Affiliate Marketing 101: Part 2, Managing Affiliate Relationships

Welcome back to Affiliate Marketing 101, a series that teaches the fundamentals of affiliate marketing in plain English. If you haven’t read part 1 which went over the basics of affiliate marketing, you can read it here.  Even if you did, here’s a quick recap of the nuts and bolts we went over:

Affiliate marketing is a way for merchants to increase their marketing reach by forming partnerships with various websites. These websites host adds for merchants (often called the affiliate merchant or the affiliate manager) and if those ads result in sales, then the partner site that hosted them (often called the affiliate partner or publisher) gets a commision. It’s essentially a symbiotic relationship with both parties working to increase the merchant’s sales so that they can both get paid.

With that covered it’s time to talk about what many consider the most important aspect of any affiliate marketing program: Managing Relationships.Don’t worry, unlike other relationships you might have, your affiliate partners don’t require you to pick up dinner on the way home or even take out the trash, but they still need TLC.

Business is all about relationships and e-business is certainly no exception. Your Affiliate Partners are in some ways like partners and in some ways like employees which means they have to make you happy and you have to make them happy. You’re using their websites, but they’re marketing your products. If you can’t move enough products, they might leave for another merchant. Likewise if their website isn’t bringing you sales, you might also want to look elsewhere. In an effort to prevent either of these from happening, we’ve come up with the four most important ways to keep your affiliate marriage from turning into an affiliate divorce. Let’s begin!

1.) Communication is Key     The web sites that so amiably host your ads aren’t run by robots. They’re run by humans. It can be easy to lose sight of this but try not to. You should do your best to learn about these humans in any way you can. When you email them to talk about conversion rate or strategy, try and add a personal touch and let your personality show. It may sound corny but you want your partner to see you as a person and not a computer screen. The more they see the person, the more they will do for the person (that’s you).

Also remember that different affiliates might have different prefered means of communication. Bob might only be able to respond to emails in the afternoons because of his daytime job. Karren might be more responsive to phone calls after lunch. Janice prefers texts and can often take a few hours to respond. And David can only receive messages by Raven (he’s a bit odd). Also be sure that if you send out newsletters or other information to your affiliates, you make them as personal as possible. If you have 10 partners, take some time and tailor the content and message of each newsletter to fit the needs of each affiliate.

Little things count as well. Did Bob go to an industry event you went to? Ask him how he liked it. Was it Janice’s birthday? Send her an e-card. Be consistently considerate and it will pay off.

2.) How Much to Pay     How much you pay your affiliates depends on two main things: how much you make per sale, and how many sales they bring you.

First you need to look at your gross margin on every sale and determine what percentage you can afford to pay them and still make a profit. You need to take care of your affiliates but that should never come at the expense of your own profit. Second, remember that not all affiliates are created equal. An Affiliate that brings you 500 sales a month should get a higher rate or better kick back than one that brings you only 50. Always reward your top producers. These two are both worth spending some time thinking over.

You can also run incentives to help motivate your affiliates. For example: maybe the first person to reach 100 sales wins an X-Box or $200. You can also reward affiliates based on specific criteria. Is it your goal to get more new customers, more female customers, more people named Henry? Make a promotion based on these criteria and use it to see what the hidden abilities of each partner's website really are.

Another thing to consider is what metric you want to use for payment. The three most common one are pay-per-lead, pay-per-click, or pay-per-sale? Which is more important for your site and your business?

Be sure to come back and reevaluate your payment terms regularly and change them if necessary. E-commerce is dynamic, not static, so reevaluation is key to your success! Finally and possibly more important than all the preceding points: pay your affiliates on time! These are your men on the ground, your connection to the world, your marketing vanguard! If nothing else, make sure they get their money on time. It will be appreciated.

3.)Don’t let your Affiliates Stagnate     Despite what many people think, affiliate marketing isn’t something you just set up and then it runs on autopilot. Your program and your partners are going to require your attention and time. You should be coming up with new strategies, new promotions, and new ads every month or at least every quarter. Talk with your affiliates and ask what's working and what's not working. Get their input and ask for feedback. They are a source of valuable information on your target customers.

Likewise, make sure that your affiliates have everything they need to be successful. Give them a detailed written plan of attack every month. Do they need new specific ads, different content, different tools? Do they need training or extra help? Make sure your partners are well provided for. The more you stay involved, the more they do too.

4.)Don’t Get Cheap When it Comes to Tracking     Affiliate programs are based entirely on commissions. It won’t do you or your partner's much good if you don’t have an accurate way to link sales figures to the partners that produced them. This goes double if you have disputes where your partner’s figures don’t match your own. If you’re part of an affiliate network, then they will have systems in place to do this automatically. However, if you run your affiliate program in house, you need to invest in good Tracking software. Tracking software integrates with your ecommerce platform and automatically tells you how much commission you owe to which partner. As a matter of fact, we might just know the perfect one to recommend to you (wink wink).

Just remember that affiliate marketing is a set of relationships. Just like your personal relationships, they take work, communication, involvement, and most importantly, powerful software. Thanks for reading.