Say you run a smaller ecommerce operation that sells specialized running shoes, but nothing else. Your customers might request running apparel, but you don’t carry running apparel, and you don’t want to stock it.
“There are dozens of large companies that sell running apparel,” says Dion Jones, marketing strategist with eNautics, an affiliate-marketing consulting firm. “Smaller merchants can refer customers to these larger companies and make commissions when those customers buy products. It’s a natural way for smaller merchants to extend their product lines without having to actually stock the inventory.”
Top Three Mistakes: Affiliate Commissions
- Referring customers too soon. Refer customers to another site only after the customer purchases your products or signs up for your newsletter. These referring links can be on a confirmation page or a “thank-you” page.
- Failure to get proven copy. Make certain that logos, graphics and text descriptions are tested and proven to be effective by the company to which you refer customers.
- Failure to track. Carefully track and monitor all offers. Drop the ineffective ones and add new options that appear promising.
“As for running apparel,” says Jones, “a larger merchant might carry, for example, a popular line of Under Armour running pants. If those pants sell for $39.99, a referring merchant might earn 7 percent, or $2.80, for every sale of those pants. That’s for doing no work, really, just referring the customer. The commission percentage varies from company to company and from product to product, but it’s worth looking into.”
Affiliate marketing, which occurs when one website refers a customer to another and then earns commissions when the customer buys something from that latter site, can help smaller merchants profit from relationships with larger merchants. That’s because most large online merchants have affiliate marketing programs; a smaller merchant can pick and choose among these programs to extend related product offerings to customers, and profit from it all.
Jones continues, “Smaller merchants need to determine the next logical purchase their customers could make, and then offer it. If you sell sporting goods, for example, go find a company with a nutritional supplement affiliate-marketing program. It’s logical that sporting goods buyers could purchase nutritional supplements, and a sporting goods merchant can earn affiliate commissions by referring a buyer to the nutritional supplement company.”
But such referrals, caution experts, should take place after a sale occurs, not before.
In order for an ecommerce merchant to refer customers to other merchants without doing harm to his/her own bottom line, “it’s important that this link occur on a post-sale thank-you page or confirmation page,” says Shawn Collins, author of Successful Affiliate Marketing For Merchants. “Merchants don’t want to lose a potential customer by referring him/her to another site before that customer buys something.”
There are hundreds, perhaps thousands, of affiliate programs from which a smaller merchant can choose. However, Collins recommends five affiliate marketing brokers that collectively list most of the reputable programs.
“I’d suggest Commission Junction [Cj.com], LinkShare [Linkshare.com], Performics [Performics.com], Kolimbo [Kolimbo.com] and Share a Sale [Shareasale.com],” says Collins. “These are the five major affiliate marketing firms, and between them they offer probably 90 percent of all affiliate offers. Smaller merchants can go to these sites and review the various offers, and then choose the ones that fit them. There’s typically no charge to become an affiliate and these sites offer lots of help and training to help smaller merchants get started as affiliates.”
Virtually all companies that offer such programs also supply logos, text descriptions and other graphics to help affiliates. If a running-shoe merchant, for example, refers a customer to a running-apparel site, the referring merchant can display logos, descriptions and photos of the apparel to entice customers to click on the referring link.
“The link should go to the actual product page,” says eNautics’ Jones, “and merchants should always monitor the products they offer as affiliates. They should drop the offers that generate no sales, and experiment with new ones that could be more successful.”
Jones has seen offers on a merchant’s “recommended resources” page get click-through rates of up to 40 percent: “That’s 40 percent of a merchant’s customers who investigated third-party offers after buying something from the original merchant. Forty-percent. That’s pretty high.”