How to Start an Affiliate Marketing Program from Scratch

Affiliate marketing is a a natural concept: incentivize others to promote your product or service and pay them a commission for each sale. Executed well, it’s one of the most effective and efficient ways to grow the visibility and bottom-line of your e-commerce shop. In a matter of weeks, a well-constructed affiliate marketing strategy can add dozens (or hundreds, or thousands) of performance-oriented marketers whose priorities are aligned with yours.

Thanks to the litany of affiliate platforms that now exist, a marketer can put an affiliate program together in a matter of minutes, but there are some key steps which should be considered to unlock the full potential of affiliate marketing.

Define Your Affiliate Marketing Goals

Like any undertaking with your business, it’s essential to clearly establish what you want to achieve with your program. The full extent of your goals may simply be “increase sales” — and that’s fine — but this is the time to consider secondary goals that may help grow your business:

• Is there a quantifiable non-sale outcome, like an e-mail newsletter signup or form submission, that will help you?
• It may be important to consider goals involving your brand equity. How important is it for your affiliate marketing partners to match your brand guidelines and style? You may find it very important for your fitness brand to be seen on high-gloss websites oriented toward an affluent audience — or you may believe that since it’s a solution for all types, that it should appear anywhere.

The goals you establish during this planning phase will become your North Star — the kind of questions you reference any time you’re making a decision about the program (and the business).

Define Your Affiliate Commission Structure

When it comes to defining your commission structure for your affiliate marketing program, ensure that it’s attractive enough to incentivize affiliates to promote your products while remaining viable for your own financial well-being.

A good starting-point is to register for an affiliate program like CJ Affiliate or ShareASale and see which commission rates are offered by your competition. Consider that your business will be listed right alongside theirs — and like you do when you comparison shop, publishers will be considering whether they want to partner with a company offering 10% or 6%.

But it’s not as simple as the surface-level commission rate. Be sure to consider the price of your product. If you’re selling high-ticket items, you may be able to successfully operate a program with a lower commission rate while still attracting affiliates.

I always encourage business owners who are at this stage to get a piece of paper and sketch it out an affiliate programs impact on their unit economics. If you’re selling a physical product with a profit margin of 30%, you may offer a commission rate of 10% to your affiliates, giving them a good incentive to promote your product while still allowing you to earn a healthy 20% profit. But if you’re selling a digital product with a profit margin of 70%, you may be able to offer a commission rate of 50% and still make the same 20% profit as in the first example. This high commission rate would likely attract a high volume of affiliates who would be motivated to promote your products aggressively.

You may also consider alternative commission structures, depending on your business. While the most common method is to compensate affiliates on a pay-per-sale basis, platforms will allow you to pay per click (which is landing on your website) or pay per lead (which is an action like filling out a form with a prospect’s contact information). In real estate, for example, it is more common to find a pay-per-lead affiliate model.

Ultimately, your commission structure will be unique to your specific business needs and goals. By carefully considering your margins, the price of your product, the industry average, and the type of commission structure you want to offer, you’ll be able to find a commission structure attractive enough to incentivize affiliates.

Choose Your Affiliate Platform Carefully

Choosing the right affiliate platform is crucial for the success of your platform. There are several major options available including the popular ShareASale, CJ Affiliate, and Rakuten Marketing. When considering which platform to engage with, there are a few important things to consider:

• Quality. Publishers will be seeing your name alongside the other businesses on the platform, so are those the kind of companies you want to associate with?
• Size. You want the size of the platform to match the size of your affiliate marketing effort, in many ways. If you have a mass-appeal item and wish to have thousands of registered affiliates, you’re going to need to link up with a platform which has thousands of publishers interested in your business. The opposite can also be true. If your product is niche-focused and you’re only looking for a handful of specific publishers, you may find a small platform best addresses your needs.
• Competition. Consider your ideal commission structure and how it will stack up alongside your competitors. If you look at CJ Affiliate and see all of your potential competitors are offering a commission-rate double of what you’re comfortable with, consider listing elsewhere where your rate will fit in.
• Cost. Each platform is different in this regard but many charge a one-time setup fee and sometimes a monthly maintenance fee. These can vary widely. Make sure you do your research before committing.

Recruit the Right Affiliates for Your Brand

Once you’re onboarded on an affiliate platform, it’s time to secure some affiliates. Establishing a process for considering affiliates is paramount to the success of your program. You should carefully vet potential affiliates to ensure that they have an audience that is interested in your products or services and that they have a track record of promoting products effectively.

It’s also important to ensure that your affiliates align with your brand values and messaging. This is a key element that I often see operators screw up. Affiliates should be aware of the importance of protecting your brand equity and not doing any damage to the reputation you’ve spent time building. For this reason, you should provide clear guidelines and rules for your affiliates to follow, and monitor their activities regularly to ensure compliance. By working with high-quality affiliates who understand and respect your brand, you’ll be able to build a strong and effective affiliate marketing program that drives sales and grows your business.

Provide Strong Promotional Materials

To make it easier for your affiliates to promote your products effectively, you should provide them with high-quality promotional materials such as banners, text links, product images, and videos that are consistent with your brand image. Additionally, you might want to consider sharing some samples of your products with your affiliates so that they can become familiar with them and provide more genuine and persuasive recommendations to their audiences.

You could also offer your affiliates special discounts or other incentives to encourage them to try your products and become regular users.

This can help build a sense of loyalty and encourage them to promote your products more actively, which can lead to increased sales and revenue for your business.

Clearly State Regulatory and Compliance Concerns

We’ve all accepted a Terms of Service despite not having read a single word — if you have regulatory or compliance concerns, do not bury them within a long, lengthy document written in legalese.

Compliance with regulations in affiliate marketing is crucial to avoid legal issues. It is important to ensure that your affiliates understand the regulatory concerns and follow the guidelines to avoid inadvertent violations, especially in the areas of alcohol, cannabis, supplements, and related products. Provide your affiliates with clear instructions and guidelines on how to comply with regulations, and encourage them to disclose their relationship with you when promoting your products. By sharing regulatory concerns with your affiliates, you can prevent any misunderstandings and ensure that they promote your products in a legal and ethical manner. This will not only protect your brand reputation but also prevent potential legal consequences that can arise from non-compliance.

Monitor and Optimize

Affiliate marketing is not a “set it and forget it” kind of thing. Active monitoring and optimization is critical, especially in competitive verticals, and even when things are going well.

Each platform has their own set of performance and analytics tools which will help you identify what is working and what isn’t. Paired with your traditional digital marketing stack (like Google Analytics), you’ll have everything you need to optimize.

It’s important to remember that not every aspect of your affiliate marketing program will be successful. There will be times when you encounter setbacks or face challenges that prevent you from achieving your desired outcome. These failures, like almost all in business, are opportunities to learn and improve. By analyzing what went wrong and identifying areas for improvement, you can make adjustments to your program and move forward. Don’t be afraid to try new things, take risks, and learn from your mistakes. With persistence, you can build an affiliate marketing program that delivers real value.

Communicate with Your Affiliates

Maintaining communication with your affiliates is crucial to building a long-term relationship and keeping them engaged. By providing them with regular updates on new products, promotions, and other relevant information, you can ensure that they feel informed and invested in your brand. In addition, offering them exclusive discounts, early access to new products, or higher commission rates can incentivize them to promote your products more actively. By making your affiliates feel valued and appreciated, you can build a sense of loyalty and encourage them to continue promoting your products over the long term. It’s also important to provide them with prompt and helpful support whenever they have questions or issues. By being responsive and attentive to your affiliates’ needs, you can strengthen your relationship and foster a mutually beneficial partnership that drives sales and grows your business.

Wrap-Up

Starting an effective affiliate marketing program can be a game-changer for your direct-to-consumer e-commerce website, building a small army of advocates who promote your products, you can drive more traffic, generate more leads, and increase sales. By carefully considering the points listed in this post, you’re on your way to building a program that lasts.