My marketing coach liked to ask, “Who has your customer before you?” His point was that each customer interacts with many people every day, and if any of those people recommended you, it would be far more effective (and less expensive) than almost any other marketing technique.
For example:
- Business coaches could get referrals from accountants
- Florists could get referrals from bridal shops
- I.T. trainers could get referrals from computer retail shops
In brief, one party (the merchant) has a product and the other party (the affiliate) has access to the market. They join forces in a very simple agreement, where the merchant pays the affiliate a commission on each sale.
This works best when the affiliate is an influential and respected person within their network, and the merchant has an effective sales system for converting leads into sales.
Although businesses have been conducting joint ventures like this for decades, Amazon.com brought it to prominence on-line when it started its affiliate program, where anybody can refer people to the Amazon.com Web site, and receive a commission on every sale. Since then, affiliate programs have flourished on-line.
There is a lot of material already written about affiliate marketing, but most of it is aimed at those who want to build a new business around affiliate marketing. That does work, but for most businesses, that’s not the goal. Rather, they already have an operating business, and now want to add affiliate marketing as one of their marketing channels.
Creating an affiliate program has a number of potential benefits:
- Database: Somebody else has done all the work in building a customer list. This could have taken months or even years, and usually involves a considerable cost in time and money.
- Reach: You can reach markets that would otherwise be outside your reach.
- Focus: Providing you pick the right affiliates, with the right people in their list, you’ll get more highly targeted visitors to your Web site. Twenty of these visitors could be worth more to you than two thousand random visitors who find you in search engines.
- Trust: When your affiliate endorses you, you overcome most of the trust issues people have when buying on the Internet. In effect, you piggy-back on the trust the affiliate has already established.
- Cost: It’s a no-risk proposition, because you only pay affiliates for successful referrals. It’s free marketing for you, and you only pay out of profits you would never have had otherwise.
The biggest problem is that most affiliate programs don’t work! Most business owners are too optimistic about the results they expect from their affiliate programs; so they end up investing a lot of time and energy in something that doesn’t pay off. That’s not to say you should not conduct an affiliate program! Just go in there with your eyes open.
