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Affiliate marketing as a new channel

How to drive growth by leveraging the affiliate programs?

It seems that you belong to the 45%  of the retailers that have yet to exploit the potential of affiliate marketing.  According to a study conducted by Shop.org and Forrester, just about 55% of the retailers have affiliate programs.  But affiliate programs are not for just retailers or for companies that do business directly with consumers.  In fact, affiliate programs can be used whenever the customer base is fragmented.  That is why companies like Dell, Overture, Pitney Bowes, Office Max, and others that do a significant chunk of business with small/medium enterprises use affiliate programs.  There is another misconception that affiliate programs are only for those businesses that use e-commerce.  You can use affiliate marketing even for lead generation.  Say, you are a consulting company that designs office interiors.  While you do are neither a retailer nor an e-commerce business, you can use affiliate marketing as a way to make potential clients aware of your business and generate new leads.

How does affiliate marketing work?

Imagine a sales-force of hundreds/thousands working for you at a modest upfront/recurring costs (these costs are a result of managing your affiliate program either in-house or through a third-party).  The affiliates get paid only when the desired outcome is achieved (which can be a lead or a sale or any other outcome that is meaningful for your business).  You provide marketing collateral to your affiliate partners, who then will use several creative ways to market your offering.  While most affiliate partners use content as a vehicle, others might simply leverage their traffic for advertising your business or use search advertising.  No matter how they do it, you will have all your affiliate partners working on your behalf to create brand awareness and to push potential customers to take the desired action.  Not only can this be extremely expensive to develop and manage on your own, affiliate partners also bring a lot of creativity to the process.  Another study reports that several businesses have seen almost 15% improvement in their sales as a result of affiliate programs.  (Related article:  Ask Jeeves' entry into contextual advertising makes search engine advertising competitive)

You must note, however, that affiliate marketing is a new channel and not a substitute for your existing channel(s).  Accordingly, you will still need to use traditional marketing programs.  Of course, you must also use email/search marketing and advertising in print periodicals read by your target audience.  Other businesses will need to use whatever media (e.g. television, radio, direct mail, etc.) makes sense for their business. 

It is also important that you plan your affiliating marketing strategy by looking at the following dimensions:

• Who will be your affiliate partners?
• What type of collateral will you provide them?
• What is the desired outcome for you?
• How much will you compensate them?  (The better they payoff, the more likely it is that you will attract more and better affiliate partners, and once they become your partners, they will work harder for you rather than your competitor.)
• How will you protect your brand identity now that there are other people who are contributing to your brand management?

How to leverage affiliate marketing partners?

• Think of them as partners.  The better you treat them, the better your results will be.
• Work closely with your partners.  Understand what you can do to make them more successful.  If you decide to partner with content-rich websites, provide them with high-quality content.
• Identify the best performers and reward them appropriately, as you would your own sales team. (Related link:  Innovative ways to reward star performers)

Related articles:  

Affiliate marketing vs. contextual marketing             Search advertising strategy development      Local search marketing

When your advertising strategy needs to change        Online ad clutter bothers consumers     Website marketing strategies

Exploiting the Internet for new business       How to leverage public relations (PR) for free exposure?

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