Affiliate marketing, a performance-based advertising channel, is highly beneficial for business growth, as it is cost-effective and low-risk for businesses to acquire new customers. Rather than investing heavily in paid advertising, businesses can leverage the networks of their partners to reach new audiences, and only pay out commissions for successful conversions. This makes affiliate marketing an attractive channel for businesses looking to grow their customer base without incurring significant up-front costs.
Let’s take a deep dive into affiliate marketing, a sector of advertising that collaborates with third-party partner types such as content, CPA network, deal, loyalty/rewards, coupon, coupon/cashback, and influencers. These partners promote products and services in return for a commission on each sale, ultimately driving revenue for brands.
The challenge of affiliate programs is that there isn't a one-size-fits-all approach, as no brand or publisher is precisely the same. Many unique factors go into a program: audience vertical, recruitment strategy, platform, compliance, budget, commission structure, publisher types, and much more. Every business has different program goals and different audiences. Brands are unique, so each affiliate program needs a different launch approach. Developing and launching an affiliate program from the ground up can be complex. Therefore, Hamster Garage has created a step-by-step plan to initiate effective affiliate programs based on vertical and program size.
When launching an affiliate program, it is crucial to understand the business model, program goals, and audience. No program is exactly the same; each one has different recruitment and launch strategies. The first step after landing the client is sending the kickoff email. This email includes the following information:
The kickoff email introduces the team and their positions and responsibilities. As the account gets bigger, the team may bring even more resourcing needed or switch team members around to ensure that the account has the right talent for servicing the success of the account. Additionally, centralized communication with the entire team will be used through an email address with this format: firstname.lastname@example.org. The client listserv will give the whole team visibility.
The program questionnaire is a list of questions to help us learn more about the brand and their goals for the affiliate channel before the introduction call. The program questionnaire breaks down everything Hamster Garage needs to understand about the client, what they are looking to get out of the affiliate program, their goals, and their internal attribution system, as well as how this will affect the affiliate channel.
The account tracker is used to track performance and any additional assets. It will include a program overview of reporting, pacing projections, and program goals. The team will update this weekly to track trends and performance. The account tracker will also include a map of links with various documents. This is a way to keep everything in one place. Finally, a competitive analysis will compare the commission structures, on-site offers, and affiliate programs of competitors in the affiliate space.
Following the kickoff email is the introduction call. The purpose of this call is to walk through the questionnaire, learn about the program and understand the goals of the brand’s affiliate program. The introduction call will clear any misconceptions and discuss the brand’s goals on what the client is looking for based on budget, tracking capabilities, and funnel to determine the best-fit affiliate platform.
When deciding which affiliate platform would be most effective for the client's goals, HG needs to understand program goals, budget, and client type. We recommend the following affiliate platforms based on the following criteria:
- ShareASale: For smaller, less complex retail brands looking for the most cost-effective option
- Impact: For brands wanting robust tracking capabilities and a more sophisticated funnel
- CJ: For brands seeking the most affordable solution
Based on program goals and needs, we will suggest an affiliate platform that will work best for the client's goals once the affiliate platform has been decided based on the program goals. The Hamster Garage team will connect the client with the integration and sales teams from the chosen affiliate platform to integrate and set up the program on the technical side.
Introduction Call Questionnaire
The call questions help our team better understand the brand's business and clear any misconceptions. Below are examples of questions the team asks:
- What are your goals for the affiliate program?
- What is the current program commission structure?
- Is PPC activity allowed on this account?
- Who are your top competitors?
- Will you manage this program on a budget? If so, what is that budget per month?
- Who is the direct point of contact? What is the best way to communicate?
- What incentives can we provide affiliates to share with their audiences?
- Do you have a mobile app? Do affiliates receive credit for these conversions on the app?
- What goal should we primarily optimize for? A particular CPA? Growth/revenue? Efficiency/ROI?
- Does the brand have a PR team?
- Is there a current reversal process?
- What is the average order value across all other relevant channels?
Develop OKR Strategy
After the introduction call and questionnaire completion, Hamster Garage now has enough information to build the Objectives and Key Results (OKR) strategy. The OKR document is an effective tool for goal setting and effectively communicating the strategy for the overall program. It's essentially the rubric and formula for achieving the goals we aligned with the client on through the introduction call and the questionnaire. Our program management model builds around key initiatives contributing to goals: recruitment, optimization, activation, and compliance.
Based on our initial conversations, the OKR opens with an overview of the company from Hamster Garage's perspective. The overview discusses how long the affiliate program has been in existence (if applicable), walks through the channel's main focuses, and includes the current commission structure breakdown.
A robust recruitment strategy is essential for the growth and diversification of a program. See below an example of a recruitment strategy:
- Onboard Foundational Partners: Strategically build out a foundational partner list. These foundational partners will make the most meaningful impact on the program quickly. This approach ensures we systematically onboard all top partners, which can significantly affect the program early on and promptly. Once the list is built out, begin outreach to the specified partners.
- Onboard Content Partners: Content partners can enrich a program and should be considered one piece of a robust, diverse portfolio of partners.
Activation is essential if a program has already launched. When a partner has never been active or has ceased driving revenue, our team will begin outreach to have them actively promote the brand.
Optimization benefits the program by driving revenue and conversions. It is generally more cost-effective and efficient for a program’s incremental growth. See examples of optimization strategies below:
- Winback Analysis: highlights partners who have seen a significant drop-off in revenue period over period. Since these partners have driven volume in the past, they have audience alignment but have seen a decline recently.
- KPI-Based Optimizations: Analyzing existing partners through their click-to-sale conversion rate and their average order value (AOV) can help us identify some high-value opportunities to drive more topline revenue.
Implement regular compliance efforts to monitor the program for suspicious or fraudulent activity. Various compliance activities include coupon and content audits and reversal efforts.
Key Insights and Takeaways
The following process is important for the success of creating a new affiliate program to learn and understand the brand’s business which will be mutually beneficial for the success and efficiency of the program.
- Kickoff email
- Brand to answer the questionnaire
- Introduction call
- Develop OKR
Utilizing the onboarding process is critical to understanding specific and measurable goals that the brand wants to achieve from the program. By following these steps, brands can launch a successful affiliate program that benefits both the brand and its affiliates to drive incremental revenue growth and build brand awareness.