Affiliate marketing and incentive-based selling are becoming valuable resources for a variety of e-tailers, and generating revenue through residual income streams is becoming more necessary than ever for web merchants to stay competitive. While the average affiliate network can bring any business a fresh batch of customers immediately, expanding this network to the e-tailer’s advantage in the long term can present some challenges.
Growing a sales team in one location involves regular training, feedback, market research, and strategy. Since affiliates are often scattered throughout the country, or even the world, it can become more difficult to control the quality of the transaction. As a result, sales may not be reaching an optimal level.
Furthermore, developing a profitable affiliate marketing program often requires training affiliate sales members and nurturing business relationships. Even though many affiliate networks can be a result of an organic growth process, a self-sustaining system often requires direct intervention. Bonuses, performance prizes, and raising commissions can all be effective ways to encourage growth. An e-tailer that develops a strategy to learn and grow with its affiliate team can maximize its chances of success for the long term.
Affiliate Marketing: The Basics
Affiliate marketing begins with the simple concept of a commission-based, independently run network. In addition to distributing products directly to customers, an e-tailer sets up a system with specific sales people to establish a network of sellers. These sales team members are responsible for recruiting additional members who distribute the e-tailer’s products. Each member is designated a commission amount, and they may move up to various levels of their company depending on performance. The business grows in multiple ways: both from increased revenue from product sales, and with an established network of sellers. Most affiliate programs fit into one or more of the following categories:
- Internet Affiliate Marketing
- Performance Marketing
- Referral Programs
- Pay-for-Performance Programs
- Direct Marketing
- Associate Programs
Internet affiliate marketing is quickly becoming a valuable way for businesses of any size to bring in multiple streams of revenue. A popular program on the web today is Commission Junction, one of the internet’s fastest growing networks that offers a streamlined payment and reporting system. ClickBank is another popular place where merchants can buy and sell digital products such as ebooks, software, and bulk batches of web articles. If your company is looking for a wide distribution of books or software packages, ClickBank can help you develop a quick and efficient process to make this possible.
Linkshare is another popular affiliate marketing network that helps merchants join similar businesses in a given industry. Commissions are earned through every product available on the network, offering companies a chance to maximize revenue generated on their website. Each time a visitor follows a specific link for a purchase, a commission is granted or the sale. Linkshare affiliates can enjoy the benefits of having well-recognized brands on their site, and it can be a valuable venture for generating interest for a new startup or smaller online merchants.
Performance marketing is another version of affiliate marketing programs, based on a pay-per-performance revenue structure. FatWallet is one example of a company that has built customer loyalty through an effective performance marketing campaign, and continues to grow alongside sites such as ClickBank.
Referral programs are used by sites such as Amazon.com, where independent e-marketers can list products directly from Amazon.com’s site and earn a commission per sale. This is a valuable strategy for companies that may not be interested in selling goods directly out of inventory. Associate programs work in a similar way; these are another option through Amazon.com, as well as GoExact.com. Both of these programs have developed a strong affiliate link structure, along with sign-up incentives as part of their recruitment campaign.
Depending on the tier structure and number of affiliates involved within a chain, the opportunity for exponential revenue becomes a strong motivator for all referrals. Since the process can be repeated to infinity, the risk of losing value and power of the network becomes apparent. It’s here that it becomes important for an e-tailer to manage the relationship. An effective approach to managing the affiliate relationship is to develop a strategic plan for growth.
Managing Affiliate Partners
Many e-tailers simply choose a strategy of high recruitment levels; this means that they will continue to hire and develop affiliates throughout the network, regardless of how each individual member may be performing. While this may offer a wider reach in the short term, the risk of poor performance becomes higher when there is limited control.
E-tailers that choose to refine their team may have a better opportunity for long-term success. The key ways to nurture and advance a novice sales team member include:
- Conducting regular sales conferences
- Offering ongoing training
- Providing opportunities for advancement based on performance
- Extending incentives with contests and bonuses
- Creating an opportunity for the affiliate to become a leader of a given area or region
The Importance of Identifying Top Affiliates
Affiliate programs can only be attractive to independent sellers when they present a competitive commission structure. Not only is it important to offer a lucrative rate plan, but identifying and rewarding high achievers will help build a more responsive network. Learning how to manage top performers will help build a strong chain.
Tracking an affiliate sales team, their efforts, and their performance is an essential part of managing an affiliate team. E-tailers need to regularly monitor sales cycles and trends. After reviewing performance, it becomes easy to see the top 100 performers within a given time frame. But why is this important?
Every affiliate team member will be working on a different commission level and compensation structure. Since the primary motivation is often to jump up to the next tier, some affiliates work exceptionally hard at reaching the next level, while others might just perform to the bare minimum. Structuring a competitive and incentive-based compensation plan will help.
How to Determine the Top Affiliates
Affiliate networks that spotlight and promote top performers offer the benefit of increased exposure. The incentive to reach the top ranks becomes even more attractive to newcomers, and will set the standards for earning a reputable position. Determining the top affiliates will require regular monitoring and the collection of sales report data. Allocating commissions, promotions, and bonuses on a regular basis will help give affiliates goals and incentives to grow their business. When this is done on a quarterly or monthly basis, the regular contributors are easily identifiable.
Although reaching the top stages takes time, it offers an opportunity for the diligent and persistent workers. Getting to the top then becomes a responsibility that rests on the shoulders of each and every individual involved. E-tailers that offer resources and tools to allow top performers reach their full potential will filter out the poor performers who simply do not put in the extra effort required to grow.
The Bottom Line
Affiliate marketing and sales programs provide profitable ventures for many e-tailers, but learning how to manage the sales team requires its own strategy. A lucrative commission structure and opportunities for growth are often not enough. Identifying the top performers and filtering out poor performance is necessary for keeping motivation and rewards level high-steps that can lead to increased sales and a well-established, valuable brand.