5 Reasons To Add Affiliate Marketing To E-commerce

Affiliate Marketing Hurdles To Overcome

Despite being a great, cost-effective way to extend marketing reach, affiliate marketing is low on the list of tools that many e-tailers use to drive and convert buyers.

Affiliate marketing is more like sales management than marketing.

To understand how it works, look at how Pat Flynn generates over $20,000 per month using blog affiliate marketing.

5 Reasons to add affiliate marketing to your e-commerce mix

1. Extend reach. Affiliates enable firms to efficiently connect with more potential customers, particularly in terms of relevant niches – Bolex collectors, for example. Adding affiliate promotions can help increase sales particularly where there are points in your marketing calendar when sales have a natural slump. Google Affiliate Network‘s Chris Henger used the example of a retailer whose Saturday sales were weak. To counter this slump, affiliates were given a coupon the second Saturday of each month that improved sales. These promotions had well thought-out limitations, such as excluding its top two sellers that always do very on any given day.
 Consider which of your products need special offers and which products have the margin for a discount to drive sales? (Hint: it’s probably not your bestsellers.)
2. Add distribution channels. Affiliates expand your reach to additional shopping channels. Examples include secondary shopping sites like ThisNext, forum and community sites like FatWallet, and continuity programs like Subscriptions.com.
3. Provide competitive presence. Affiliates enable you to be present on sites at the actual point of purchase, where your competitors are. This is an important decision point when customers may trade off one brand for another. Loyalty or rewards sites like Ebates and Upromise are good examples.
4. Focus on late purchase-process conversion. While the buying process may occur over an extended period, customers may need an extra incentive to complete the deal, as with RetailMeNot.com. Further, affiliate marketing networks, such as RevenueWire for technology products, provide a more efficient shopping cart for some online merchants. Just as paid search marketing buys are assigned to the last click, affiliate sales are often assigned the last click because many analytical models have trouble attributing sales.

5. Pay based on performance. Affiliates are compensated based on actual sales, making marketing expenses more effective and directly attributable to revenues.

Remember– it’s important to identify the affiliates who drive the best traffic in terms of the number of quality customers and ongoing purchasing behavior.

eBay Partner Network’s Will Martin-Gill discussed finding ways to reward affiliates for driving the best quality traffic, no matter their size. At the same time, you must determine and deal with the low-value publishers in your program that create fraud, reduce profitability, and try to insert themselves in the flow of purchases that would have happened without their promotion.

5 Affiliate marketing hurdles

Affiliate marketing remains marketing’s stepchild despite its ability to drive demand and close sales. Here are five potential negatives and why they shouldn’t hinder your use of affiliate marketing:

1. Incremental marketing cost. Marketers think affiliates insert themselves in the path of purchases that would have come to them through their own sites. For established marketers who have offline (such as catalogs) and online marketing vehicles, affiliate marketing adds incremental costs, thereby reducing margins. The reality is that savvy customers hunt for the best price.
2. Lost Sales. If there’s an affiliate’s promotional code box in your checkout process, some portion of prospects will leave your site to look for a coupon and that’s an opportunity to lose the sale. You can counter this by providing content that describes how customers can qualify for a promotional discount.
3. Additional overhead. To work effectively, affiliate marketing must be managed, analyzed and tracked. Further, you must provide other marketing resources such as offers, creative, and relevant landing pages, to drive sales.
4. Brand control. Always an issue, but marketers can manage their brands by setting and enforcing rules for their affiliates.
5. Unprofessional affiliates. The reality is that most affiliates are full-time business people with a deep understanding of, and relationship with, their market. The Performance Marketing Alliance is an affiliate industry organization focused on raising the visibility and improving the credibility of the affiliate industry. Its board, consisting of the who’s who of the industry, is tackling important issues like the new tax laws.

While affiliate marketing requires resources to work effectively, it can be a productive channel that brings you sales you would never have found on you own.

Happy Marketing,
Heidi Cohen

Photo credit: pbkwee via Flickr