May 24, 2022
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4 Ways to Grow Your Ecommerce Business With Affiliate Marketing (& How to Get Started)
Affiliate marketing is a powerful for your business and a sales channel that is highly under-utilized for its value. This could be a source of high quality traffic that serves more than just one purpose. This article dives into the benefits of affiliate marketing.
What comes to your mind when you think about affiliate marketing?
If you're like most people, you probably think of the activity as a great way to generate a passive income without actually having to do too much work.
But have you ever thought about affiliate marketing as a growth strategy for your e-commerce business? Well, if you haven't, perhaps it's time you did. Much like SEO link building services, affiliate marketing can bringmore exposure to your brand. The list of its benefits is extensive, and itonly gets better once you fully realize its potential. Here is everythingyou need to know about it.
The Basics of Affiliate Marketing
The simplest way to define affiliate marketing is to describe it as a business model in which a brand pays third-party publishers (affiliate marketers) for selling its products or services.
Although the concept predates the internet and e-commerce, it became popular in the mid-to-late 90s, as Amazon and its Associates program rose to fame.
Today, it's almost ubiquitous in the e-commerce world:
- A 2020 survey revealed that 63% of the United Kingdom's most successful brands use affiliate programs, with the numbers going higher in the United States.
- The affiliate marketing spend in the US is predicted to reach 8.2 billion dollars by 2022.
- It is estimated that 15-30% of all sales come from affiliate programs.
With all this data, it is clear that affiliate marketing has plenty of potential. But what is it that makes this type of digital marketing strategy attractive to brands?
The Benefits of Implementing Affiliate Marketing Strategies
One of the biggest misconceptions about referral programs is that they only benefit marketers. Sure, affiliates often get to enjoy impressive incomes. But it's safe to say that e-commerce brands stand to gain much more – as long as they keep their eye on the (real) prize.
Audience Reach & SEO
The first benefit of investing in a referral program comes in the form of boosted traffic to your website.
It's actually quite simple. This type of advertising relies on collaborations with marketers who have established followings and high website rankings. So, it allows brands to reach considerably more potential customers than if they were doing SEO on their own.
It's also not a bad idea to remember that as much as 40% of affiliate commissions go to blog and content publishing websites. That's a sure sign that these make for excellent collaborators for brands looking to grow their reach.
Naturally, scaling web traffic through affiliate links doesn't have a direct positive impact on your website's rankings. But, heightened awareness does.
So, the more people hear about your brand through reliable affiliates, the more likely they are to search for your products once they're ready to shop. And that will boost organic traffic and lower your PPC marketing costs.
Take Eachnight, for example. This site has an impressive content marketing strategy, with hundreds of articles on everything sleep-related. Not only is it a popular resource for everything connected to its focus topic, but it's also one that's continuously investing in audience reach and SEO.
Now, if a person looking for a resource on sleep health lands on Eachnight's homepage and concludes that it's a trustworthy site, they're likely to also click on the featured "Best Mattresses of 2021" article. If your brand happens to be on that list, that's instant awareness and a huge amount of potential traffic you can then turn into conversions on your website.
Access New Markets
Another great benefit of investing in affiliate marketing comes in the form of unlocking new business opportunities. By choosing the right collaborators, you can enter niche markets that are often dominated by well-established brand names.
So, if you're trying to market your product to pregnant women, the logical step would be to choose affiliates whose target audience matches your own and whose authority in the field can transfer to your brand.
That's what LMNT did in its collaboration with Katie Wells of Wellness Mama. The brand secured an appearance on Katie's podcast, received an additional traffic source, and was presented to 200k+ potential new clients as a trustworthy brand.
Furthermore, the affiliate scheme also gave Drink LMNT a priceless opportunity of widening its target audience from sports enthusiasts to women and moms interested in leading a healthier lifestyle.
Generate Social Proof
Do you know that the majority of consumers don't trust advertising? That's right – most people prefer to get their product recommendations from friends, family, and social media influencers.
But here's the thing. People aren't exactly likely to recommend brands. According to ReviewTrackers' 2018 survey, only 28% of consumers are likely to leave a review after a positive experience with a brand (vs. 34% who will leave feedback after a negative experience).
Fortunately, however, you can change things around with affiliate marketing. By developing a referral program, you can incentivize customers to recommend your brand, which will inevitably result in greater revenue and a higher level of consumer trust.
In addition to financial benefits, social proof also plays a role in optimizing your pages for conversion. Furthermore, you can make it part of your content marketing strategy for an approach to branding that relies on trust and meaningful relationships instead of empty promises.
Enjoy a High ROI
Finally, it's impossible to talk about the benefits of affiliate marketing without mentioning that it's a strategy with an impressively high ROI.
Unlike other forms of digital advertising (whether on social media or paid search), affiliate marketing only costs you when you make a sale (or capture a lead).
Moreover, it offers a high level of control over what products you offer a commission on, ensuring your acquisition expenses never outgrow your revenue.
If you're a small business or startup and are trying to work with a limited marketing budget, joining an affiliate network could give you an excellent opportunity to grow your business. Moreover, it will allow you to do so without spending more than you can afford or having to wait to see your desired results.
How to Get Started and Grow Your Business
Now that you have an idea of everything you can gain from affiliate marketing, it's time to start adopting it in your e-commerce business.
Choose Your Program
The first decision you'll have to make is whether to join an existing affiliate network or create your own referral program. Both have pros and cons, so choosing the right course of action depends on your brand and following.
Existing affiliate networks, such as ShareASale or Rakuten Marketing, have well-established operations, making it relatively easy to gain exposure for your brand. However, the downside of these is that your affiliate partners don't necessarily have to be your customers. Yes, you can choose associates, but their testimonies are likely to be solely profit-driven. If you think back to the element of trust in advertising, this can be problematic.
Referral programs, on the other hand, rely on a much closer relationship between brands and marketers. In these, you can invite your existing satisfied customers to share your products with their friends, offering benefits for both parties.
As an example of a brand with a great referral program, you can check out the dropshipping eCommerce platform, Spocket or European food delivery service Wolt. This brand came up with a custom token system that allows existing users to share a link with their friends. New customers then get a certain amount off their first two offers, and the person sharing the link receives tokens, which they can use for free delivery service.
Of course, you don't necessarily have to choose between affiliate marketing and referral programs. To maximize your reach and profits, it's not a bad idea to combine the two approaches.
Once you've decided on the type of program you want to use (or develop), it's time to start thinking about the conditions it comes with.
First, think about what you want to achieve. Having a clearly set goal (such as earning $15,000 in revenue or acquiring 500 new leads per month) will help you define the conditions you can offer.
If you go the route of offering a per-sale monetary compensation, keep in mind that most commissions range between 5% and 15%. That means that you will have to be able to cover these costs and still make money. Otherwise, affiliate marketing won't pay off for your business.
Of course, that doesn't mean minimizing commissions and hoping for the best. You still have to make your program appealing to marketers.
However, you should not jump into things without doing some math and having a clear idea of exactly how much you can afford to spend per new customer.
Another thing to note about the terms of your affiliate program is that they have to be 100% transparent to appeal to potential marketers. And that means designing an optimized affiliate program sign-up page.
For example, GILI Sports chose to go with a simplistic design that only covers the basics. While there are links leading to the affiliate program's terms, the brand could be more creative with the page. A potential solution could come in the form of a hero image or featuring a unique value proposition that brand ambassadors could expect to receive by participating.
Find the Right Collaborators
One of the biggest problems with affiliate marketing is that brands often don't think about choosing the best affiliates. Sure, a blogger may get a million website visits per month. But how do those visits relate to your products?
As an e-commerce business, you have to think about affiliate marketers in terms of target audience and traffic quality. For some e-commerce stores, the best solution may come in the form of dedicated affiliate sites. As these make their revenue through affiliate links, they're likely to have a strong online presence and occupy top SERP positions.
For example, Medical Alerts Buyers Guide wins Google's featured snippet for the search term "best walking canes for seniors." That means an e-commerce store that sells these types of products would do well to reach out to the website's owner and suggest a collaboration.
For the affiliate blog, the benefit comes in the form of more potential profits. The ecommerce brand, on the other hand, has the potential of exponentially increasing website traffic, which, naturally, leads to a higher likelihood of making a sale.
But that's not the only route to consider. Some ecommerce brands may do better by reaching out to social media influencers.
Transparent Labs is an ecommerce brand with an excellent affiliate marketing strategy that relies on social media influencers. The interesting thing about this company's approach is that it has a wide variety of collaborators. It works with legit celebrities like Hafthór Björnsson, mega-influencers like Stephen "Wonderboy" Thompson, and also micro-influencers who have few followers but highly engaged ones.
Whether you decide to go with blogs, affiliate sites, or social media ambassadors for your affiliate marketing program is entirely up to you. But, again, don't rush into the decision and think that numbers are the only thing that matters. For the best results, try to secure recommendations from people who actually use and enjoy your products.
Track & Tweak
The one thing to keep in mind about running a successful referral program is that it's not a "set it and forget it" type of thing. To get results, you need to be consistent about tracking performance and making any necessary changes to keep your business growing.
The best way to do that is to closely monitor KPIs such as revenue, clicks you get through affiliates, your best-performing associates, the customer lifetime value of the people who came through your affiliates, as well as conversion rates.
To make things simpler, create a dedicated landing page for each of your collaborators. That way, all you need to do is set up your analytics (e.g. Google Analytics or Amplitude, or your preferred tracking software) and see how things work out.
Additionally, with the help of affiliate software, you can track and measure the performance of their affiliates and determine how much revenue they’re generating from each partner. This type of analytics can help you understand which affiliates are more profitable for them and provide insights into where improvements need to be made to maximize ROI.
Having a hands-on approach won't just inform you of the success of your campaigns. More importantly, it will tell you what you need to improve. Perhaps a certain affiliate needs a push to reach its full potential. Or, you might find that there's still room to optimize your landing pages and get even more conversions out of them.
As you can see, there are many ways in which affiliate marketing could help your business grow. Whether you're in the beginning stages of your ecommerce journey or are looking to scale, this strategy has a lot to offer.
Nonetheless, remember that while your collaborators will be doing a lot of the legwork, you'll have to invest time into it as well. To get the absolute best results, make sure that your website is fully optimized for conversions, that you nurture generated leads into loyal customers, and that you keep on your toes to remain the best in your niche.
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