If you want to increase and multiply revenue in your business without having to add any additional marketing costs, while ensuring that you are capitalizing and maximizing your ability to get and follow up on referrals, then affiliate systems are the next key in today’s collaboration economy.
If you are in a service business where you provide your customers something intangible, which they can’t enjoy unless they hire you, then a minimum of 40% of your business should always come through referrals. In the old way of doing business, referrals were an arduous process: You would have to reach out to each of your customers, ask them if they were happy, and then if they responded positively, you would have to ask them if they knew of anybody who could benefit from your services.
At that point, there may have been an awkward pause; no matter how much they liked your product or service, the individual may or may not have felt comfortable with this question and they may have hemmed and hawed and left you without any good referrals. Generally, this was a very clumsy, cumbersome process.
All about affiliate marketing:
In the new business model, thanks to today’s technology, there is even a new term to describe how to automate your referral system—it’s all about affiliate marketing.
Affiliate marketing was made most successful by one of the companies we keep referring to in this business because they’ve done such an amazing job, Amazon.com. The way Amazon.com grew so rapidly and so quickly is because they created an affiliate program where anyone—you, me, it doesn’t matter as long as we have an email address and a computer—could sign on as an affiliate, receive a specialized link to every single product in the Amazon warehouse, post that on a personal website, and if anyone else chose to buy that product through this vocalization of Amazon, you would receive a small percentage of the sales you were directly responsible for influencing.
How to make an affiliate program work for you
It is important to address how affiliate programs can work for you even when you’re not working. You shouldn’t have to be constantly working on affiliates and referrals in the new economy.
In general, there are three types of people who could be a potential affiliate for you and your business:
- Promoters: These are the people who will really give your business a boost. They think what you have to offer is amazing and they are more than happy to promote it on their website, through social media channels, to friends and family, to anyone they meet. The more promoters you have, the better. All you need to do is reward them and thank them and send them on their way; they will be happy to do the rest and publicize your product or service to anyone and everyone. A promoter is really what you want all of your customers to ultimately become. A promoter will take the reins out of your hands and will willingly and eagerly go out and tell people about your products or your services, not because of the commission, but because of the amazing benefits they receive and the outstanding follow-up support that they get from you. Every business owner should be constantly thinking about creating more promoters.
- Customers: A customer is someone who has purchased your products or services and they are happy with the purchase. This group would be thrilled to tell people about these products and services, but only when those people ask. They’re not inclined to go out of their way to promote your products or services. They will if you hassle them enough, if you constantly call them and email them and remind them over and over. However, you could end up spending a lot of time and energy trying to encourage customers to send out marketing on your behalf. If they do it at all, it’s going to be halfhearted, template-driven communication, and it’s not going to speak to their core audience the way it needs to.
- Sleepers: When you hear someone complain about having to babysit the people who are signed up as an affiliate, this is the group they’re talking about. A sleeper is someone who has purchased your product or service, has agreed to fill out or click the affiliate link and sign up, but then finds that promoting your system or your service is far too time-consuming. As a result, they never do anything with it. It is actually pretty easy to become a sleeper for many of the companies you set up affiliate links with. Why? Because they never do anything to keep in touch with you; they may have an affiliate program, but not a very effective one. At the end of the day, if you can make a 10, 20 or a 50% commission selling somebody else’s product for the same amount of work that it takes to sell your own products and services for 100% of that commission, you will naturally work on your own. That is a common mentality in this business. All of this means that you need to help sleeper affiliates realize that the 20-50% commission that they might receive on your product is a better deal for them than 100% of the sales on their own product or service. You can do this.
Rather than focus your energy and time on reminding customers to send out referral marketing for you, you would be better off spending that same time rewarding those customers, keeping in touch with them and giving them the most remarkable customer service you could possible imagine.
Following is a great example of just that: Daniel Priestley, an entrepreneur, author and speaker, regularly rents out a night club, restaurant or a pub to have what he calls an “Affiliate Night.” During these events, he brings all of his key affiliates—the promoters and the customers—out to just enjoy company and develop more connections.
The two of us, John and Topher, have a great affiliate relationship with each other. We happily refer people to each other’s companies not because of the commissions we get—which we don’t even take—but because we both believe so fully in the other person’s products and services that we go out of our way to encourage people to reach out to the other one and do business with them. If you want to make your customers your promoters, seek ways to make them your friends. Build up that trust, build up that bond and create that friendship.
Both sides of the affiliate marketing coin
There are two sides to the affiliate network business. If you think about it, being an affiliate or offering an affiliate program is really the essence of the collaboration economy, because without this collaboration, neither the individual nor the company can reach their full potential and maximize their earnings potential. Affiliate marketing is truly the collaborative economy in action, which is one of the reasons we are such strong believers in affiliate networks.
In truth, when done really well, affiliate commissions alone can create more revenue than most full-time professions today.
As you contemplate how you will collaborate in this economy using affiliate programs, there are two different things you can think of:
- If you have a product or a service that you want to better monetize and increase word-of-mouth and exposure primarily online, then you can offer an affiliate program—in other words, a commission based on performance—for those who promote and then sell your product. If this is your model, then affiliate marketing is something that you should seriously consider.
- The other perspective is that you can promote and sell other people’s products and services. With this scenario, one question that always comes up is this: How do I know that I’m getting paid in an honest way for the work that I have done or the sales I have created for Company XYZ that offers this widget? How do I know that my $500 commission is accurate?
First, this all depends who you are working with, and you have to remember that not everyone has the same ethical standards. Further, in reality, there are a very few reputable companies and you can think of them in terms of being Switzerland—the neutral countries. These companies are the Switzerland of electronic commerce on the Internet, and what they do is they act as an intermediary—a third party, who oversees the transactions, ensures that the proper compensation and payout is done and that the tracking is done properly. These companies are extremely ethical about payments and commissions and can reduce any concerns.
The best in affiliate programs
In particular, there are three great companies to build your affiliate relationships. With these companies, you can create a product or service and make it available through their network, or you can promote and sell products and services that other people have made available on their network to make a commission.
- A good choice is Commission Junction, often known as CJ for short. A well-established organization, Commission Junction has a great reputation and the company offers a wide array of products and services that are sold through electronic means. In addition, Commission Junction allows you to sell both physical (something that could be shipped or consumed) and non-physical (an eBook, online learning course, MP3 download or online education) products and services.
- LinkShare is very similar to Commission Junction. LinkShare offers the opportunity to promote or sell both physical and digital products, and is also well established and reputable. We have used both options for affiliate marketing programs.
- ClickBank only sells digital products and services. If you decide to be an affiliate of ClickBank and you want to promote your products and services, you will only be promoting digital products. Their reason for doing this? Likely, it has something to do with fewer returns, less hassle, ease of reviewing the products before they are accepted into the ClickBank network and so on. In addition, ClickBank becomes your shopping cart. Every transaction actually goes through them. You don’t have to cut a check if you are the person providing the service. You do not have to cut a check to the people who are selling your products. It all goes through ClickBank first. The person who made the sale for you as an affiliate gets paid immediately and the remainder of the money goes into your account. ClickBank is the liaison. They are the system and the intermediary bank, which allows all of this to take place very painlessly.
With all of these organizations, if you are selling your product or service, you will have a built-in army of people who are ready, willing and able to promote your products or service.
For instance, let’s say that you have a coaching program to help real estate agents, and it’s a digital product with 10 hours of audio, five hours of video, and a 100-page PDF manual that you’ve created to help real estate agents realize their full potential and double their income within the next 12 months in any market.
That’s your angle. That is your pitch. You take it to ClickBank. Assume that they approve the product to be put into the ClickBank network. As soon as it’s approved and live, their army of affiliates is made aware or has the opportunity to review your new product. Think for just a moment about how much you could sell on your own—one person, one website, with a single person’s effort. Now think about that multiplied times literally thousands of people who really understand Internet marketing. Does it really matter if you are giving away 50% of the retail price of your product if you have even 500 people selling it for you? It’s digital. Does it really matter?
Think about the multiplicity of this. It’s leveraging your time, leveraging your effort, and it’s leveraging other people’s talents and opportunities. All of this is incredibly important in the collaboration economy and in the way the world works today.
You can use all of the affiliate networks if you choose, unless there is some sort of conflict of interest in any of their rules and regulations. If we had to recommend just one, ClickBank is our choice, unless you have a physical product to sell. It is the simplest, most streamlined, most widely recognized and most accepted by Internet marketers and affiliate marketers throughout the world.
NOTE: If you have, or want, your own shopping cart to sell products and services from your own website, we suggest 1ShoppingCart or Infusionsoft for your affiliate program. This allows you to have people promote your programs and earn commissions and puts you completely in control. There are many others, but these top rated. Research and determine the best fit based on your needs and budget.
How much money will I make?
The question that always comes up when it comes to affiliate marketing is:
How much money or what percentage will I make promoting another person’s product?
If I am offering my product to another person, how much money do I have to give away to the person who really helps facilitate the sale?
The answer is: It varies.
The commission earned varies based on several key points: Is the product or service physical or digital? A physical product has greater inherent costs. You have to build the physical product. You have to ship the physical product. If there is a return process, there are always costs involved with a return of a physical product. Because of those inherent increased costs with a physical product, the commission earned and the commission paid on the sale of a physical product will generally be less than with digital products.
A digital product has a lower cost of entry. It really has no cost other than continual access to the people who want to purchase and gain access to this digital product or service. Because the person who has created a digital product or service at lower cost, they can pass that cost savings on to you in the form of higher commissions paid to the affiliate.
With a physical product, commissions can range from 3% to 20% on average, although there are several variables at play. A digital product will have a commission ranging from 25% up to 100% commission.
You might be wondering, “How is it possible that I could earn a 100% on a digital product? Why would any business owner ever give away 100% of their profits?”
It’s a great question and there is a very logical answer to that and it relates to what is called the back end. For example, if you offer a coaching or mentoring program online and it costs $100 through a company such as ClickBank, they will give you 100% or $100 of that sale. However, there is also an upsale on the back end or else they have a method of keeping people involved with the expectation of future sales, so they give 100% on the front end, because they know the upside of the back end sales far exceeds the $100 and also the 100% they gave you as the affiliate. For you as an affiliate, however, that $100 is certainly worth your time and effort. Once you get an affiliate program going, while there is still a little work and promotion involved, this is by far the best method of making passive income. As an affiliate, you have no support issues, customer service emails or calls and no product development or maintenance challenges.
As you are developing your business or developing your products or service, think about what products you could use as an add-on from these networks to earn a commission in conjunction with the sale of your existing products or service, or which of your products or services you might make available to these networks so that other people can help sell it for you, allowing you to increase your reach, broaden your brand and make more total sales.
Despite the fact that you are giving away a good chunk of the overall sales and commission for your product, in the end your total sales and total revenue should increase dramatically.
If you offer it, will they come?
When you become an affiliate or when you sell a product on an affiliate site, you might think that once your product is approved and uploaded, it will immediately turn into “The Field of Dreams,” where the business simply comes out of thin air and your product just starts selling itself automatically. In reality, you need to continue to take control of your own destiny and your own success.
The following tips will help you even after you’ve uploaded your product or service to an affiliate website:
- Take advantage of the tools some of these sites offer: ads, sales copy, case studies, calls to action and so on. You can use many of these on your own website to further promote your product. Generally, you can customize colors and fonts to suit your business.
- Think about seasonal promotional opportunities. For example, if you are doing a blog post on your website about getting in shape for the holidays and you are promoting a weight loss product, then the weight loss company you are an affiliate for may have a seasonal ad that will pop up with a code on your website. Some of them will change automatically because the code is being pulled from a central server, so they will push the ad to you, which is embedded on your site with an updated image based on the current season. In this case, all you have to do is enjoy the incremental sales and success that comes from this option.
Again, the best of the best when it comes to this strategy is Amazon. As an affiliate of Amazon, you can sell anything from books to solar-powered backpacks to Mac computers, and they will provide you with links, text, sales copy, different colors and different sized images—some that are static and some that are dynamic. Amazon makes it easy for you. The important thing is to have the right image that fits the flow of your website, newsletter, blog, social media post or whatever it is that you are working on.
When it comes to colors and consistency, there are two options:
- You can carefully ensure that any ads or promotions will flow with the structure and colors of your website.
- The other is to use colors and ads that are in stark contrast with your site, so that they really pop out.
Next time you visit Facebook, look at the ads that pop up because they are deemed relevant to your likes and dislikes. (That’s why you filled out all of that personal data on Facebook).
If you are wondering how they know which ads might interest you, they are collecting data on you, otherwise known as data mining, so that the ads are relevant to your personal preferences and sometimes even to what you “like” on your Facebook feed that day.
Notice which of the ads stick out. What colors stick out? Generally, it is the contrasting ads. If the colors of the ads are very similar to the colors and design of Facebook, they will tend to look too much like the architecture of Facebook itself, and they got lost. The look and feel of your online ads is a personal preference that you can play around with as you dive deeper into affiliate marketing.
In addition, it is always important to do some testing when it comes to offering affiliate products on your website. For instance, you may have two ads that are exactly the same, except one is yellow and one is blue, and you can drop a very simple code in there for testing purposes. ClickBank allows you to use such codes for tracking; if the yellow ad pulls twice as much business and interest as the blue one, then get rid of the blue and use the yellow on the other page as well. It’s that simple and that effective and definitely worth your time.
We have a friend named Sam who likes to say, “You can’t expect what you don’t inspect.” So if you do not inspect what’s happening in your affiliate programs, if you don’t test your ads and if you do not compare A to B, then you won’t know which way to flip the switch to where you can double the return for your efforts.