Building a Successful Online Sales Force

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by Todd Crawford

Affiliate marketing is revolutionizing the way online retailers advertise and consumers shop online. It allows retailers to place advertising links and even individual products on affiliated web sites across the Web, greatly expanding their "shelf space" and their online presence. While affiliate marketing has proven to be effective, it's not a get-rich-quick scheme, and retailers must manage their programs and develop strong affiliate relationships to make their programs successful.

Affiliates act as a powerful online sales force for retailers and can quickly and cost-effectively grow their online business, but retailers cannot start a program and then leave it to run itself, expecting profits to roll in.

In order to recruit the high-quality affiliates necessary for an effective sales force, retailers must maintain a competitive program and open communication with their affiliates. With these ideals in mind, retailers can gain the attention, trust and profitability of quality affiliates.

Become an Affiliate

Understanding affiliates and their mindset is crucial. For instance, if affiliates are involved in several programs, they may log into several different interfaces for reporting, work with dozens of retailers and receive paychecks on different payout schedules. It can be difficult to manage a business on these terms.

Retailers should join other merchant programs to better understand what affiliates experience when getting links, earning commissions and tracking results through an affiliate marketing program. This will help determine what techniques are more effective and user-friendly. Also, retailers should join competitors' programs to stay on top of what they offer affiliates.

Learning about the affiliate's problems and needs will assist in developing a mutually beneficial program.

Develop the Relationships

Regularly communicate with affiliates to learn what successful affiliates do, and use tools such as newsletters and short periodic emails to share their techniques with other affiliates in the network. If certain links are not working, inform affiliates about products or services that are selling well, and offer tips to help them drive more sales. Sharing successes with affiliates can boost a program's performance and enhance relationships.

Also, retailers should visit affiliate sites before responding to their inquiries. This puts the retailer in a position to make informed suggestions about link enhancements and how affiliates can match links to site content, which has proven to be very effective. That kind of personalized attention will establish trust.

Evaluate Affiliates In addition to tracking the number of sales and leads, there are many variables retailers can evaluate to determine an affiliate's progress and potential success including click-through rates and conversion ratios.

Affiliates not driving a large percentage of sales, but generating a large number of click-throughs have potential. They may simply be using links that are less effective and, with a small change, could drive more sales. By not catching and addressing this type of problem quickly, retailers can lose potentially successful affiliates.

Observe Customer Acquisition Costs

Affiliate programs are cost-effective marketing. Observe the financial advantages of acquiring customers through affiliate marketing versus traditional online channels and reward affiliates accordingly.

For example, with CPM banner buys, Company A pays approximately $20 to acquire one customer. However, Company B pays affiliates a 10 percent commission for each $100 sale. The customer acquisition cost through its affiliate channel is a fixed $10. Company A assumes a larger risk with the CPM buys, because it costs twice as much and there is no guaranteed return on investment. Company B only pays when an actual customer is acquired.

This acquisition information empowers retailers to reward superior affiliates with a percentage of the money saved through affiliate marketing. If every affiliate receives a 10 percent commission, and a retailer raises the most profitable affiliates to a 20 percent commission, they develop a strong relationship with them. Affiliates will not want to remove those links from their sites.

Motivate Affiliates

It is best to begin with a conservative commission. Observe the results and raise payouts as necessary. Beginning with unrealistic payouts and lowering them later is unwise. Affiliates view this as dishonest.

A pay-per-click payout is an effective motivational tool for rewarding affiliates with unusually high traffic. Combining payout types is a hybrid program that is more successful than single pay structures.

Another payment option is tiering, which adjusts the commission rate based on an affiliates sales volume for the month. The more sales they generate, the higher their payout.

Two-tier commission structures, which reward affiliates for new recruits, are also effective motivators. Through this system, affiliates receive small percentages of a new recruit's commission, thereby encouraging them to promote your program. To make recruiting easy for affiliates, create links advertising your program that they can simply place on their sites.

Custom payouts also keep affiliates motivated. Create special payouts for seasons or quarters or special deals for high-selling affiliates. These short-term programs allow retailers to return to their standard payout if these promotions don't work. Take risks to give affiliates new incentives to earn more revenue.

Affiliates Are in Control

Affiliates join retailer programs, promote the products, and can stop working with a retailer at any time. They want programs that work for them, not vice versa.

The quality of a retailer's site, products, and customer service, as well as its conversion ratio all impact the quantity and quality of affiliates. When affiliates work with multiple programs, they can easily see which programs are successful and drop the programs that are not.

Selecting a Network

Affiliate programs can be managed internally or through a third-party network. Networks provide access to a large base of affiliates and program management, freeing retailers to focus on other business aspects.

Many affiliates prefer working with networks that offer a wide variety of retailers, as well as tracking systems and management tools to help monitor their programs. When choosing a third-party network, select one that offers programs and tools that maximize affiliate effectiveness and provides ongoing support. Also, retailers should share any industry knowledge with affiliates and third-party networks to increase a program's success.

Developing a successful affiliate marketing program is crucial to a retailer's business. Retailers can easily transform affiliates into an effective online sales force through proper management and strong affiliate relationships. Simply placing a banner that says "Affiliate Program Here" won't create results - the relationship makes it happen.

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Article By Todd Crawford, of Commission Junction

Todd is the VP of Strategic Initiatives at Commission Junction, the leading web-based affiliate marketing network. The company has transformed Internet advertising by creating effective marketing partnerships between online retailers and content sites, where web sites embed retailer images into their content, leading to increased sales. The privately held company has 60 employees and is headquartered in Santa Barbara, CA. Commission Junction can be reached on the Web at http://www.cj.com or by telephone at (800) 761-1072.