program, now it’s at least $500 a month.

Infusionsoft is a very popular CRM platform that includes an affiliate program module. I’m devoting an entire article to Infusionsoft that will be released in November.

Advantages & Disadvantages of In-House vs. Affiliate Network Programs

As an outsource affiliate program manager for over 10 years, I’ve managed a slew of in-house and network programs. Recruiting desirable affiliates has always been an important responsibility in this role and it’s always been abundantly clear to me that affiliates prefer to work with merchants though a respected third party network.

The primary reasons why affiliates prefer to work with a network:

  1. Affiliates want to ensure they get paid. This desire cannot be emphasized enough. Affiliates know that merchant programs will be flagged or suspended by the network if they do not keep their accounts properly funded to cover commissions earned. Affiliates also trust that third party tracking is more reliable and they will earn proper credit for their referred sales. In addition, if you have a ‘young’ brand this concern becomes even more critical. Affiliates rightly have no reason to trust they will be paid the commissions they’ve earned by a company that has not been in business very long and is not well-known.
  2. Affiliates don’t want to learn how to use your in-house ‘system’.  In order to participate in any program, affiliates need to know how to get link codes, generate and interpret reports, access product datafeeds, post ever-changing deals, and more. Every affiliate solution, whether a network or in-house, is unique in how it handles these functions, so there is always a learning curve. There is often resistance by affiliates in having to learn the ‘ins and outs’ of another affiliate solution. This is why many will only work with a handful of network solutions only.
  3. Networks offer centralized reporting and consolidated payments.  Affiliates prefer to limit the number of places they need to go for reporting. They may be participating in many programs within one network and therefore can run reports all at once vs. logging into a single in-house program. In addition, most programs have a minimum payment amount which is often $100. For the small affiliate, they may never reach this threshold for a single program they are promoting, but since networks will consolidate earnings from all the programs the affiliate is participating in, it’s then much easier for the affiliate to reach the minimum payment threshold.

From the merchant’s perspective, the great advantage of using an affiliate network is your program’s exposure to lots of affiliates. Networks already have a base of affiliates – in some cases, hundreds of thousands – and when your program launches on one of these networks this exposure is tremendous and quite valuable.

There are still some important advantages of running an in-house/private affiliate program:

1. The Direct Relationship.  The single most important advantage of an in-house program is establishing a direct relationship with each of your affiliates. With some network solutions, it’s virtually impossible to do this. Typically, will you have not access to anything more than an affiliate’s email address – and some networks even allow affiliates to hide their email address and opt-out of your correspondence! This has often mystified me. Why networks would want to limit merchant communications with their affiliates is without explanation.

The other critical factor with a direct relationship is that you do not have to pay a performance based fee to the network each time one of your affiliates refers a sale. Furthermore, some of the networks base this fee on a percentage of the commission rate – usually from 20-30% of commissions paid – vs. network performance fees based on sales revenue – usually 3% of sales. This is another pet peeve of mine…as it seems unfair to be required to pay more to the network when it’s decided to increase overall commission rates or even to raise the commission for an individual affiliate. For example, if you are paying affiliates 10% and the network is earning 30%, then their net fee is 3% of sales. If you increase commissions to 15%, then the network automatically gets a ‘raise’ to 4.5%! This amounts to a disincentive to raise commission rates in order to grow one’s program – something the networks would want to encourage!

2. Increased Control and Flexibility. With an in-house program you have the ability to create a custom-built solution that allows for more integration with your business. With more integration with your business, you can much more easily track affiliate referrals for the lifetime of the customer. This means affiliates can be paid true residual income on the customers they refer. With integrated, database tracking, this is a straight-forward process. Cookie tracking is all that most network solutions can offer which is a very unreliable way to track future purchases.  And with a custom solution comes greater control. However, this will put more demands on IT Resources that may or may not be available to you. Still, even with a third party or software solution, you typically have more control than when part of an affiliate network.

So Which is Better — In-house or a Network Program?

Jim Gribble of LinkProfits has been managing affiliate programs for over a decade.

Of course, there is no clear choice, it depends on the particular needs of the merchant and how they match up with the advantages and disadvantages cited above.

However, I generally recommend to successful merchants to consider running both an internal affiliate program and also have a presence on at least one of the large affiliate networks. This is the strategy that I have seen work well and have implemented successfully myself numerous times.

If you are a merchant interested in pursuing a robust affiliate program, I invite you to contact me to discuss your particular situation and objectives.

 

InfusionSoft or CONFUSIONsoft? This Affiliate Manager’s Perspective

I’ve been managing affiliate programs as an outsource program manager since 1999 and I’ve used a number of ‘systems’ to help me be effective at my job. Whether it’s running a program through one of the major networks or using a basic shopping cart plug-in, I’ve been in the trenches with most of them and there are pros and cons to each. Unfortunately, Infusionsoft, one of the most popular CRM platforms, provides an affiliate program management tool that is a challenge to use effectively, to put it mildly.

Infusionsoft’s Affiliate Module does have One Major Advantage Over Network Tracking

Before I enumerate what I believe are shortcomings of the Infusionsoft affiliate program management module, I want to point out that there is one major advantage when a merchant uses Infusionsoft to manage their affiliate channel — and it’s a BIG advantage…

Merchants who use the Infusionsoft platform to manage their affiliate program are running their entire Customer Relationship Management (CRM) using the Infusionsoft, therefore all the purchase data is readily available to utilize in tracking and crediting affiliate commissions. This allows the system to tie the customer directly to the affiliate who referred them. Often referred to as ‘database tracking’ this method is far more accurate than cookie-based tracking. In most situations, especially with Affiliate Networks, transaction data must be transmitted/transferred to the network in order for the affiliate to receive credit for referred sales.

Having accurate, readily available purchase data is especially beneficial for merchants who sell continuity or subscription-type products (requiring ongoing payments from the customer), offer installment payment plans, and/or who want to offer their affiliates accurate commissions on follow-up purchases — even lifetime commissions years after the initial referred purchase. These are great selling points you can use to attract desirable affiliate partners to your program. After all, as I enumerated in the article, Running a Private Label or In-house Affiliate Program vs. an Affiliate Network Program, it can be quite challenging to get good affiliates to participate in a non-network or private affiliate program.

The Infusionsoft Affiliate Backoffice Can be Customized to Help Deal with Confusion

When an affiliate logs into their account on Infusionsoft they land on the Welcome page and are met with a number of menu choices and as I will describe shortly, even when they go to one of these areas it is far from clear what they should do when they get there.

To help avoid this confusion, I created the content below to display on the Welcome page. This content directs the affiliate to watch a screen capture video in which I walk them through the process of getting various creatives and links. And since I found that even this step-by-step video was not enough to address the confusion, I created my own resource pages outside of Infusionsoft where my affiliates could go to get banners, articles, videos, program news and much more.

Here’s the special content I provide on the Affiliate Welcome page:

Infusionsoft's Affiliate-side Navigation Menu

Infusionsoft’s Affiliate-side Navigation Menu gives the affiliate many choices for promotion tools and reporting often leading to confusion to the new user.

Welcome to Your Affiliate Resource Center!

This is where you’ll find all the tools you need to successfully promote our products. You can use the Tracking Tools links on the left menu to check your stats and view your commissions.

Infusionsoft’s back end is certainly confusing so I created a little video to show you how to navigate, get the resources your need and maximize all the capabilities of our program. Go here to watch the video. (This link, as well as the links to the resources listed below have been removed from this article.)

Below are some additional links to affiliate resources that you will find very helpful:

Affiliate Artwork Website – On these pages you’ll find a large collection of banners and images you can use to promote our products and earn referral commissions. If you need additional sizes of any of these banners in order to fit your website, please don’t hesitate to contact our Program Manager.

Product Related Articles – You can link to any of these articles. Many of these links are already set up in Inufusionsoft. If you need a link to any article, notify the Program Manager to set up an affiliate link for you. You are free to re-publish these articles provided that you adapt/edit them to fit your audience and do not promote any competing products on the same page that you publish the article.

Product Videos – You can get links to any of these videos, just notify the Program Manager to set up an affiliate link for you.

‘Embeddable’ Product Videos – You can embed these YouTube videos right onto your website or blog.

Company Blog – You are free to re-publish these articles provided that you adapt/edit them to fit your audience and do not promote any competing products on the same page that you publish the article.

Affiliate Program Description – Here’s where I’ve published a full description of our Affiliate Program opportunity.

Affiliate Commissions by Product – This page also lists all products in order by highest popularity first.

Affiliate Program Blog – Get the latest program news, tips and other goodies!

Affiliates Face Several Choices and Dropdown Menus Just to Get a Banner

Below is a screenshot of the Banners page. Before affiliates generate the code for the desired banner, they need to first be sure the three dropdown menu options at the top of the page are set properly. Unfortunately, the affiliate cannot even see what the banner looks like until they click on Generate Banner button. This can be quite tedious when you offer a large number of banners. For one program I managed, we had approximately 20 products, each with their own banners and possible landing pages.

The first dropdown choice is there in case the affiliate has any sub-affiliates they have recruited into the program. If they want to create banners to use themselves, they need to first be sure their name is showing here as my name is in the screenshot below.

Then they need to decide on the proper landing page for the banner they want to use. In the case of this program, since we had over 100 landing pages, you can imagine the confusion this might cause. To address this concern, I utilized the individual banner description text to instruct them on the correct landing page to use.

The third dropdown menu choice asks: “Which ad are you using to drive the traffic:” Most of the time affiliates don’t have to make any choices here. This dropdown controls the affiliate-defined ad variable which most affiliate do not use. For those that want to try some A/B testing or want to further break down their ad stats, they can utilize this additional variable. It’s a nice feature, but since most affiliates don’t use it, it often results in more confusion than it’s worth.
Welcome Page of the Infusionsoft Affiliate Interface

Since affiliates can’t generate sales and earn commissions until they post your links, it’s critical that this process be as simple as possible. Besides putting in place the extra help, guidance and resources to make this process straight-forward, I also used Infusionsofts’ email follow up campaigns to reach out to my affiliates as soon as they join with more step-by-step getting started instructions.

Infusionsoft’s Reports Section Generates Lots of Questions from Affiliates 

Turning now to the Reports section where it’s not surprising that a lot of head scratching goes on. As I mentioned, since the Infusionsoft affiliate module pulls real purchase data from the CRM side, it’s possible to generate a number of reports and metrics  that affiliates don’t typically see in other interfaces.

I used to get so many of the same questions about these reports, especially when it was time to calculate earnings, that I took the time to write out the following explanation and posted it right on the Welcome page of the affiliate interface. Unfortunately, as clear as I tried to make it, it’s one of those ‘clarifications’ that you probably have to read a couple of times:

‘Good to Know’ info about your Ledger and Link Tracking Stats

First, it’s important to understand, your earned commissions is the ‘Net Commission’ number. The ‘pending commission’ number is a number we wish Infusionsoft wouldn’t show as it does not help anyone and it causes confusion. Its purpose is to essentially show you all the commissions that you will receive upon 2nd/3rd installment payment and if someone’s credit card does not go through, it shows what is to be rebilled. Infusionsoft creates an order but if payment fails, it leaves the amount here showing as a pending commission. Unfortunately, it’s an amount that we may never collect and you may never earn commission on.

We cut checks or make PayPal payments for the Net Commissions earned in the date range. The minimum payment is $__. The amount is slightly lower than the one you my see in your report because it takes into accounts clawbacks from previous months due to refunds, etc.. Checks are mailed around the __ day of the month following when commissions are earned. Paypal payments are sent on the __ day of the month. Email me if you want to be paid via Paypal.

Regarding Link Tracking Stats, the number of orders that shows up for a certain redirect inside of Link Tracking Stats does not mean that the order that took place was for the product that was on that page. The person could have wandered off to any of our other pages from the landing page the affiliate used in the referral link. Link Tracking stats is they saying that an order took place during that browser visit of the initial click, not necessarily for example that a customer used a Product A redirect and that the order was a Product A order.

Jim Gribble

Jim Gribble of LinkProfits has been managing affiliate programs for over a decade. (Click to contact)

So that’s the shortcomings from the affiliates’ perspective…I’ve not even touched on what it took for me to get up to speed as an Affiliate Program Manager in order to be able to manage a program through Infusionsoft. Keep in mind, I’ve been managing affiliate programs for over a decade and have worked with numerous systems. Typically, I’ve been able to take over programs and work with new systems without any special training. Yet with Infusionsoft, it took intensive training over a period of weeks and hands on work for a couple months before I mastered the system and was able to make it easier for my affiliates to use it.

If you are currently using Infusionsoft for CRM and are interested in launching an affiliate program or need some assistance with your current one, please don’t hesitate to contact me. I’m happy to provide some guidance or we can discuss an outsource management role.

LinkProfits’ Jim Gribble to Speak at DMA:2011 Conference

Learn more about DMA:2011Last week, I was very pleased to learn I was selected to speak at this year’s Direct Marketing Association Conference to be held this October in Boston.

I am honored to be joined by Todd Farmer of PerformStreet Media and Carolyn Kmet of Groupon for our session that’s titled:

10 Successful E-commerce Affiliate Program Marketing Strategies

Presentation Summary:
Find out the most critical aspects involved with launching and managing a successful affiliate program and how to approach each aspect in the best way. Benefit from real-world examples and suggestions of specific resources to best help you implement the important strategies we will present.

The critical aspects will include the following:
1. Is an affiliate program a viable marketing channel for your ecommerce business? Just because affiliates are paid on a performance basis only, there are still investments required to start up, build, and manage an affiliate program. An affiliate program is not a panacea for a weak business concept. Your site needs to be successfully converting traffic to buyers before you consider an affiliate program.

2. Deciding on a CPS, CPL Affiliate Program and the differences between big “Retail Networks” and “CPA Networks”. When determining your Affiliate Marketing Strategy, what do you need to know about the different payout types, and the different types of affiliate networks?

3. Should you join one of the affiliate program networks or run a private/internal program?  “Choosing your solution”. Before launching your affiliate program, you need to decide the platform upon which you run it.  We discuss the differences between an inhouse solution, and choosing one of the available networks.

4. Establishing an affiliate compensation plan that is attractive, yet affordable. When setting affiliate commission rates, you need to determine the optimal rate that takes into consideration:  overall profitability, product profitability, lifetime customer value, competitor payouts, conversion rates, affiliate attraction, bonus tiers, attractive EPC, ‘room’ to secure desired relationships, credit affiliates with phone orders they refer, etc.

5. Choosing an Affiliate Manager or Outsourcing to an Agency, and incentivizing them, and supporting their efforts for maximum results. Who will run your affiliate program, and how will you pay them?  How will your company support the channel?  We discuss the elements important in ensuring a highly profitable affiliate program.

6. How to identify, approach and secure partnerships with desirable affiliates. Your affiliate program needs the best affiliates, and you need to be able to reach out to them and secure their participation.  We discuss the elements important in successful affiliate recruitment practices.

7. How to promote your Affiliate Program so desirable affiliates find you. In addition to your Affiliate Manager’s direct recruitment practices, Affiliates need to know about your program and apply.  We discuss how to publicize your affiliate program and entice quality affiliates to apply.

8. Segmenting your affiliate base so you can best serve their unique needs. Identify content and social networking affiliates, deal site affiliates, paid search affiliates, etc. so you can provide them with the support and marketing materials they use.)

9. Providing results-oriented marketing material for your affiliates. The marketing material you provide your affiliates must be perfect for each affiliate, and their promotional efforts on your behalf.  We discuss the variety of marketing material important for a successful affiliate program.

10. How to best promote through affiliate deal/coupon sites. Affiliates come in all shapes and sizes.  Some of the most popular affiliate types are the coupons / deals / incentive / loyalty sites.  We discuss how to leverage their reach and influence, while remaining profitable for you.

Here is some information about the conference, according to the Direct Marketing Association website:

THE GLOBAL EVENT FOR REAL-TIME MARKETERS

Data. Integration. Engagement. Relationships. Real-Time. These are the hallmarks of DMA2011 – and what makes it the most relevant marketing event in the world.

At DMA2011, you – and 10,000 marketing peers from around the world – will find everything you need to develop and execute the real-time integrated marketing campaigns:

  • Learn how to effectively integrate multiple channels including social, search, mobile, print, email, and more
  • Understand what you need to leverage your data, determine cross-channel attribution and develop optimization strategies
  • Meet with hundreds of technological solutions providers representing all channels and processes to better integrate your campaigns and improve effectiveness
  • Network with thousands of peers, gurus, and thought leaders from 50+ countries to grow your contacts

$300 Savings with this Keycode!

I’ve been authorized to extend a special $300 discount to my readers and followers! You can use Keycode AN614 when registering for DMA2011. You can use this discount along with the Early Bird rate that is valid until June 24th. This special discount cannot be combined with any other single or group offer/promotion and cannot be retroactively applied to previous registrations. For more information about DMA2011 registration, visit www.dma11.org.

Merchants: How You Think of Your Affiliates is Key to Success

The relationship between you, the merchant, and your affiliate partners needs to be harmonious if you want your program to achieve maximum success. Unfortunately, a lack of trust or commitment is more often the norm when examining attitudes of both merchants towards their affiliates and visa versa. This situation is a real one and needs to be addressed and overcome.

In order to develop healthy relationships with your affiliates, you must start by taking stock in your current merchant mindset. Are you influenced by negative past experiences that continue to cloud your perspective? If so, the first step is to set these experiences aside as they will result in counter-productive behavior.

Once you’ve taken that deep, cleansing breath, you’re then ready to create a whole new, positive approach to your relationships with your affiliates. Use the following advice to go down the ‘healthy relationship path’ in order to realize the full potential of your affiliate marketing channel.

First, you must keep in mind, affiliates are not your employees; they are independent entrepreneurs. They do not work for you, but rather work alongside like a teammate. Avoid dictating to your affiliates, and don’t expect them to follow any sort of structured schedule. Affiliates work at their own pace and follow their personal schedules.

Acknowledge that your affiliates often have a number of other affiliate programs they are promoting, so the don’t expect them to immediately produce results for your program. Affiliates are free to work for whomever they want, and they divide their time between the programs they believe to be the most secure and represent the greatest income potential.

Your merchant mindset needs to be as accommodating and flexible as possible. Take the initiative to make sure your valued affiliate partners have everything they require to evaluate your opportunity and to best promote you to their audience. Make sure they know how to contact you and are encouraged to do so. Are you doing everything you can to foster trust with your affiliates? Are you providing one-on-one training and guidance? This is where your focus needs to be.

As I have often said, affiliate marketing is all about establishing trusted relationships. With greater trust comes greater exposure, greater sales, greater commissions… The most successful affiliates do not need more new programs to promote, but rather it is you the merchant who needs these super affiliates. Gaining the attention and interest of these affiliate gems is a challenge and is often best achieved by affiliate program managers who are well-known and trusted by top affiliates. This is where the hiring of an experience and respected affiliate program manager can be extremely valuable.

Regardless who is managing your affiliate program, they should exemplify a successful merchant mindset of teamwork and equality. They must help affiliates become successful in order to achieve success for you. They must view affiliates as team members with a common goal. Let this be their mantra…

What LinkProfits will do for your Affiliate Marketing Channel

“Introduction to LinkProfits”