Affiliate Marketing for E‑commerce Businesses

Learn how affiliate marketing works and if it's right for your business.

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Your business is up and running. You’ve set up your online store and gotten some initial sales. Now you’ll want to look for ways to grow your business. Finding customers is challenging, even with the marketing and selling tools available today.

This is where affiliate marketing comes in. It’s one of the most straightforward ways to generate sales. With this model, you create relationships with people who advocate for your product. They essentially do your marketing for you.

What’s affiliate marketing?

Affiliate marketing uses endorsements to generate leads. Your business pays a 3rd-party publisher, such as a blogger, to generate leads to your company’s product or service. The 3rd-party publisher is the affiliate. The affiliate then gets paid for every sale you make to someone who clicked through from their site.

How does it work? The affiliate uses custom tracking links, called affiliate links, that lead to a purchase page on your e-commerce site. This activity hopefully results in a sale and is associated with the affiliate whose link the customer clicked. You only pay the affiliate when someone buys something using their affiliate link.

For example, suppose you sell DJ equipment. You have a particular controller that you know makes it easier for DJs to mix, scratch, and blend their music. You find a blogger who writes about DJing. Their blog posts appear high in search results. And their readers engage regularly by leaving comments on their articles.

If you begin an affiliate marketing relationship with the blogger they’ll include links to your product in a few posts. If one of the blog’s readers clicks on a link to your product’s sales page and buys your controller, the affiliate marketing system sees the link and credits that blogger with the sale. The blogger then gets a part of the proceeds.

If your campaign is successful, you can set up affiliations with other DJ bloggers. The affiliate links they use correspond to their own affiliate accounts. That way their sales aren’t mixed up with those of the first blogger.

Pros of affiliate marketing

Affiliate marketing has several advantages of introducing your products to your target audience.

Generating new leads

When you and the affiliate have similar target markets, affiliate marketing is effective at generating new leads. In effect, your affiliates’ fans become your leads. Because your affiliates are already tapped into a specific niche that overlaps with yours, you benefit from the growth of their brand and audience.

Sometimes, you can enter markets you hadn’t previously explored. Maybe you’ve focused on wedding DJs as your niche market, knowing they do a lot of business and spend extra on top equipment. So you reach out to a blogger who has engaging articles about DJing weddings. They write an article about DJing for friends’ house parties. You see a spike in your sales as a result of the link from that article. A portion of the affiliate’s audience—party DJs—has become a new market segment for you.

Low costs

With affiliate marketing, your costs are relatively low. Your return on investment (ROI) is high–you only pay affiliates when they generate sales. What you get is a low-risk, high-ROI marketing strategy. In contrast, with pay-per-click advertising, you pay for clicks whether they result in sales or not. You gain brand awareness and site traffic, but not necessarily increased revenue.

Cons of affiliate marketing

While the risks are low, and you may enjoy a relatively high ROI, affiliate marketing does come with some drawbacks.

It can be hard to find the right affiliates

You want affiliates whose messages and goals align with your business goals. This can be a challenge, especially if the affiliate’s objectives take them in a direction that doesn’t benefit your business.

Imagine an affiliate writes a post ranking 10 products in a certain category, each one with a different affiliate link. Granted, “all ink is good ink,” meaning any exposure is positive. But if your product gets a low ranking, the post may give you minimal exposure and prop up your competition.

You may find an affiliate who produces compelling content at first, but then either their focus shifts or the quality of their content drops. As a result, you get fewer sales than you had originally anticipated.

You lose some control over product presentation

Once you give the affiliate their link, you have little to no control over how they showcase your product. For instance, there may be certain features that you think could be easily worked into a video or article, but the affiliate focuses on the price of your product instead.

The affiliate may also create content that doesn’t align with the vision or principles of your company. For example, if your DJ equipment business focused on energy-efficient tools and carbon-neutral manufacturing, the affiliate’s content could send a message that runs contrary to what you want to espouse. Even if you did your due diligence in checking out their messaging, they could make a video, for instance, that includes language that may offend the people your brand supports. When they include a link to your product, your brand is then associated with their message.

Affiliates have to disclose their relationship

The Federal Trade Commission (FTC) mandates that affiliate marketers disclose that they’re being paid to endorse your product. If they don’t, you could be liable. Because you can’t control whether affiliates abide by these regulations, you may have to check their content to ensure they comply.

How to get started

To get started with affiliate marketing, you need to know who your target audience is and use the right affiliate marketing tools.

Understand your audience

Knowing your audience makes it easier to identify affiliates who appeal to your target demographics. Consider your target market and the types of content they’re likely to consume.

  • Which age groups do you want to focus on?
  • What’s their income range?
  • Where do they live?
  • Where do they travel to?
  • Do they typically work from home, in an office, run a business, or not work at all?
  • What do they do for fun?

Mailchimp’s customer relationship management (CRM) can help you organize and understand information about your target audience. For instance, you can figure out where your customers live, whether they like to use coupons or sales, or if they arrive at your site through referrals.

The answers to the questions above can help you learn the kinds of content your audience engages with. But you might want to drill down further with content-specific questions, such as:

  • What kinds of articles or blogs does your target market read?
  • Do they prefer long-form content or shorter pieces?
  • What do they look up in search engines?
  • What kinds of videos do they watch?
  • Are they more likely to check out product reviews and rankings or how-to content?

You can also use Mailchimp’s CRM to discover patterns of behavior that lead to purchases. Ideally, you want them to engage with an affiliate’s content when they’re ready to make a purchase. Knowing how, when, and why they buy can help you make conditions ideal when they engage.

To return to the DJ equipment example, customers researching controllers often consider several before deciding. You’ll want to choose an affiliate who reviews equipment instead of one who just writes about how to be a better DJ. This way, when your target audience reads their content, they’re closer to purchasing. That increases the likelihood they’ll purchase your product.

Recruit partners

There are a few methods to recruiting partners and affiliate marketers. Choosing the method that best fits your business model will depend on what you already have in place and how broadly you want to market your product.

Use your current marketing channels

You can use your social media accounts, email, or website to let people know about your affiliate program. Be sure to provide all the essential information needed to make a decision and get started. This may include details like:

  • The amount of commission they can make
  • Special offers you make available to affiliates, such as coupons and discounts
  • The kind of marketing material you’ll provide
  • Whether you’ll provide tracking stats that can help them gauge the benefits to their own business

Contact potential affiliates directly

Some affiliates may respond better to direct, personalized outreach through email or via social media. While you can start with a template message, you should personalize each one. You may want to include details such as:

  • Something you liked about a recent post or video they did
  • An attribute you feel sets them apart from other potential affiliates
  • Your personal interest in something they value, such as a core principle they believe in

This can make your message stand out and help them realize they’re more than a marketing tool—they’re a valued partner.

Create links and provide promotional materials

When your affiliate is on board you’ll need to provide affiliate links and promotional materials. You’ll also want to decide whether you'll work through an affiliate network or link tracking software you manage yourself.

If your aim is to launch an affiliate program with a large number of affiliate marketers, you may want to work with an affiliate network. These programs connect businesses to potential affiliates and generate and organize affiliate links. They often provide analytic information to track each affiliate’s effectiveness. Keep in mind that not all affiliate networks are equal. Some are larger than others and have a broader range of products. Still, some simplify the payment process with affiliates better than others.

If your goal is to have more of a personal relationship with fewer affiliates, consider link tracking software. You’ll be able to generate affiliate links yourself and track them. These platforms offer a range of reporting and other useful tools for more than just affiliate marketing. Link tracking can be enlightening for social media and traditional marketing campaigns as well. Prices vary depending on the features of the platform. Before selecting one, have a good idea of your budget and your goals. Knowing that will make choosing the right link tracking software easier.

Providing promotional materials

When an affiliate is ready to sign on, streamline their side of the process while you maintain some level of creative control. You can do this by providing them with promotional materials. When you provide promotional content, you:

  • Give them the tools they need to market your products.
  • Keep your marketing material fresh and relevant to your target audience.
  • Exercise control over how you present your products and sculpt your brand.
  • Set clear expectations and uphold them.

You should communicate your pay structure clearly so affiliates know what to expect. Be transparent, and be sure to let them know about any changes well before they happen.

To cultivate a strong relationship with your affiliates, set aside time for check-in’s and ask for feedback. They may have ideas or insights that you can use as you craft new marketing materials.

Expand your reach

It takes time and effort to set up and manage an affiliate program, but the potential benefits are huge. Each affiliate is like a small store in a franchise. As they perform better, your sales increase.

If you’re hoping to reach new audiences and take your e-commerce business to the next level, consider using affiliate marketing. To learn more about the tools you can use to build your brand and engage with customers, reach out to Mailchimp and get started for free today!

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