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Inner Circle Roundtable of 21st Century Marketers |
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Chapter Thirty-Eight Affiliate Marketing
By Ben Hart
What is “affiliate marketing”?
Well, there’s really nothing new about the concept. When you offer an affiliate marketing program, you pay people a commission for sales they help you bring in.
The concept is a simple one. If you participate as an affiliate marketer, you receive a commission for every sale you help bring in.
Businesses have been operating this way for centuries. That’s how you compensate your sales force. So there is absolutely nothing new about the concept of offering a sales commission or receiving a sales commission.
What is different today is the Internet -- that is, the economics, speed and reach of the Internet that allows the creative marketer to speak to a global audience at lightening speed. If your content is good, if what you are saying is worthwhile, you’ll have no trouble finding a big audience on the Internet.
In other words, you are no longer limited to your tight circle of friends, relatives and associates. Nor are you relegated to selling door to door or cold calling – Willie Loman style. On the Internet, you can create a marketing virus (the good kind of virus; not the bad kind) that can spread like wildfire across cyber space in a matter of weeks or even days.
If your marketing virus is successful, you can reach thousands of people, even millions of people quickly for almost zero cost.
Remember, money is no barrier to your success on the Internet. If the content of your site is good, if your product is good, and if people can benefit (i.e. make money) by telling others about your product or your site, you then have the makings of a powerful marketing virus on the Internet (again, the good kind of virus, not that bad kind) the kind of virus that spreads on its own across the Worldwide Web because everyone wants to tell their friends about your site or your product.
Everyone wants to be a hero to their friends by pointing out something interesting, useful, or worthwhile. That’s the kind of virus you want to create on the Internet. And that’s what makes affiliate marketing so powerful on the Internet – IF (like anything else) you do it right.
This chapter looks at both sides of the affiliate marketing coin: 1) How to be is a successful affiliate marketer; and 2) how to launch an affiliate marketing for other to join.
Those are the flip sides of Affiliate Marketing. You sell for others. Or you get others to sell for you. Most of the big internet marketers do both.
They offer an affiliate program to get the word out quickly about their product or service. They also represent other people’s products as affiliate marketers.
A good strategy to follow is first to try to sell your own product or service. Then, for those who do not buy your home-grown product or service, start offering the products and services of others and take the commission.
Now, just like with any other marketing system or method, your success will depend on the quality of the product or service you are offering and whether people want your product. No matter how great a marketing system you have or how great a salesman you are, you cannot sell people a product they don’t need or want. You can’t sell ice to Eskimos.
How to Succeed as an Affiliate Marketer
So, let’s say you are thinking about being an affiliate marketer – that is, you are going to wade into internet marketing by looking for a product to sell.
You are going to sell someone else’s product and take a commission. That, by the way, is a great way to get started in Internet marketing. Being an affiliate marketer is great for newbies. The advantages are many. But here are a few of the big ones:
1) You don’t need to create a product to sell.
You just pick someone else’s product to sell and take the commission. You can then focus 100% of your efforts on the marketing.
The key here is to pick a product or products that have a track record of selling very well. And you want to select products that all fit well into your chosen market niche.
2) You don’t need a big infrastructure to be an Internet marketer.
For example, you don’t need to have a merchant account. You don’t need to have inventory. So there is effectively zero start-up cost in becoming an affiliate marketer – selling the products of others.
In my view, there really is no need to create your own product anyway – unless you just want to. I create my own products because I am a writer. That’s what I do. And I do that for many reasons – not just to make money.
I do it because I want to share my ideas. I enjoy teaching, because I want my children to learn what I know. And I want this to be my legacy. I want this body of marketing knowledge (my books, articles and seminars) that I have produced over the years to be a big part of what I’m known for, even after I’m gone. I just think a lot of people can benefit from reading what I write.
If I can change some lives (hopefully many lives) for the better because of what I write, that’s my goal. So that’s why I write.
But most people are not writers. So this approach does not make sense for most people. And that’s no problem. There are an infinite number of proven products out there to choose from.
Almost all of them have an affiliate marketing program you can plug into – or some variation of an affiliate marketing program.
Generally, for example the wholesale price of a product is 40% lower than the retail price. That goes for books, electronics, golf equipment, laptop computes, sneakers, whatever. So just figure you have about a 40% margin to work with if you buy at the wholesale price – almost no matter what the product is you are thinking about selling.
Well, maybe not for very high-ticket items. But for most consumer products.
The key is to target a niche – a niche that interests you. You don’t want to be spending your day doing something you are not interested in.
Figuring out what your niche should be is not the topic of this chapter. That’s covered by other chapters in this book – most notably in the chapter titled “How to Get Rich by Doing What You Love.”
Once you figure out what your niche is – that is, what your target market is -- your next step is to plug into affiliate programs or make arrangements to be an affiliate marketer for those products that fit your market niche.
Then create a website that’s all about that niche. If your niche is golfers, your website should be all about golf. If your niche is wine drinkers, your website should be all about wine. If your niche is bolts, your site should be all about bolts.
The successful sites are not sites created for affiliate programs. The successful sites are content-rich sites that are labors of love for the site owner.
Representing the products of others is how you make money from the traffic coming into your site.
Step #1 is to build traffic with a great site by following the advice in this book.
Step #2 is to “monetize” that traffic by offering products on your site from which you receive a commission.
The successful affiliate marketers are those with high-traffic sites.
So once you’ve figured out your the niche your are targeting and once you have your site up and running and are bringing in traffic, start entering into affiliate marketing relationships with manufacturers of the products that fit well into your market niche – the kinds of products people in your target market want to buy.
It’s really no more complicated than that.
The more traffic you have coming through your site, the more money you will make. To attract traffic, your site needs to be good. That’s why the focus of your efforts must be to create a great site.
Because your focus is on the content of your site, it’s best to make sure the companies producing the products handle all the logistics – including the shipping and the customer service. That’s one of the beauties of being an affiliate marketer. It frees you up from most of the headaches of running a business so you can focus of creating great content for your site.
Now, there are two ways you can handle the transactions.
The easiest way is just to have the company that created the product handle the transaction. You then just collect the commission check and you’re done with it.
The other way is for you to handle the transaction and then to pay the company the wholesale price for their product. Handling the transaction yourself is the more difficult way because it requires getting a merchant account and most likely doing more customer service. That means hiring employees – customer service people.
Of the two ways to handle transactions, I prefer the latter because I am a bit of a control freak. I want to know how much money is coming in because knowing that number is critical to knowing how much money I can invest in my advertising and marketing.
I don’t want to sit there for a month or a quarter and wonder how I’m doing. I want to be able to track the results of my marketing daily – even sometimes hour to hour.
Also, I want to make sure I am getting credit for the sales I’m making. I feel the best way to do that is to is if I handle the transaction and pay the product company the wholesale price for the product.
Many companies will accommodate you either way. They handle the transaction . . . or you handle the transaction and pay the wholesale price.
Most companies will be happy to let you process the transaction and pay wholesale price for their product if they know you are serious. Most will ask for a business tax ID number to make sure you are a real company, and not just an individual starting out. They will want to see your website and some will ask for proof of your annual sales and do a credit check on you.
They will probably require a minimum order for you to get the 40% off wholesale pricing because companies don’t want to let you buy their golf clubs at the wholesale price only to have you end up buying just one or two golf clubs.
They want to sell to you in bulk. They want to make sure you are serious.
So if you are just starting out, you’ll likely need to be content with the product creator processing the transactions and you getting commission checks. As you get bigger and as sales become more predictable, you can then negotiate processing your own transactions and perhaps even branding the product as your own. This is called “private labeling.”
So there are many ways to “skin the cat” as an affiliate marketer – selling the products of others.
The affiliate marketing program I have set up for members of my Inner Circle Roundtable of 21st Century Marketers is different from most other affiliate program.
If you have been reading my books, you know how strongly I believe in the KISS principle of marketing. KISS stands for Keep It Super Simple.
If your marketing campaign is not KISS, it will fail. Everything must be super simple.
Your offer must be super simple to understand. You must make it super simple for people to do what you want them to do. You must ask people to do one and only one thing. And you must sell one and only one thing with your pitch.
Don’t give people lots of options to choose from. Choices and options just lead to confusion. Confusion is the enemy of communication and the enemy of closing sales.
As I’m sure you know, Henry Ford created the Model-T – the bestselling car of all time.
Henry Ford said, “our customers can have any color they want for their car, so long as it’s black.”
I give my affiliate marketers one and only one job to do. And that’s to send their friends to a landing page to pick up a free digital version of my bestselling 234-page book Automatic Marketing.
And that’s it. Their job with that referral is then over. Each affiliate gets their own “landing page” and a link to their own landing page. Anyone who fills out the form on that landing page to get the free book then ends up on the affiliate’s list of leads. Any name on that list belongs to the affiliate.
The affiliate then receives a 40% commission for any lead of who becomes an Inner Circle member.
The affiliate does not do any selling. So that’s what makes this affiliate program I’ve set up KISS – Keep it Super Simple. The affiliate’s leads then get their free book and are entered into my prospect cultivation program.
Their leads are sent articles on marketing by me. Every so often they are sent to a sales letter promoting the trial membership in the Inner Circle program for $1.
The trial membership expires after 14 days. After that, monthly membership dues is $38.
That’s when affiliate’s 40% commission kicks in. So 40% of $38 per month is $15.20 per month to the affiliate for each referral who become an Inner Circle member.
The affiliate keeps getting that 40% commission for as long as your referrals stay members.
So if just 3 referrals become Inner Circle members, the affiliate earns $45.60 per month commission on those members for as long as those customers are in the program. That’s if just three of your referrals become members.
Now, others of are more ambitious, or are more advanced Internet Marketers. Some have an ezine or a blog with thousands of readers. These affiliates routinely drive hundreds or even thousands of people to their dedicated page landing page (that I give them) to pick up a free copy of Automatic Marketing.
On average, about 10% of these leads convert into Inner Circle members. Some of my affiliates are earning more than $2,000 a month in commissions.
Those earning this level of commission all have blogs or ezines with a decent size readership. They are also earning commissions from other affiliate programs. They are professional affiliate marketers with successful websites that bring in significant traffic. That’s how they make their living. That’s how some of them are getting very rich.
Here are the keys success as an affiliate marketer – to making money by getting a commission from selling the products of others:
1) Make sure you are offering a product that has a great track record of selling well.
If the product is hard to sell, you can’t make any money, no matter how generous the commission. 100% of nothing is still nothing.
2) Pick an affiliate program that pays a generous commission.
Not much point is working to 10%. Pick affiliate programs that pay at least 25-30% commission.
3) Pick affiliate programs that are easy and simple for the affiliate.
The parent company should be doing the selling. Your job should be just to generate the visitor to the site of the product being offered. You are being paid to generate traffic to the site offering the product. That should be it.
So when you analyze the quality of an affiliate program, pay special attention to the parent company’s sales process. Is the main sales letter for the product powerful?
Is it a quality operation that knows how to market and sell effectively?
If not, don’t sign up.
4) Pick affiliate programs that are not an after-thought for the company.
The best affiliate programs are those where the affiliate program is the primary method the company uses to generate sales. Famous examples in the offline world: Amway, Mary Kay, Avon, Pampered Chef.
If the affiliate program is not the primary method a company uses to generate sales, it’s not going to be very good. You might not even get paid what you are owed.
6) Pick an affiliate program that has a full-time affiliate program manager running it.
Affiliate program require management – including promoting it, tracking it and making sure affiliates are getting paid what they are owed. This is a full time job.
Affiliate programs that do not have a full-time manager running it are not serious. Talk to the affiliate manager before you enroll. Ask questions.
5) Pick affiliate programs where the tracking, reporting and accounting are transparent.
You should be able to go to the company’s website to see how you are doing. Or the company should send your monthly accounting reports. The monthly report I give to my active affiliates includes: the number of leads they have generated, the number of leads who have become Inner Circle members or buyers of some kind, total commissions earned and total commissions owing.
6) Pick products to represent that have high-profit margins, because this allows for high commissions.
Avoid products that have a tendency to be commoditized. That’s one of the big advantages of an Information Product, such as what I sell. Information products are cheap to produce and have high-perceived value.
A disadvantage of representing a tangible product such as laptop computers or golf clubs is that you will find your margins are always being squeezed.
Yes, you can buy the product at the wholesale rate 40% or so below the retail cost. But because so many others are also offering the same product (let’s say the new Calaway driver) you will be under constant pressure to cut your prices.
These products quickly become commodities. But an Information Product – such as what I sell -- are one-of-a-kind products. They are unique because they are the product of my own brain.
My products are not being sold in stores across America. They can’t be reproduced by others unless I agree to it – because all my products are copyrighted. There is only one place you can get my products. And that’s from me.
I determine what the price is. This means an affiliate’s 40% commission can never disappear or evaporate with pressure from competition. That’s huge.
Whenever possible, you want to avoid being commoditized in your business. You want to avoid getting into price wars – like airlines, for example.
How to Set Up a Successful Affiliate Program
Many ask me how I can possibly afford to pay a 40% commission. Obviously, that’s a generous commission. Well, several reasons.
First, any leads you take to your landing page to get my free book and who then end up in my automatic marketing system are free leads for me.
A list of qualified leads and happy customers is the most important asset a business can have. Your list is far more important than the product you are actually selling. You can always find a new product.
But if you have no list, you have no way to sell your product, or any product. That’s why priority #1 for me is always to be building my list of qualified leads . . . because without leads I have no way to make conversions, no way to make sales.
You will have to pay for your leads one what or another. There really is no such thing as free leads or free sales – at least not on any kind of mass basis. You must pay for all that.
You must for pay for traffic across your website, one way or another -- either with money for advertising, or sweat equity.
Or you can offer commissions to those who bring in your leads that then lead to sales.
So no matter what, I have to pay. Now, I also know that a lead that comes into my marketing system by way of referral is going to more valuable on average than a lead who comes in by way of paid advertising.
The reason for this is that a lead that comes in by way of referral is here as a result of a recommendation from someone they trust.
Are you more likely to see a movie that has been highly recommended to you by a friend? Or if you see a paid ad about the movie?
That’s why leads that come in by way of a referral are so valuable – so much more productive. So that’s reason #1 for the 40% commission.
Reason #2 for the 40% commission I pay is that information products are cheap to deliver.
It’s just as much work for me to deliver my seminar to two people as it is for me to deliver a seminar to 2,000 people or 20,000 people.
Actually, it’s easier to deliver a seminar to 20,000 people than 2 people because 20,000 people are not expecting one-on-on attention. Nor am I doing any more work if 100,000 people read my books than if just one person reads my books
Once the book is written, once the article is written, my work is over. The question then becomes “how many copies of this can I now sell.”
So an information product has a high-profit margin, and its “scaleable.” That’s what we must all strive to achieve in business – “scalability.”
We want to avoid a lot of customized, one-of-a-kind work. Once we have a product or a service that people clearly want – that’s sellable, we want to be able to roll it out and roll it out quickly without the bottlenecks caused by customized service.
Remember that great Henry Ford remark. “They can have the Model-T in any color they want, so long as its black.”
Henry Ford understood mass-production and “scalability.” That’s what an information product or program like mine has going for it as a business model – low cost to produce and deliver; high perceived value because good information about how to make your business more successful has obvious high value . . . and scalability.
So that’s why I can offer a 40% commission.
Another big reason for the 40% commission – perhaps the biggest reason – is the importance of rewarding your sales force.
If you want to have a happy, highly-motivated sales force of affiliates who are excited to get out of bed every morning, you need to pay the absolute highest commissions you can possibly afford.
The great sales people often make more money than the President or CEO of the corporation. And they should, because a great sales person is worth their weight in gold.
So if you want to have a successful affiliate program, if you want to have a motivated sales force, you need to pay the maximum commissions you can possibly afford.
You need to keep increasing commissions until you feel like you will pass out from the pain. And then raise your commissions some more.
The fact is, my affiliates make more money then I do from the leads they bring into my marketing funnel who then go on to become Inner Circle members and buyers of my other products.
The reason they make more is that I have the costs of delivering the program – including the printed copies of Automatic Marketing, How to Write Blockbuster Sales Letters and other books and “white papers” they will receive in the mail.
But I don’t mind at all that my affiliates make more profit than I do from their referrals because I never would have found these people without the affiliate.
That’s the attitude you need to have towards the sales made possible by your affiliates. Heck, if I only make a 10% profit from memberships that come in from an affiliate’s leads, that’s fine by me. That’s more money than I would have had without the affiliate’s help.
But there’s another big benefit to me of having an affiliate program – beyond expanding my customer base. And that is my affiliate program creates member loyalty to my Inner Circle program – since affiliates become a partner in the success of the program.
The affiliate becomes a stakeholder. My affiliates and I become partners in the same business. Our interests are aligned.
So having an affiliate program is a great way to help cement the loyalty of your customer base – to provide a concrete and specific way for them to help you succeed . . . because you are also helping them succeed.
Its a win-win relationship. Also, remember why you are in business.
You are in business in part to make money, but also to be master of your own time. You don’t want a boss. You want to be the boss. And you don’t want to be doing everything yourself.
You want to be leveraging other people’s time – giving them incentive to do the work so that you don’t have to do it. Time is a finite resource.
You only have so many hours in the day – and some of that time must be spent sleeping, eating, spending time with your family an doing the things you want to do – living life.
You can’t get very far if you are the only one doing the selling. What you want is an army of highly motivated people out there – fanning across the country and even the globe – selling for you.
The only way you can create that happy, motivated army of sales people – perhaps hundreds, even thousands of sales people – is to pay the highest commissions you possibly can – in fact, to go beyond what you think you can afford . . . because if you don’t, your best sales people will just find another product to sell. They will head off to another company – perhaps to your competitor.
And where will your business be then?
“Give and you shall receive,” Jesus said. Be generous. Go beyond what you think you can afford with your commissisons. You will be rewarded – rewarded by the Hurculean efforts of your army of salespeople.
What you will likely find is that this will actually end up being your cheapest form of advertising – if by cheapest I mean producing the greatest return on investment (ROT).
Because remember – you don’t pay anything until a sale is made. You can’t do that with advertising. You must pay for the ads before you know if they work.
So your risk with you affiliate program is zero – because you lay out no cash until a sale is made . . . which is why commissions need to be so generous.
The big challenge with an affiliate marketing program is to have your affiliates trust you. You will want your affiliate marketing to be transparent. You should send your affiliates regular reports on how they are doing.
The report should include:
** The number leads that are now in your system from their referrals ** The number of customers who have come from their referrals ** Total dollars in sales generated from their referred leads ** Total dollars from the most recent monthly reporting period ** Total commissions earned so far ** And most importantly, they should be alerted when a commission check is on the way.
You want to constantly promote your affiliate program -- not only to those who have not signed up yet, but also (and more importantly) to those who are already you affiliate marketers.
By the way, you will find an enormous disparity in the performance of your affiliate marketers. The reality is, most won’t produce much for you at all.
That’s why the “bring in three and your membership is free” offer is so strong.
This is achievable for the 95% of your affiliates who won’t do much more than that.
Notice that is what I stress with my program. If your referrals produce just three members, your membership is free, plus you have enough money left over for lunch.
Not bad for 10 minutes work. So that’s about what 97% of affiliates will do – and that’s fine. Nothing at all wrong with that. Actually, less than half of affiliates will even do that much for you. That’s the reality. But 3-5 percent of your affiliates will be superstars . . . IF you keep them engaged and motivated.
This 3-5% group will generate 80 to 90 percent of the leads and sales for your affiliate program. These are the folks you want to give the gold-plated, red carpet treatment to.
In Mary Kay you get a pink Cadillac if you reach a certain level.
You want to make a big deal of your top performers – just like the casino’s want everyone to know when someone hits the jackpot on the slot machine. Sirens and lights go off. Money cascades out of the machine – sometimes out of the ceiling. The casinos make a big deal out of their winners because they want their patrons to see that there are winners.
You want to make a big deal out of your top performers.
Let me share with you a story that I think reveals something very interesting about human psychology that applies to affiliate marketing.
I was conducting a seminar on direct mail copywriting in Washington, D.C. for college kids. There were about 30 students in attendance.
I gave the students an optional assignment. They could do it, or not do it. Their choice.
I told them to spend the evening writing their very best direct mail package. I said I would award a $1,000 cash prize for the best direct mail package – as judged by me.
Guess how many kids came in with a direct mail package written the next morning.
Zero.
None did the assignment. I knew that would happen. But I asked them why all chose not to go for the $1,000 prize.
The answer I got from all of them is that none of them thought they would win the prize.
The competition, they thought, would be too tough and they would be wasting their time trying.
I pointed out to them that “If just one of you had come in with something written, I would have had to award the $1,000 prize.”
That could have been very easy money for someone with the initiative to at least try.
When the kids saw this, of course they felt pretty foolish. Their faces went into their hands. $1,000 is a lot to a college kid. And one of them could have had the $1,000 if ne had just scribbled something on a napkin and handed it in.
I explained that I knew this would happen. I knew no one to do the optional assignment.
How did I know?
Because I am a professional marketer. It’s my job to study human behavior. Human behavior is predictable. Professional marketers are psychologists.
So I knew with a fair degree of certainty that no one would show up with a direct mail package they had written.
Moral of the story: people don’t succeed because they don’t even try. They believe the competition is too fierce and that they have no realistic chance to win.
Over-estimating the competition leads to paralysis.
Big secret – the competition is really not that strong. 90 percent of success in life is just showing up. Not playing because you think you’re going to lose is no way to win.
Then I gave them all the same assignment again. I gave them a second chance.
How many, then, do you think showed up with a direct mail package written?
This time 18 of the 30 students came in with direct mail packages they had slaved over probably all night – some with all the graphic art and mocked up as dummy direct mail packages.
Moral of the story: When people see that something is doable, they do it.
If they think or worry that they can’t do it, they don’t even try. The reason only 3-5% do anything with an affiliate program is because the rest just don’t really believe they are going to be successful.
The rest don’t realize that 90% of the prizes awarded in life go to the guys who just show up – those who just make some effort. You can’t win if you don’t play.
Moral of the story: When you see an opportunity, go for it. And don’t think you’re going to fail. Believe you’re going to succeed. You’re not going to be successful if you think you can’t be successful.
Onward now to some nuts and bolts.
What’s the best way to track commissions and what you owe to your affiliates?
Are there services that do this? Is there software you can buy?
The answer is “Yes.” There are many ways to manage an affiliate program and track commissions. The method you choose depends on your business.
I’ll now hit here on the five main methods.
Very often you will want to combine these methods for your own program. That is, you’ll want to track affiliate performance and commissions owed several ways. That’s what I do, because there really is no single perfect way.
Method #1 Use a hosted third-party affiliate tracking service.
This is the solution that I prefer – at least over installing the software yourself. Let the experts track your affiliate program.
Here are some of the better known services:
One is called AffiliateShop.com. It’s easy to set up and integrates with most shopping cart systems. Both you and your affiliates can access real-time reports on their account.
I have not used it, but the program looks like a good value, requiring a one-time set-up fee of $395 and a monthly fee of $45. AffiliateShop offers a 30-day free trial.
Another good third-party hosted option is Interneka.
Another good one is My Affiliate Program
This service includes all the bells and whistles -- automated set-up; admin and members' page; banner location tracking and verification; email to your affiliate members; monthly account statements; export your affiliate information; tracking click-throughs, sales and commissions; automatic reminders; good sales reports; online sales history; variable commission structure; two-tier commissions and lifetime commissions support.
The company has a good reputation and is used by thousands of merchants use this software.
AffiliateTracking.com is another one. It charges $104.95 the first month and $29.95 a month thereafter. I have no first-hand experience with this program, but it gets good reviews. There are also a number of shopping cart systems that have affiliate tracking built in as part of the service.
Examples include QuickPayPro and 1Shoppingcart.com.
The shopping cart I use is 1Shoppingcart.com.
I like 1Shoppingcart.com because it includes many marketing tools useful for e-commerce marketing, including an affiliate sale tracking program.
I actually don’t use their affiliate track system, for reasons I’ll explain in a minute. I’ve rigged up my own system that better suits my needs for a membership site. But what’s nice about the 1Shoppingcart system or QuickPayPro.com is that having affiliate tracking built into the shopping cart saves you the trouble of having to integrate your affiliate sale tracking program into your shopping cart.
A more costly option is DirectTrack.com. This will cost about $1,000 to set up and will take about three days. What’s nice about this pricier option is it’s turnkey.
It has all the links within it. So all you do is create your banner ads, text ads, big display ads, or links words within text or email. Then you don’t have to worry about it any more. The system does all the tracking for you, automatically. You then encourage your affiliates to run your ads on their websites or to send out emails with your links.
Method #2 You can use affiliate tracking software.
This is software you install on your computer.
The way it works is you supply your affiliates with banners and/or textual links (created with the help of the software) that’s coded and allows the software to track the activity of anyone who clicks one of these coded links.
The affiliate puts these coded banners and text links on their website. Whenever someone clicks one of these links, the tracking software knows the referral came from that affiliate’s website.
When a referral opts-in to receive an ezine or buys something, the activity is recorded and any commissions owed are reported. In addition, a cookie is placed in the computer of the referral so that if the referral leaves and comes back to the site later, the tracking software still knows the source of the referral.
The better programs also use IP address association to track referrals who leave the site and return later.
Here are some affiliate tracking software packages that get good reviews if you want to install it yourself, which is easy:
One is called AffiliateGuerrilla. This is not the third-party, hosted solution that I prefer. But it’s cheap. The cost is just $89; is integrated with PayPal so that website owners don’t need a merchant account or shopping cart to get started. It allows up to five levels of commissions. It can track commissions on standard products and on recurring billing programs – such as subscriptions and memberships.
Another software package you can install yourself is www.Groundbreak.com. It also gets good reviews. The advantage of the install-yourself programs is there are no monthly fees, which you have with the third-party solutions. They are one-time purchases.
Method #3 You can hire one of the big affiliate marketing network.
The biggest are Commission Junction, (now owned by ValueClick) LinkShare, BeFree and Performix.
Clients of these companies include Fortune 500 companies. They are expensive – charging thousands of dollars in set up fees, plus a hefty take on sales.
The big benefit they boast is an ability to deliver business to you because of their big networks of merchants who use their programs. I frankly doubt that claim. But these are the industry leaders if you have a big budget.
Method #4 Create your own customized affiliate software.
Perhaps you have unique needs that are not covered perfectly by the off-the-shelf affiliate tracking packages.
This is not as tough as it sounds. Computer programmers are cheap these days. You’ll find plenty to choose from at Elance.com or RentACoder.com.
NOTE: When you have your own in-house affiliate program (whether it’s out-of-the-box software or software you create), the affiliate links will all run through your domain name or URLs that you designate. So you will need some technical knowledge (but not much) if you go this route.
Method #5 Track your affiliates yourself without cookies and tracking software.
You might have the kind of business where your customers don’t have websites to promote you and who are not on the computer all the time.
They are not computer savvy. For these customers, and the kind of referrals they are likely generating, you might as well talk to them in Greek as give them a link or banner with specially embedded code to put on their website.
For these folks, you will need to ask them for the email address and names of all the folks they intend to tell about your service. And you will need to store this information in a database, where each name and email address is linked to an affiliate.
Each new customer that comes in will need to be checked against this data base.
In addition, you should ask your affiliates to give you the heads up for any of their referrals who might be coming on your list as a lead or buyer.
Sometimes referrals will show up in your system with a different email address or a slightly differently spelled name (i.e. James instead of Jim). You will want the information go over with human eyes to spot possible matches that might have been missed by the computer. Computers do well with exact matches, less well with inexact matches.
Inexact matches can often only be picked up by human eyes. This is the hard way to track your affiliates, but it’s also the best and most reliable way. At a minimum, you should be using human eyes to track affiliates as a back-up to the automated systems described above – which is why you really cannot run an effective affiliate marketing program without a full-time affiliate program manager. Running an affiliate program is a full-time job.
Another way to make sure your affiliates are getting credit is to give your affiliates a special discount code that they type into the order form. The discount code is unique to the affiliate marketer.
By providing a discount to referrals, they will have a strong incentive to use the discount code. This is a nearly iron-clad way to make sure your affiliate marketers are getting the proper credit for their referrals.
If you are taking orders over the phone, train your phone operators to ask callers if they have a discount code, which is trackable to the affiliate marketer. If they don’t have their discount code, press harder for the source of the order. Ask how they heard about you. Ask specifically if they were referred to you, and by whom.
This should be standard practice and will help you measure the productivity of all your advertising and marketing. You want to know what or who is generating your orders, so you can put more effort into getting more referrals and more orders from that source – whether its a person or an ad.
For orders that come in by phone, you might be tempted not to give credit to the affiliate marketer in your network who generated the call. This is a serious mistake.
You want a motivated army of affiliate marketers driving people to your product or service. If they suspect for a moment that they are not getting the credit they deserve for the sales they are bringing to you, they will find another product to market. They will leave you. They will say bad things about you. Word spreads like wildfire on the Internet.
It would cost almost nothing for an angry affiliate marketer to put up a website on you on what a rip-offer you affiliate program is. That will do serious damage to your business.
Err on the side of caution. Pay commissions that are in doubt. Don’t argue with your affiliate marketers. Pay them what they think they are owed.
If you are direct depositing payments directly into their bank account, make sure you let them know every time you make a deposit. In your email communications, make a big deal of every sale made to a referral of an affiliate.
Your email should start with “Congratulations, Jim! You’ve made another sale.” And then go into a little detail about the sale and, above all, the amount of the commission the affiliate will receive.
For many businesses, I’m a believer in the manual method of tracking referrals and not relying on software – unless your customers all have high-traffic websites.
That’s not the case for most businesses. The method I’m using is a good one – set up separate dedicated landing pages for each affiliate linked to it’s own dedicated list – where only the referrals who fill out the form on that landing page end up on that list.
I thought this might be a time-consuming process. So before I launched the program, I timed myself to see how long with would take me to set up landing page and list for each affiliate.
It took me 8 minutes per affiliate. That’s not bad. I have now trained a staff person to do this.
I always do a job myself before I train someone else to do it. I have also hired a full-time affiliate program manager.
Not only is the tracking of affiliates and their referrals a significant undertaking. But there’s a lot of hand-holding, instruction and encouragement that must be part of an ongoing program to keep your affiliates engaged and motivated.
Your affiliates should receive a newsletter. And the affiliate marketers area on your website should be updated constantly and packed with news – including feature articles on your most successful affiliates. You should hold training conference calls for affiliates.
Amway, Avon, Mary Kay and Pampered Chef are some of the highly successful old-style multi-billion-dollar affiliate marketing programs that don’t rely on the Internet, tracking code embedded in links, cookies or IP address association.
So just because we live in the 21st Century, don’t think technology can do everything. It can’t. It has limits.
I’m really not a fan of tracking affiliates with code and cookies. That’s how must affiliate programs are tracked on the Internet. People clear the cookies out of the cache all the time. So then the cookie is lost.
All the coding and tracking methods that rely entirely on machines are unreliable in my experience. Computers still cannot replace human beings. Technology certainly helps. But there’s no substitute for human beings monitoring, tracking and managing an affiliate program.
I believe the best affiliate programs on the Internet should be run the old school way – with a lot of personal contact, instruction and motivational programs (like Amway, Mary Kay, Avon, Pampered Chef). Imitate success.
Now, let me give you a few more tips to ensure the success of your affiliate marketing program:
Key Tip #1 Ask your affiliates to direct referrals a “lead generation” landing page rather than a sales letter page.
This kind of landing page offers something of value free (such as an ebook) as incentive for people to fill out your sign-up form and get on your list.
This is what you will be getting from me if you sign up as an Affiliate Marketer for the Inner Circle program – your own personalized landing page designed to capture the email addresses and names of your referrals by offering a free copy of Automatic Marketing.
The reason you want your affiliates to direct their referrals to go to your landing page to get your free offer is that 98% of your visitors will not buy the first time they hear your sales pitch. They’ll want to study you further before making a decision.
You want to capture the name and email address so that you can continue to follow-up with emails that include valuable information and offers.
So instruct your affiliates not to send their referrals to your main sales presentation first, but to send them to your free offer so you can capture the name and email address. This also makes for much less work for your affiliate marketers. Their job is not to sell. That’s your job. Their only job is to bring traffic to your site to get your free offer.
Your automatic marketing system then takes over.
You will certainly want your affiliates to reinforce your marketing messages with firsthand accounts of their own experience with your product or service. But once they have delivered the referral to a landing page to get your free offer, the formal part of their job is over.
You now have the referral. Your affiliate will now get their commission once the referral makes a purchase.
Key Tip #2 Be responsive.
You must be immediately responsive to questions and comments you receive from your affiliates.
If you don’t answer their emails (and even phone calls) quickly your affiliates will drift away. You must constantly educate, instruct, motivate, encourage and inspire your affiliates.
Key Tip #3 Have a training conference call with your affiliate marketers at least once a month.
This helps them engaged and revved up.
Feature your top affiliate producers on your training call as speaking guests. On a conference call held using a bridge line, you can have speaking guests and mute the rest.
You structure your training calls like a radio show that you can then later post on your website as a podcast. You want these conference calls to be instructional, motivational and inspirational for your army of affiliate marketers.
For more on this, read the chapter in this book on “Webcasting for Dollars.”
Key Tip #4 Publicize the success of your top affiliates
In the affiliate marketers section of your website, you should celebrate and publicize the top affiliate performers. Have a photo of your happy affiliate marketers holding up a check. List your top performing affiliate marketers (with photos) and how much they’ve earned in commissions. Include audio testimonials from your happiest affiliate marketers.
Audio and video testimonials can be especially powerful.
Key Tip #5 Make “private label” available to serious affiliate marketers.
Some of the bigger marketers will want to offer your product or service under their brand. And they will want to run the sale through their own merchant account and shopping cart.
No problem there. That means you’re probably about to sell a whole lot of what you’re marketing. Usually you would charge a licensing free if someone wants to sell your product or service under their brand. You then pay the commission according to your usual terms.
Your army of sales people will continue to grow and snowball to mammoth proportions if you make building your affiliate program a major focus of your business – and if you pay super-generous commissions.
If you are generous with commissions and treat your affiliates well, you will be swamped with customers and people wanting to sign up for your affiliate marketing program.
Your business will become a marketing and selling machine almost on its own. Instead of you pulling the wagon by yourself, you will have an army of enthusiastic people pulling your wagon for you.
Don’t get hung up on the high percentage you are paying in commissions. Would you rather have 100% of what you have now – or ˝% of Microsoft?
But keep this in mind. What will make your affiliate program fly ultimately is the quality of the product you are selling.
You can’t build a business around a lousy product. A great sales letter cannot sell a product no one wants. And it won’t matter how generous your commissions are if your product is not easy to sell.
So often I see people sell their affiliate programs and their multi-level and network marketing programs as great ways to get rich. The focus of the marketing is all on the getting rich and you hardly hear about the quality of the product.
Beware of programs like that. Affiliate marketing, network marketing and MLM marketing is just another form of advertising – all valid, all great methods of marketing.
But they all work the same way in principle. An MLM marketing program has a multi-tier commission structure.
But they can only pay out so much in commissions.
When you look at it, they are paying in commissions about 30% or 40% -- about the same margin as the difference between wholesale and retail. So the payout is really the same – just different structure.
I prefer to pay all 40% immediately to my affiliates . . . and not dribble it out over 3 or 5 tiers. More money faster I think is better. But regardless of your commission structure, your success or failure will rest on the quality of your product, the sellability of your product, and the quality of customer and affiliate care you deliver.
So if you are thinking about becoming and affiliate marketer selling someone else’s products, don’t just look at how high the commission is, or how loud the hype is about how rich you can get.
If the product stinks and won’t sell, it won’t matter how high your commission is.
You could be getting 100% commission. But 100% of no sales is still nothing. Better to get 10% or 20% of the selling price for an iPhone.
Focus not on the hype, but on the quality of the product and company when selecting products that you want to represent.
** Does the product have a track-record of selling well? ** Does the company stand behind it’s commitments? ** Does the company provide good customer service and care?
When you become an affiliate marketer who sells someone else’s product, you are really entering into a partnership with that company. Partnerships can be wonderful, or they can be horrific. Your success very often depends on the quality of your partner.
So do your due diligence on who you are aligning yourself with – what company you are partnering with. Your choice here can and usually will determine how successful you will be.
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