Affiliate and reward programs can be an effective way to increase traffic to your website with hopes of increasing revenue. In this episode we will explain the differences between an affiliate, reward and referral program and the best features to look for when starting your program.
What is an affiliate program? How does it differ from a reward or referral program?
An affiliate program is a program where people share about a product or service and in return get a commission of sales when people purchase using their link or code. Affiliate programs are typically an effective way to incentivize people to share about a product or service.
Affiliate programs differ from reward and referral programs, although they share many similarities. Whereas affiliate programs usually provide a cut of the overall sale, reward and referral programs usually provide bonuses or free products, etc. in return for sharing. For instance, a barber’s referral program might reward you with a free haircut for every new client you refer. Or, if that same barber has a rewards program, you might get a free haircut for every five haircuts you get with the barber.
Which is better: affiliate programs vs. reward and referral programs?
One is not necessarily better than another. Some businesses effectively run both affiliate programs and referral programs. Much of it depends on the type of business and the goals of the program.
If you’re asking influencers to share about your product or service, they’ll often want to participate in some sort of affiliate program where they receive a commission based on the number of people they successfully refer.
However, if you’re trying to get a loyal customer base to share your product or service with their friends, a referral or reward program is often enough extra incentive to get people to share.
Additionally, referral and reward programs are often less expensive for the business.
What’s the best affiliate platform?
We highly recommend choosing an affiliate platform that has a tight integration with your website platform.
We use AffiliateWP since we use WordPress, which we think is one of the best options for a WordPress website. It’s feature-rich, easy-to-use, and the support team responds fairly quickly when we run into any issues.
Here’s what we love about AffiliateWP:
- Choice of different commission structures (recurring, percentage, flat fee, etc.)
- Clean affiliate portal interface for affiliate to grab links, creative, copy, etc.
- Ability to give affiliates coupon codes that track their referrals.
AffiliateWP can do so much more than that, but those are basically the features we were looking for when finding a platform.
When choosing an affiliate platform, we also recommend choosing something you can grow into. AffiliateWP isn’t prohibitively expensive and it’s feature-rich, which made it the perfect choice for us. Changing affiliate platforms down the road can be a serious undertaking, so do your research before making a choice.
What features should you look for in an affiliate program?
When searching for an affiliate program, we looked for something that was easy-to-use, established, and was something we could grow into. There were a few specific features that we sought after:
- a well-designed affiliate portal where we could load copy and creative for our affiliates
- the ability to provide affiliates with coupon codes
- different commission structure options (we currently use one-time commissions but may want the option to do recurring commissions in the future)
- custom affiliate links
- tiered affiliate rates (provides different rates for affiliates based on different criteria)
- affiliate landing page
These are just a few of the features that we looked for in an affiliate platform. Something we did before choosing an affiliate platform was to make a list of our favorite affiliate programs that we’ve participated in. We then identified those things that we really liked about that program.
Which commission structure should I choose?
We recommend starting simple, then iterating based on feedback. If your commission is too low, potential affiliates will likely tell you that up front.
One of the worst things a business can do is offer a commission that’s not profitable for the business and then have to change course down the road by lowering the commission percentage or fee. This will erode trust with your affiliates.
Typically, we’ve found that commissions under 20% aren’t worth it for affiliates. This, of course, isn’t a hard rule. For instance, if you’re product is $100,000, a commission of 5% might be totally worth it for an affiliate.
The “gold standard” of commission structures are “recurring commissions” for subscription products. Recurring commissions highly incentivize sharing since the affiliate will continue to get a cut of the sale for as long as the customer remains with the business. Kit used to have a “lifetime” recurring commission structure, which made it one of our favorite affiliate programs to participate in. Unfortunately, they’ve since done away with it (much to the frustration of many affiliates!).
Again, we recommend choosing something a bit more conservative and simple and starting there. You can always increase it down the road if needed.
What makes an affiliate program effective?
In our experience, the most successful affiliate programs share the same characteristics. Effective affiliate programs typically:
- Clearly convey the affiliate commission structure and what has to be done to win a referral.
- Offer a commission that makes it worthwhile to share.
- Supports the affiliates by making it easy to share! This often means loading creative and copy assets that affiliates can use on-the-go instead of making them come up with their own graphics and captions.
- Frequently sends updates to their affiliates. At Farm Fed Box, we send a monthly update to affiliates that identify upcoming promotions and give people a glimpse at new products, events, etc.
Listening to feedback is one of the best ways to consistently improve an affiliate program.
How do I get people to join my affiliate program?
The easiest way to get people to join your affiliate is to ask your current clients and customers to join.
When starting an affiliate program, it’s usually wise to ask a specific people instead of opening it up to large groups of people at a time. This way you can test whether it works and identify any mistakes or issues on a smaller scale.
Additionally, you’ll likely find that 80% of your affiliate sales come from 20% of your affiliates. Affiliate programs can be a lot to manage. A lot of inactive affiliates lead to more work!
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