Affiliate programs are a cost-effective channel for marketing your eCommerce store. But many people do not realise just how powerful this channel can become by properly leveraging your partner relationships. Today we talk to Jamie Birch, CEO at JEB Commerce on how to start an affiliate marketing program for eCommerce entrepreneurs and brand professionals.
To start us off, do you mind sharing a little bit about yourself and your background in affiliate marketing?
Sure. So I got involved in affiliate marketing back when it started which some say was about 1996. So it has been quite awhile.
As I started out of college, I started interviewing for every type of job until I read an article about a Dot Com millionaire and then I knew I wanted to do something to do with the internet. I eventually found a role in what these days you would call a Search Engine Optimizer where I was sat in a room with a card table, computer and was told “Get us some rankings.”
One of the main reasons I took the job was that I thought if I could demonstrate the discipline then I could get more out of it. And that turned out to be the case. Affiliate marketing was just starting and it was perfect for me. I loved business strategy and building relationships, and it involved both of these.
About 17 years ago, I started JEB Commerce to help clients maximize sales, leads, and revenue through affiliate marketing, going on to generate about 1 billion dollars of retail transactions for our clients. I love it because we get to have a direct impact on our clients, which has actually helped a lot of people retain their jobs and not get laid off in these times.
Among eCommerce businesses, who should think more about affiliate marketing? Or where will brands get the most ROI?
If you sell directly to consumers, you should definitely be looking at affiliate marketing. I honestly haven’t found an advertiser who hasn’t done well.
At JEBCommerce, we focus on 5 verticals; health and beauty, travel and outdoor, fitness, apparel and fashion and food and beverage. We know these markets do well with affiliate marketing.
One area that may struggle, however, is businesses that provide commodities. If you are reselling something everyone has access to, you’ll find it challenging to compete without a strong USP. You will likely compete on commissions. Having said that, traditional retail does do extremely well.
We’ve found that affiliate marketing also does a good job being the tip of the spear for marketing campaigns. It can help brands build an audience and reach them.
How should people think about affiliate marketing as a strategy?
Firstly, a lot of people think of affiliate marketing as a stand alone channel when they should be thinking of it more like a model that you can apply to all of your channels.
It isn’t a practice of ‘build it and they will come’. It’s more of a philosophy of how. You should be using affiliate relationships to access and leverage all the marketing channels, like email, display, social, etc to reach your objectives.
With an affiliate approach you can still achieve many of your promotional goals, without needing to lay down the cash before making sales. Getting the same thing done through affiliates can help you pay only after the sale happens.
Another benefit of the affiliate marketing approach is that you can spread your budget out. By working with partners on a success basis you may find that you’re multiplying your budget 5 to even 15 times by working with partners across all channels.
How do you recommend brands execute affiliate marketing?
First thing is that you should start with your audience and not channels. This is a common mistake merchants make. When you focus on your audience, where they are and how they are using the web, you can work out the way they prefer to do business. And this might be different to the way you would have originally anticipated it. For example, you might have preferred that they visit your site directly and buy there, but shoppers may prefer making purchases where they are. So dig into their customer journey first.
Then, find the areas where your affiliate can augment this process. For example, social media, display partners or sites that rank high in search. If you had originally thought in channels first, you might think that you don’t have the budget to use these channels, but once you have identified the journey and how affiliates can augment this, you can unlock these channels through success-only campaigns.
Truthfully, this isn’t something that everyone likes to do, though. It does take work and you will need to share trust and data to make it work.
💡 Example Affiliate Marketing Strategy Execution: So let’s work through another example. Consider SERPs. There are only so many positions that get traffic, including ads. Worst yet, you only have control over some of the results. Using an affiliate strategy, you might instead work with your search engine partners so you get access and control over those results on a cost per acquisition (CPA) basis. This means you would still reach your margin goals because of your CPA commission, while also helping make sure that your customer is getting all the messaging they can.
How has affiliate marketing changed over time?
One big thing that’s changed in the last 5 years is that affiliates have invested sizable budgets into building their own brands that consumers trust. The flipside of this is that if you want access to those audiences, then you’re going to have to cooperate with affiliates.
How do you build an affiliate marketing strategy, starting from scratch?
This is a big question and there is a lot of detail but I’ll do my best to cover it at a high level. You will have to start with two major homework tasks first:
1) Competitive Analysis
First you will need to start by looking at your competitors. Look at your peer group, but also what your affiliates consider as your peer group.
Your potential affiliate partners may have a different idea of who your competitors are. For example, if you are a technology platform, your affiliates may view implementation agencies, hosting providers, or other related services as potential partners in competition with your offering.
So make sure you think of all the ways a partner might earn a CPA, and in what real estate or channel.
2) Survey Partners In The Space
Now you can survey partners in your space to understand how they operate and how to make effective partnerships. Find out:
- What are they interested in?
- What kind of creatives do they need?
- What drives them financially, and how?
3) Define Your Goals
Next, do a deep dive on your goals for the company. How will you measure success for your campaigns? What KPIs will you use?
4) Formulate Your Plan
Having completed the above, you will now be placed to complete the rest of your plan, consisting of definitions of these:
- What is a competitive commission structure for your partners that will incentivize the behavior you’re looking for?
- What technology will you use?
- How will you promote your affiliate programs? Or is your campaign non-promotional?
- Will you provide exclusive or non-exclusive deals to your partners?
- What creative will you use?
- How are you going to attribute conversions?
- How does your attribution model change with multiple channels?
- How will you reach out to your partners?
- Who is your customer, where are they, how do they behave, etc? For communicating this to your partners.
💡 Tip: A non-promotional strategy takes into account all of the above. It will be focused more on a strong commission rate, the technology used and introduce the need to consider how you will protect the top of funnel partners who may experience less results than those lower in the funnel.
Based on what you’ve shared, it seems like investing in and maintaining strong relationships is key. Do you have any recommendations or tips on building relationships with partners?
Absolutely. It goes back to a negotiation training I once did: your partnerships have to be a win-win deal.
Second to that, you have to really understand your partner and build trust. Many merchants go in thinking only about, or knowing only what they need. But your relationship needs to be founded on trust. Your partners will need to know you and know you care about them.
How to build trust? You need to get to know your partners. Deliver on what you’ve promised. When things change, let them know ASAP.
We hire and train a lot of people at the entry level to become affiliate managers. First, we make sure that these people have strong people smarts, so that they know how to talk to people. Once established, these managers then receive a list of questions to help them really understand their assigned affiliates by working out what the affiliate partner needs.
Once you have an affiliate program planned, what’s the best way to promote your affiliate program?
The best way to promote any affiliate program is to talk directly to the partners on an individual basis. It’s basic outreach.
Also on every network you usually have a page that represents your program. Make sure it is updated and has useful, relevant information that will make it easier for partners to engage. They’ll want to know what is your earnings per click (EPC), top selling products and what marketing initiatives work for you.
We’ve experimented with using paid search campaigns to promote programs but usually a simple link on your home page to your affiliate program and a good outreach effort will be sufficient.
I also recommend that you attend the events. There are plenty run by companies like CJ, LinkShare (now Rakuten Advertising) etc. Go there and participate.
Great! Very useful, thank you.
For people thinking of putting a program together or in the process of running affiliate programs, what are some common issues that come up that you think they should be aware of?
There are a few common issues that come up.
First one is really looking at affiliate marketing as it’s own silo, instead of understanding affiliate marketing as a model that can be applied to the whole customer journey.
The second is incorrect attribution. Understandably, everyone is trying to work out how to have the minimum amount of touches required to make a sale, and how to only pay for those. Often marketers divide up the revenue across multiple channels, but they don’t divide the cost.
This might remove some orders from a channel that produced it and burden it with all the cost.
There is a lot of great technology out there now that can give you great data insights on this, and you can spend a lot of time analyzing the data but at some point you will need to just make a decision on how much to attribute a revenue to a particular channel.
Lastly, I see some advertisers make the mistake of wanting to reduce budget expenses by lowering rewards or ending partnerships with affiliates.
This needs to be handled carefully because you may end up burning a bridge that you want to build back up again later. A lot of affiliate partners are super friendly, and love building relationships with new people and will feel like they’re working with you on the deal. However, when things come up like the current covid-19 environment, you may be tempted to restrict your budget away from these partners and affect their livelihoods.
A better way to handle these situations is to develop a plan to mitigate the impact and try to meet face to face, or over the phone. Show that you care about the partner, and while the present reality may require changes to your budgets, you want to work together with them to make things work until times change. Never underestimate the value of a well placed phone call.
Thank you so much for sharing your insights on the affiliate marketing space with us. For those who are interested to learn more or even work with you, what’s the best way to connect?
You can always email me at gethelp @ jebcommerce.com. I take half a day out on Fridays to answer questions, so you can reach me there or even Calendly.
🎯 I also host the Profitable Performance Marketing Podcast so that is also a great resource for those who want to learn more about how to leverage performance marketing techniques.