What is Affiliate Marketing?
In the simplest of terms, affiliate marketing is the process of paying a commission to customers whenever they get new customers to your business. It’s a success/win/win scenario: You earn a new customer, your referring customer (affiliate) gets paid, and your new customer gets introduced to your services.
Once more, this isn’t exactly a recent invention; in truth, the core concept of affiliate marketing really goes back to the pre-Internet days. In some manner or another, businesses have constantly tried to leverage their existing audience so as to spike development—venturing to compensate customers whose referrals lead to the further customer obtaining for the organization in question.
(As a rather simple example, think about the new restaurateur around offering current customers 10% off their next meal for every new supporter that comes in and says, “I heard great things about this place from my friend, Steve.”)
Presently, while the core concept of affiliate marketing hasn’t changed such a lot, significantly more goes into developing a successful affiliate program these days. Essentially telling your customers to “tell your friends about us!” just won’t work by the present norms.
Rather, there’s a great deal to consider when diving into affiliate marketing, for example,
- Defining your ideal affiliates
- How to best engage with your affiliates
- Determining the ideal commission percentage to pay successful affiliates
- Assessing the performance of your affiliates (just as that of your affiliate program overall)
We’ll get to these focuses (and that’s just the beginning!) in a piece.
Before we dive in, however, let’s talk about the numerous ways an affiliate program can benefit your eCommerce business in any case.
A Few Quick Notes on Affiliate Marketing versus Referral Marketing
All through this article, we will be utilizing terms, for example, “refer,” “referring,” and “referred customer” when discussing the relationship between your affiliates and their target audience members.
However, don’t let this confuse you into speculation affiliate marketing and referral marketing are synonymous. While the end objective for each is the same (that is, having your current customers welcome others from their network ready), there are a number of differences between the two strategies:
- Referral marketers ordinarily center around referring brands to their those in their close and more intimate network, while affiliate marketers, for the most part, market to their professional network or their own after/audience.
- Referral marketing is a more intentional and focused process, while affiliate marketing is often rather passive, with affiliates utilizing a “wide net” way to deal with generating referrals.
- Referral marketers are often reimbursed with limits, coupons, or freebies so as to enhance engagement with the brand in question.
Affiliate marketers, then again, are paid a percentage commission for each sale they influence.
Obliging this, the primary difference between affiliate marketing and referral marketing is that affiliates see the process as a business, and use it as an approach to make passive income (whereas referral marketing focuses on generating more “off the sleeve” referrals from customers who basically like your image).
It is not necessarily the case that affiliate referrals are less authentic or organic than those who participate in referral marketing or anything like that. As we’ll get to, authenticity is one of the key factors with respect to whether or not your affiliates are able to successfully get new customers to your organization.
Since we’ve explained what affiliate marketing is, let’s talk about the numerous ways an affiliate program can benefit your eCommerce business in any case.
The Main Benefits of Affiliate Marketing
Once more, the surface-level benefit of affiliate marketing is pretty self-evident:
The more referrals your affiliates make, the more customers you’ll acquire.
In the interest of specificity, however, let’s get more granular:
- Affiliate marketing is effective: According to Business Insider, affiliate marketing is responsible for an average of 15% of computerized marketing revenue over all industries. Likewise, revenues from affiliate marketing are expected to increase by 10% year-over-year until 2021 and may overtake email marketing as the best advanced marketing strategy by 2019.
- Affiliate marketing leverages social confirmation: According to com, 95% of online consumers read online reviews, and 60% of them are directly influenced by recommendations made online (by means of web-based life posts, web journals, etc.)
- Affiliate marketing increases overall ROI: According to Conversant, affiliate referrals lead to purchases that have a 21% higher average order value. Also, customers acquired by means of affiliates generate an average of 58% more revenue than non-referred customers.
Overall, offering an affiliate program provides yet another path for your customers to engage further with your image. Thusly, your best customers can continue to provide value to your organization even when they aren’t making purchases themselves.
Overall, developing and keeping up an effective affiliate program can permit you to acquire new customers, expand into new markets, and scale your business more efficiently over time.