13.3 Leverage Your Business with Affiliate Marketing
13.3.1 What is it ?
Affiliates take the form of a variety of arrangements. They may be:
Formal partnership agreements.
Loosely structured success fee arrangements.
Formal or informal referral arrangements.
Cross-selling arrangements and other similar arrangements by which there is a sharing of the profitability generated from a sale that is the result of a referral by an affiliate to a vendor/merchant.
The vendor/merchant does the selling and the affiliate markets or promotes the vendor/merchant’s business and products.
13.3.2 What are the charges, how does it work and who does it suit?
Affiliate commissions range in extent but average at about 50% of the selling price. The affiliate network administration fee averages about 8%.
The affiliate marketer captures a coded link to the vendor’s site that tracks the source of the referral. The exact source may be:
Text in a story.
A banner advert on the affiliate’s website.
A link from a marketed electronic document, etc. that results in a commission based on a fixed or variable “pay per click” fee or percentage.
Commissions are based on actual paid for sales. However, some affiliate management organizations will link an affiliate’s revenue to referrals. Some affiliate programs are multi-level programs with sub-affiliates being appointed in a hierarchical structure. Vendors set up a sales/pytch (sic) web page per product that directs the buyer to a payment page and then back to a thank you page that offers electronic product downloads and more. There are many affiliate organisations. Popular affiliate networks include www.clickbank.com and www.jvzoo.com.
Digital information products such as e-Books that you download from the internet is perfectly suited to affiliate marketing. The marginal cost of e-Books is negligible and thus relatively high affiliate marketing percentages are affordable. The user purchase process will be professionally managed, and the e-tailer will not have to pay fixed monthly fees for online credit card facilities.
13.3.3 Why start an affiliate business?
Once you have acquired Internet marketing skills, perhaps by way of joining a network marketing team, an affiliate business may be a great way for you to test your new found skills. In this way, you can test the market for successful product lines without having to focus on admin, stock holding cash flow dynamics, warehousing and distribution, delivery and payment terms and conditions, etc. Often having some house lines and augmenting them with noncompetitive affiliate lines will be a way of growing a new Internet-based e-commerce store.
13.3.4 Other matters
Investigate the nature of selling aids that are available. Does the merchant offer e-Book support or bonus buys? Is there a marketing pack with advertorials, logos, adverts and online chat or other support? Having affiliate product lines that logically fit into your product range is recommended. Maintaining a theme for the website operated by the affiliate will help to ensure that the clients that the affiliate attracts are a good fit to the products on the website. When shopping for products, ensure that you test the user experience and the testimonials offered by their customers.
At the core is the commission. Will it be a once off commission or will it be for a defined period on repeat or new sales? Who “owns” the customer? Will you make a referral and after that the customer belongs to the affiliate network? In other words is the customer to remain that of the affiliate or do they become customers of the merchant? Reputable affiliate networks track and keep statistics on referrals. You need access to this data to ensure that your revenue stream is well managed and is reliable. Where up-front joining fees or other payments are required the chances all too often are that the merchant is a scam. Alternatives exist and taking a chance is not necessary. Ensure that you protect the intellectual property of your site by formalising affiliate agreements and ensure that you own your identity and website URL.
In the end, there are those that establish successful businesses as an affiliate marketer, selling products on behalf of others, and many make a sustainable income doing so. However, this said it is not a universal truth. Affiliate marketing may add a revenue stream to a new business, but you need to decide if it is the main or an ancillary product. When you have your products you can turbo your reach into new markets by appointing affiliates to sell for you. You could set up a network of distributors, dealers and agents. The trick will be to ensure that your product can feed the income expectations of each level in the network. Network marketing in this way can expand your market reach like few other systems can. I recommend that you explore this opportunity if you can provide value and margin to each layer in the network. To better understand how to set up a network marketing distribution network search for "Eric Worre GoPro” on YouTube. The Rich Dad Poor Dad book of Robert Kiyosaki that was published in 2000 has now sold some 26 million copies and it promotes self employment in a network marketing team. Certainly network marketing is a distribution model that is gaining rapid popularity.
There is a risk associated with employing affiliate marketers, and it relates to the fact that affiliate commissions are high. Network marketing too has risks but these are more related to people not understanding the concept of Multi-Level-Marketing (M-L-M) or network marketing. The extent of the problem will depend upon the product that is marketed. The more tangible the product is the less will be the problem. Selling resale rights to digital products is often misunderstood and providing adequate evidence of client satisfaction by way of testimonials will be required to counter this risk. Big businesses set up multi-level distribution supply chains and doing so is normal. My suggested approach of setting up a mult-level affiliate-network enables small business to level the supply chain playing field with that of big business by them setting up an identical supply chain with the difference being that they do not own each level in the network. The problems with affiliate marketing are different. If your customers get to know that an affiliate is earning a 75% commission will this have an effect on customer loyalty and their perception of product value? Will your customers link to an alternative option or will they for example seek and link via an AdSence advert to another merchant’s website. The trick will be to place your website within a busy flow of relevant traffic that ensures a balanced revenue for all. Once your site loses balance, your affiliates will dry up and so will your sales.
13.4 Leverage Your Business with Other Marketing Opportunities
Finding consensus on a definition for the word “marketing” is about as elusive as finding one for the word “asset” - the more the professional experts know the more they differ. Allow me to define effective marketing for the purposes at hand to be: The process of communicating a story to an audience who appreciate it, take action as a result of it and who share it with others.
e-Marketing is a wide field that interfaces with offline marketing channels. Often synergy is created by bridging eyeballs from offline channels to online channels. The cost of printing and distributing flyers, brochures, reports and more is significantly more expensive that online distribution provided an online audience exists. If there is no established online audience then online channel creation could take time and a large budget to create. In overview, an e-marketing plan would include websites, pay per click advertising, e-mail marketing, webinars, social media campaigns, online banner advertising, article syndication, backlinking and other SEO requirements. Offline advertising and marketing would integrate with the e-marketing plans.
13.4.1 Interfacing Needs, Options and Opportunities
(This section on the interfacing of user needs, communications needs, technology options & marketing opportunities has largely been excerpted from my book I wrote titled: People Centred Performance Enhancement)
In an e-commerce environment users need to be able to locate what they want, know where to get it and they need to be able to follow a simple, easy to follow checkout routine to buy it online. Payment options, delivery options, returns options and guarantees will add to user comfort and to the overall user experience, as will the positive testimonials of others. However, simplicity alone is not enough.
Customers seek a seamless buying experience that is fast and which offers competitive pricing. Yes, we are back to the goal of good, fast and cheap! Notwithstanding the fact that some have not achieved the mass market goals of good, fast and cheap, e-commerce opportunities can be targeted to defined audiences by way of the analysis of harvested data from customers and users.
e-Commerce is a part of the modern market place and the user experience will be impacted by the nature of the product or service as well as by the marketing approach adopted. The popularity of e-commerce lies in the ability of an enterprise to extend it’s market reach and if it does not compete in the broader market place it will find its competitors competing in its own “back yard.
”There were times when only big business could coordinate and integrate the flow of information from sales ordering to dispatch and customer feedback. Today lightweight systems abound that offer advanced information tracking and analysis. Clearly the playing field for building psychographics (see below) is no longer the preserve of big business.
Mobile phones increasingly redefine the idea of what a computer is. By no stretch of the imagination a smart phone is a computer in the pocket of current and potential customers. It allows customers to be spontaneous and it is a communication channel, like no other, to customers and staff alike. The use of social media for work-based communication is taking hold. Opening the door to live conversations via smart phone connectivity happened some time ago. Why should employees not be handing out business cards with the invitation for direct contact instead of leaving the customer to do battle with a robotic switch board and a call centre help desk? Social media is no longer the domain of student after class communication. Why, as an example should sales or service technicians not have a corporate Twitter following for daily tweets on product related tips, et cetera? Company Apps, communication platforms and the data harvesting tools in use today, that are designed to gather consumer opinion, must be intelligent enough to be user friendly and they must give comfort by being transparent and easy to use. Customers must be happy about you using the phone in their pocket to gather data and they must feel confident that they command the flow of data to any automated collection database for marketing data. In short, customers and users must feel that they have an opt-in option to the provision of demographic and other data. They too need to be secure in the knowledge that their data will not be used for anything other than disclosed and approved purposes.
Clearly, business performance enhancement directed by people that are self-directed and who give their own considered opinion on merited company performance will add the edge to consumer information needs. Information is a key to success that is powered by its collection analysis and use. Customers prefer human interaction and one-on-one connectivity rather than “canned bling” brochure material. The power of employees legitimately asserting that the organization is not “ho-hum” is as strong as customers offering positive testimonials of their user experiences.
Where going online is a tactic to produce turnover growth in an entity facing closure, what will be on the minds of the staff? Consider the publication of the following monthly service delivery robot report to the mobile phones of all employees. Definitely it will signal, at the very least, hope for the future.
Given that all know what the standard resource, performance and profitability standards are, the robot chart will crisply deliver the message via an MMS to a mobile phone. It’s an example of technology simplifying reporting.
What’s the secret to e-commerce and showcasing services online? Firstly, harnessing technology will enhance corporate performance in most markets. The secret is to keep it simple, deliver an awesome user experience and ensure that your connections maintain a human touch. Automated robotic telephone operator styled communication as an example is bad and it delivers nothing more than an awful user experience. Follow-up communication with buyers and users is critical to success. Many will tell you that the secret is in gathering data about purchase behaviour and psychographics.
Psychographics relates to market research that studies psychological variables such as attitudes, values and fears. It also deals with consumer trends in opinions, aspirations, values, interests, lifestyles and more. Taken as a whole these matters are referred to as IAO variables (Interests, Activities and Opinions) and they are used to build profiles of your customer or user base. With a better understanding of your customers as well as of your market you will be able to enhance your marketing needs as between mass, niche, precision and target marketing campaigns.
Mass marketing via bulk e-Mail campaigns, TV, radio and newspapers is often used for building brand awareness and for broadcasting price competitiveness to mass markets. The audience is not differentiated and the products or services are likely to be used by everyone. On the other hand marketing to veterinary surgeons by way of an opt-in SMS campaign run by the national association of veterinary surgeons might be termed niche marketing however this audience may be further classified so as to be relevant to a small segment of veterinary surgeons that use a particular piece of diagnostic equipment in an attempt to get them to upgrade their equipment with a new add on in what would be termed a precision marketing campaign.
Market segmentation may be effected in terms of a variety of criteria such as geographic filtering to target farmers, income filtering to target high end expensive product promotions, gender filtering to target cosmetic promotions et cetera.
The relevance of touching on marketing matters has been to draw attention to the fact that the modern world consistently and regularly invades the privacy of individuals. Service delivery needs to be marketed and success will depend upon finding a balance between gathering psychographic data and privacy so as to maintain a positive user experience.
Achieving turnover growth in this arena will depend on transparency, values and the degree to which you maintain a reputation for a workplace Ubuntu. You need to demonstrate that your organization is people centred and that its values dictate its humanity in its dealings with employees, users and customers. The day when consumers revolt against an invasion of their privacy is fast approaching and in many respects it is well under way.
It is stressed that successfully interfacing communication, technology options and marketing for business performance enhancement is a function of really understanding your audiences. You need to understand their likes and dislikes in relation to their user experiences and in particular you need a deep understanding of their views on the direct or indirect collection of data from and about them. Above all else, keep connections “human” and communication people centred.