How to maximise your affiliate marketing program ROI

Avoid 5 common affiliate marketing pitfalls with these 5 tips

Done properly, affiliate marketing can yield many benefits for challenger brands and established brands alike. Advances in technology and consumers’ ever-increasing willingness to shop online practically guarantee a strong ROI — if you have the right plan and resources in place.

Though affiliate networks do afford advertisers nearly automated marketplaces, these programs don’t run on autopilot. From commission structure and communication channels to budget, data tracking, and conversion metrics, everything needs to be fine-tuned in order to maximize ROI. Here’s what you need to know before you jump into the affiliate marketing waters.

The Benefits of a Well-Structured Affiliate Program

Affiliate programs are attractive marketing options because they’re inherently self-funding. Instead of buying advertising upfront and hoping it leads to later sales, you only pay a commission when a sale occurs via an affiliate program. A well-structured affiliate program not only delivers a significant boost in traffic to your website, but it also delivers potential customers who clicked to learn more about your offer.

Here are the benefits well-structured programs afford to online marketers:

• Efficient revenue sources: With the exception of email marketing, affiliate marketing typically delivers the greatest ROI of any marketing channel. A strong program produces high sales conversions, regardless of the number of impressions or clicks.

• Third-party endorsements: An endorsement from an independent source is a valuable way to influence customers without “selling” something to them. Many affiliate networks are adept marketers of products or services — look to leverage their efforts.

• Scalability to suit marketers’ needs: A scalable infrastructure offers automated tracking, reporting, payments, and link generation. Today’s technology creates efficiencies, allowing you to get a number of additional sales from affiliate networks without the extra work.

• Diversified revenue sources: Display advertising and paid searches require you to work with a handful of partners or search engines (e.g., Google, Yahoo, Bing, etc.). A well-structured affiliate program distributes your risk across hundreds or thousands of sites.

While there are plenty of benefits, be aware of some common mistakes associated with affiliate marketing.

Common Affiliate Marketing Pitfalls

Implementing a successful affiliate marketing program is not without its pitfalls and misconceptions. A program can cause your team to misconstrue data, lead to bad decisions, or — worst of all — hurt your ROI. But these are easy mistakes to avoid if you know what to look for. Don’t let these common pitfalls stand between you and that return on your investment.

Download resource – Affiliate marketing strategy guide

This guide, by affiliate marketing specialist Graham Jenner updated by Luca Tagliaferro, explains the opportunities of affiliate marketing. It is aimed at owners or managers of Ecommerce sites who are considering setting up an affiliate programme, or looking to review their current programme.

Access the Affiliate marketing strategy guide

Here’s how to ensure your program avoids these common challenges:

1. Establish policies and procedures. To play by the rules, affiliates need to know what the rules are. Without guidelines, they might promote discounts or offers that you didn’t want promoted. Set policies for paid searches, promotional methods, and brand guidelines. Put procedures in place that ensure your affiliates are following these guidelines.

2. Ensure sufficient resources. To manage and grow your program, dedicate resources to it. Affiliate marketing is never an autopilot activity, and your team will need to actively and regularly recruit and optimize partners to avoid jeopardizing revenue opportunities. Hire enough people in-house or outsource your program to an agency that will manage it.

3. Don’t focus on the wrong metrics. It’s not the number of affiliates you have, the impressions you generate, or the click-through rates that matter. Affiliate marketing is all about sales, conversion rates, and the cost to generate those sales. Focus your analysis on key metrics for conversion rate, sales, and efficiency to maximize your program’s ROI.

4. Avoid having too many networks. Start with a single affiliate network and expand only if there is a good reason to do so (e.g., an enhanced technology feature or a different geographic market). If you plan to join more than one network, be sure your payouts and policies are consistent from network to network. And be on the lookout for duplicate transactions across your networks.

5. Have a fluid marketing budget. Marketers often cut commissions, slow down their programs, or completely stop them because advertisers are stuck with fixed budgets. It’s better to operate with an unlimited budget tied to an efficiency or ROAS goal. As long as your orders are coming in at profitable rates, there should be no reason to stop generating new sales.

Once you’ve avoided these pitfalls, optimize your affiliate program. One way to do that is by learning from the successes — and best practices — of other marketers.

Optimizing Your Affiliate Program

One award-winning program from Fanatics.com leverages great informational pages to educate affiliates about their program, including a YouTube channel that acts as an educational portal.

Home goods online retailer Wayfair.com has a progressive attribution method for compensating affiliates. It’s based on the last affiliate site a visitor clicks on before adding something to the cart, rather than the typical policy of paying a commission to the last affiliate a customer clicked on before making a purchase.

Regardless of which best practices you choose to embrace, here are key strategies to keep in mind to ensure a smooth, effective run for your program and to maximize its ROI:

• Have a two-sided program.Use one commission rate that the public sees and a separate range of private commissions for top-performing sites. Public commission rates should be built to last — frequent changes can often disrupt affiliates, and they’re difficult to maintain.

• Do upfront research. You need to know what your competition is doing. If your commission rates aren’t competitive when you launch, it’s tricky to catch up later. Start out on the right foot to make an impact — you only get one launch and one first impression.

• Future-proof your tracking. Plan ahead and discuss with your agency or affiliate technology provider all of the ways that you might want to track now and in the future. Making changes later is difficult — as is communicating the changes to affiliates after the fact.

• Insist on great communication. Affiliates need information about your product, your sales, and your promotions. Share brand or promotional guidelines, too. Use newsletters or webinars to update most affiliates, but reserve one-on-one emails and phone calls for top partners only.

Affiliate marketing programs can yield myriad benefits, but only if you sidestep the pitfalls that often keep people from developing solid plans. Learn from others who are successful, do your research, and keep your communication channels open. If you effectively use your budget, you’ll get the exposure you need to maximize your ROI.

Thanks to Chris Kramer for sharing their advice and opinions in this post. Chris Kramer is a founding partner at House of Kaizen, a leading end-to-end digital performance advertising agency based in New York City, London, and Lagos, Nigeria. Chris is the head of affiliate marketing for the agency and considers his most important task to be creating a performance-based service for his clients that’s centered on continuous optimization. You can follow him/her on Twitter or connect on LinkedIn.