AFFILIATION MODEL, TO ENGAGE WITHOUT CONVERTING

Accelerate your business with these expert tips on the "Affiliation Model, to engage without converting". Analyse and discover this TIP!

The name "affiliating" sounds nice but is more difficult than it seems, because this is to pay a third party to help you sell and promote your business. For Whether this is really a business depends very much on the size of the market and the type of product.

A good example of this is in fashion, where Cocum, project of the 4th Edition of GarajeThe image recognition system, through image recognition, locates the garment you are looking for and always guarantees results. But beware! bear in mind that as you have no control over the final sale, look at the content you link to... Imagine that you end up redirecting to the website of a shop that is a disaster!

The affiliate business models are all the rage on the Internet. Quick to set up, simple to operate and with hardly any costs. But like everything else in life, all that glitters is not gold, and before taking the plunge and creating a revenue strategy with this model, it is necessary to fully understand how it works and how it can be used.above all, when to mount it and its implications.

Affiliate business models are by no means new, and although we have become accustomed to seeing them in the e-commerce environment (Amazon has been using them since 1996), they have actually been around for as long as the world has existed. If you've travelled a bit, you'll know that when you approach a taxi driver and ask him for a good place to dine/shop/entertain yourself, he's likely to take you to a place where he gets a commission for every tourist he takes.

That is an affiliation model... although formally we could define them as:

An affiliate business model is the one where one of the actors, usually a company (the seller) sets up some kind of reward for people or businesses (affiliates) that bring customers or even orders to it.

They are models "win-win".They allow the seller to get new customers for a fraction of the cost (the commission) that he would have to invest to attract them, and they allow the affiliate to earn money without closing the sale or taking the risk of starting up a business, although obviously they are not usually so "pretty" and have profound implications that you should be aware of...

In this TIP we will give advice on types of business models from the point of view of the marketer who wants to establish a new customer acquisition channel based on affiliation.

AFFILIATE BUSINESS MODELS: A VENDOR'S POINT OF VIEW

As we have said, they are interesting for the seller because allow low-cost channels for attracting interested customers to be set up. (leads) for which you only have to pay if you sell, and often access to potential customers that by default we would not have access to (it means changing from a "push" model in which we are the ones making the effort to go after customers to generating a "pull" strategy in which affiliates bring us customers).

It is a model in which usually success is remuneratedi.e. only the commission is paid if the customer brought to us by the affiliate ends up purchasing... Something very interesting that makes it not only scalable on business model but potentially very profitable (recruitment ceases to be a fixed cost and becomes variable and tied to the closing of the sale). TIP ).

This strategy is undoubtedly interesting, but as a business it is usually not a good idea to base our entire customer acquisition channel on affiliates, as this is not a good idea, as it is a channel that does not depend on us and over which we have no control, we cannot be sure of its performance.... or put more pressure when it is in our interest (for example in campaigns or at times when we want to increase sales with specific actions).

These are usually business models where the affiliate is rewarded using one of the following strategies:

• CPA (Cost Per Acquisition) - Revenue sharing: if the site A (affiliate), sends to the site B (seller) a customer and the customer ends up buying, the site A (member) takes % of the invoiced amount (it is very unusual to use margin).
• CPL (Cost Per Lead/Pay Per Lead): is very similar to the CPA with fixed commission, i.e. a fixed amount is always paid, but in this case, payment does not take place if the customer sent by the affiliate (site A) buy a product, but if the customer registers or subscribes on the seller's site. (site B).
• CPA (Cost Per Acquisition)- Fixed fee: is a model exactly the same as the previous one but where the affiliate (site A) gets a fixed commission if the customer ends up buying from the seller (site B) regardless of the amount of the purchase.

From a marketer's point of view, we could say that in a way it is a long tail model where instead of putting all the effort into a few recruitment channels, little effort is put into many channels (the affiliates).

SOME KEYS TO SETTING UP A GOOD AFFILIATE PROGRAMME

At least the following points should be taken into account if we want to set up a good affiliation model:

• MARGIN: the key to being able to use this type of business model as a seller is to have a sufficiently healthy margin on the products being sold (which usually rules out dropshipping), since, even though the % to be paid varies widely across sectors and markets, you have to set a sufficiently "juicy" commission so that the affiliate will make the effort to sell your products.
• TECHNOLOGY: is very important be aware that, if we want to set up an affiliate programme, we must not only establish good commissions, but at a technological level we must also be able to "trace" the origin of a sale in order to be able to attribute the correct commission to the affiliate who has sent us the customer.... something that many marketers are not yet ready for. This involves not only being able to track and attribute the origin of a visit by web but also by email (the best affiliate tool).
• CONVERSION: in my experience the key to making it work an affiliation model from the vendor's point of view is that our site or e-commerce is fully optimised for conversion.i.e. that of every qualified visit sent to us by an affiliate, we convert as many as possible into sales....because even if we pay a handsome commission, if no visits result in a sale, our affiliates will quickly stop sending us their valuable traffic. This means that NEVER we should set up an affiliation programme if our trade is not selling well.
• HELP AND CARE: our affiliates are normally people who do not only work with us, so they have little time to spend with us. If we make a real effort to make their life easier by preparing as much work as possible (content to promote your product...) and giving them tools to make their effort as little as possible (campaigns, income reports, links...) our affiliate programme will be much better received..., as usually "good" affiliates have a lot of work and little time to dedicate to us.

When it comes to actually getting to work with our affiliate model, there are two options for doing so:

We set up our own "own" affiliate programme, which implies not only to prepare ourselves technologically but above all, manage the entire relationship with affiliates: search for new affiliates, verify them, manage their payments...etc.

It is recommended if we are a strong brand or have a product that is in demand, as it is likely that the affiliates themselves will want to start working with us... and we will have more margin to operate with. Work with one of the many existing affiliate networks, that already have a defined working format, hundreds or thousands of affiliates that can potentially work with us and a lot of visibility.

A good option to start with if you are new or inexperienced.but implies that we bring in an intermediary in the chain (who has to be paid his %) and that we have little control over the quality of the sites that sell our products. (Some of the best known are Zanox, WebGains, Antevenio, Trade Doubler, Commision Junction, Affilinet and Adjal).