Affiliate Marketing - An Introductory Guide For Your Small Business

Affiliate marketing can be a very powerful way of growing your customer base and small business. If you are looking for some more information on this subject and are thinking of employing it in your business, then hopefully you will find this introductory post useful.

Affiliate marketing 101 - An Introductory Guide For Your Small Business

What Is Affiliate Marketing?

Affiliate marketing is the process of using partners to promote your products or services through their marketing channels. This is normally achieved online, through a partners website, blog or email list. Partners are paid only by commission on sales that are made through their efforts, making affiliate marketing a very cost effective option for small business owners to grow their business.

How Does Affiliate Marketing Work?

Normally, affiliate marketing works through a process such as the following:

-  Business 'A' would provide Affiliate 'A' with a set of text and/or graphical adverts to display on their website, blog or emails, along with a unique tracking link
-  Affiliate 'A' would use the adverts to send as much traffic as possible to the website of Business 'A' - making sure to use the unique tracking link so that conversions can be tracked
-  Any sales made as a result of this process would result in a commission being payable to Affiliate 'A'

In terms of finding affiliates and providing adverts and tracking links, there are a couple of ways you can do this. You can join an affiliate network such as Commission Junction or ClickBank, or you can set up your own affiliate process through a provider such as Zferral/Ambassador.

I'd say it's much better to join a network, although this can sometimes be difficult for new businesses as they like to see strong sales figure history before admitting you onto the network. Every case is slightly different though so it's worth checking what you can do with each network.

What Are The Advantages Of Affiliate Marketing?

Some of the advantages of affiliate marketing are as follows:

-  It can help grow your business very quickly - think in terms of having an army of digital, commission only sales people at your disposal
-  You only pay when a sale (or other agreed action) has taken place - no fixed, ongoing costs to worry about
-  It can help to increase the perception of your brand - if you have a lot of quality affiliates promoting your business, it looks good to your target audience

All in, affiliate marketing is definitely worth consideration, although there are a couple of disadvantages that you should be aware of too.

What Are The Disadvantages Of Affiliate Marketing?

The benefits of affiliate marketing certainly make it worthy of serious consideration as part of your overall marketing strategy. However, it's worth noting the following points before you begin:

-  Although working with good affiliate partners can help to increase the perception of your business, the reverse is also true. Affiliates who act in negative ways can damage your reputation too
-  Although affiliate marketing can help to grow your business dramatically, this can also be a pain point. Can you realistically fulfil an avalanche of new orders if your campaign goes well?
-  Although paying only commission on sales sounds like a great thing, make sure it's viable and sustainable. For example, 20% might not sound like a lot, but are you sure this doesn't eat into your margins too much? Can you keep that level of commission up over the long term?

In saying the above, these disadvantages should be relatively easy to manage with a bit of planning and preparation. Affiliate marketing can still work for the right kind of business.

What Kind Of Business Does Affiliate Marketing Suit Best?

Especially when considering the disadvantages mentioned above, I'd say that affiliate marketing would suit a digitally-based business best. For example, the kind of business who would:

-  Sell downloads, e-books etc
-  Provide SaaS (Software-as-a-Service) products
-  Sell goods through e-commerce stores (assuming they had a good handle on inventory/stock)

However, in saying that, affiliate marketing can also work well for professional service based companies too. You could work out an affiliate program that offered commissions on well defined and packaged services that customers could buy 'off the shelf'. You could also offer commissions on booked appointments or similar too. 

Is Affiliate Marketing Right For Me?

When deciding if this is the right approach for you to take, it's probably worth asking yourself questions along the lines of the following:

-  Is my product or service even able to be sold digitally? Some purchases require a bit of 'hand-holding' and might not suit the affiliate model well
-  Can I realistically handle a serious increase increase in orders if my campaign goes well?
-  Can I afford to be paying commissions on sales, or do my margins not allow it?
-  Am I able to invest the time in setting up an affiliate program and in managing affiliate partners?

How Can I Get Started With Affiliate Marketing?

If you have decided that you want to get started with affiliate marketing for your small business, then here are a few places that you can visit for more information and and to get started:

-  Commission Junction
-  ClickBank
-  Ambassador
-  PerformanceIN

Thanks for reading!

By Alan MacDougall
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The Revenue Builder Blog is a small business marketing strategy and tips blog designed to help small business owners and startups maximise sales revenue.

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