Build a Competitive Affiliate Program

by Greg Hoffman April 15th, 2011 

competitive

Building a new affiliate program isn't as easy as launching on a network and flipping the auto-pilot switch. In the last article, we discussed when to launch an affiliate program. Now we need to discuss how to build a competitive program that is attractive to affiliates.

With thousands of merchants on the major affiliate networks, chances are that most vertical niches are represented. Affiliates active in these verticals will only look at a new merchant based on several criteria: trust or personal relationships with the manager, higher commission and proof of higher conversion compared to competitors.

It's been said over and over, affiliate marketing is about relationships. The manager in the program should be knowledgeable, proactive, outgoing, helpful and transparent. Affiliates want to know that their needs will be met and their opinions heard.

Commissions need to be competitive. Managers need to research the competition and find a balance between margins and cost per new customer through the affiliate channel. If commissions are not equal to or greater than competitors, then conversion needs to be higher.

Conversion is mainly on the shoulders of the merchant. Affiliates need to send relevant and targeted traffic to a site but if conversion is not equal to or higher than competitors, then commission needs to be higher. See how that works? Basically the affiliates want to know where they can maximize their commissions. Loyalty doesn't pay the mortgage.

See What Affiliate See

To determine if a proposed commission is competitive, it's time for research. Merchants need to see what affiliates see. Every merchant/manager should have an affiliate account. This is not to suggest spying on competitors, only to explore how other programs are structured. Through the affiliate interface, one can see the basic structure of any program.

Start an excel spreadsheet and list the top 10 programs using the following criteria: Commissions, cookies and other program vitals relevant to comparison. The goal is to find the range of options and match or beat the competitors across the board.

Terms of Service

affiliate

Too many merchants have no terms of service or long legalize terms in their affiliate programs. Make it easy to understand what affiliates can and cannot do when promoting products. Know that affiliates will test the boundaries on promotions and may in fact violate those policies on a regular basis. Having a clear set of terms and the consequences of violating those terms up front will save merchants many hours of anguish.

Review and research why some merchants allow trademark bidding and others do not. There are varying opinions on whether or not affiliates should be allowed to bid on brand names and phrases such as coupons, deals, promo codes and discounts. Establish strict rules regarding paid search and enforce them consistently. Some affiliates will not work with programs that have loose terms or rogue affiliates.
The same can be said of use of coupons. The general public is highly trained at finding a product and then opening another browser window to see if they can find a coupon code. Follow the best practices of other merchants on how to utilize coupons and deals.

Here are some other basics regarding program structure:

  • Commission and cookie length should be competitive
  • Choose the category wisely
  • Manual approval is suggested – know who the affiliates are and how they promote
  • Auto deposit is a must, if available – keep the program funded
  • Datafeed is strongly suggested for sites with multiple products
  • Reversals should be minimal – communicate why reversals happen
  • Cookie length standard is 30-90 days
  • Two-Tier referrals are not widely used anymore, but it is a good tool for affiliates to help recruit other affiliates
  • Include a professionally designed header for the description page
  • Use an html editor for autoresponder emails, program description and terms of service
Greg Hoffman

Greg Hoffman, aka the Marketing Gorilla, is an affiliate management consultant with diverse clients in the major affiliate networks. His agency was recently voted OPM of the year for 2010. He hosts two podcasts, one highlighting interesting merchants, the other highlighting interesting affiliates.

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