Your direct-to-consumer (DTC) brand needs cost-efficient marketing methods that keep you in control – to match the reasons why you chose to sell directly to consumers in the first place. But it can be difficult to break through the noise when you’ve chosen to stay independent.
Affiliate marketing is one way to show what makes you stand out, and efficiently generate new leads and sales. Even though it involves partnering up with content creators, you still remain in the driver’s seat.
Through affiliate marketing, DTC brands can increase brand awareness and acquire new customers – all at a much lower cost and lower risk compared to traditional ads.
But before we dive into direct-to-consumer affiliate marketing, what exactly is a DTC business?
A DTC business sells products directly to consumers, without going through other third-party resellers. These businesses cut out the middlemen, including retailers, wholesalers, and distributors.
Now that we have a clear definition in place, let’s dive into how direct-to-consumer brands are leveraging affiliate marketing.
In this article, we take you through the benefits of DTC affiliate marketing, as well as the best practices to follow for a successful direct-to-consumer affiliate program.
What is a DTC affiliate program?
In an affiliate program, your business recruits content creators, such as bloggers, YouTubers, and social media influencers, with audiences that match your ideal target customers.
These creators, or affiliates, promote your products on their channels and place an affiliate link that directs their audience to your website. This link allows them – and you – to track any new customers they send to you.
Each time someone clicks on the affiliate link and makes a purchase from your business, the affiliate is rewarded with a sales commission.
An affiliate program can have just a few or several hundred affiliates. However, the number of affiliates you have doesn’t directly correlate with your customer acquisition results.
Why should you use direct-to-consumer affiliate marketing?
An affiliate program helps you build brand awareness easily and quickly. With the help of your affiliates, you gain access to a larger, qualified audience that affiliates have already built up for you.
You can look at affiliate marketing as an endorsement from a trusted source. Most affiliates are experts or thought-leaders in their niche.
Using their own platform and voice, affiliates show what sets your DTC brand apart from competitors. And since their audience listens to what they have to say, they’re more likely to click your affiliate link and make a purchase.
Affiliate marketing is also more cost-effective compared to other marketing methods since you only pay affiliates when a customer buys your product.
Thanks to affiliate software, it’s easy to track affiliate sales and ROI.
When done right, you can expect increased website traffic, more leads, and more customers through direct-to-consumer affiliate marketing.
Are you ready for a DTC affiliate program?
Even though affiliate marketing is widely successful for DTC, not every brand is ready to make the most of it. Your business should meet the following requirements to build a successful DTC affiliate marketing program.
You must be willing to pay a commission on every sale
The highest ROI-producing affiliate programs offer cash incentives. Rewards such as discounts and coupons are great for referral and loyalty programs. But nearly all affiliates prefer to be rewarded in cash. And they expect payment to be made every time they help make a sale.
You must understand your profit margins
Yes, affiliate marketing is profitable and effective for most DTC brands. That said, you still need to be on top of your profit margins to figure out how much you can afford to pay affiliates while still turning a profit.
You should pinpoint suitable creators
Ideally, before starting a program, you should already have specific content creators in mind whose audiences match your own.
It’s always better if your affiliate partners have used and promoted your products before – without compensation. This will bring the most authenticity to an affiliate’s marketing efforts and quickly build trust in their recommendations.
Your products should appeal to a broad audience
Direct-to-consumer affiliate marketing works best if your product appeals to a wide market. Finding affiliates in a super niche market can be challenging since the pool of potential customers will also be smaller.
13 direct-to-consumer affiliate marketing best practices
To gain the full benefits of affiliate marketing, DTC brands will need to check off some best practices along their journey. Here are the top 13 DTC affiliate marketing best practices you can’t afford to miss.
1. Set goals for your program
Every successful affiliate program starts with setting strategic goals. These are the blueprint that guide an affiliate program. And to stay focused on your affiliate program goals, your goals need to be SMART.
SMART affiliate marketing goals are specific, measurable, attainable, relevant, and time-bound. Your goals can include:
- The amount of revenue you want your affiliate customer base to generate per quarter, month, or year
- The number of new sales you want the affiliate program to bring in within a specific period
- Your target average order value from affiliate program-acquired customers ‘month over month
- The desired conversion rate from affiliate leads (percentage of affiliate leads who purchase out of all affiliate leads) for the quarter
If you have a few high-value affiliate partners, it’s better to tailor goals specific to each. However, if you work with a large number of affiliates, you can set general goals, then track their specific performance over time to evaluate the value each affiliate brings.
2. Investigate your competitor’s affiliate programs
By researching the competition’s affiliate programs, you can already get a goldmine of ideas on how to best structure your program and reward affiliates.
You also identify the gaps and opportunities competitors have not yet seized, which could help your program stand out.
When analyzing a competitor’s program, focus on:
- Their commission structure and how long affiliate tracking cookies last
- Their affiliate program terms and conditions
- How competitors get their affiliate partners
- How they train and communicate with their affiliates
With this information in hand, break down the competing program’s strengths and weaknesses, the opportunities you could take advantage of, and threats they could pose. This is known as a SWOT analysis.
3. Stay away from affiliate networks
DTC businesses are always about skipping the middleman, staying cost-efficient, and maintaining full control over branding and customer data. Affiliate networks work against all of these important attributes.
Here’s why affiliate networks are not a good fit for DTC businesses:
- With a network, you don’t control the relationship with affiliates – the network functions as a middleman.
- You’re forced to compete with other brands for the same affiliates. Networks are filled with many different programs that affiliates can directly compare.
- The network owns your affiliate data, so you can’t leverage any metrics to your full advantage.
- Networks are expensive. They take their own additional cut of your sales on top of the commission you’re paying affiliates, and they often charge other extra fees.
4. Use affiliate software to set up your program
Managing affiliate partners manually would be a pain for most DTC brands. However, thanks to affiliate management software, you can easily track sales and compensate affiliates automatically.
With affiliate software, you own your data and have complete control of how the affiliate program runs. Full ownership also means you can customize your program as your needs and business change.
Compared to an affiliate network, maintaining your program with affiliate software also eliminates any unnecessary costs.
5. Choose the right commission rates
Incentives are the fuel that drives your affiliate program. Choosing the right commission structure could be the difference between a successful and failing affiliate program.
Cash incentives – or cash-equivalent incentives, like PayPal or Visa gift cards – work far better than discounts or coupons.
You also need to choose between a flat fee or a percentage of each sale. (We find that a percentage commission works better if your brand sells many types of products at different prices, or deals with fast-moving goods.) Ideally, your commission rate should be competitive relative to what your competitors offer.
Either way, what matters is your brand can afford to pay affiliates consistently to keep customers coming in.
Remember, commission should only be paid when a sale is made. Don’t pay for traffic or leads, as that can drain your profits quickly without real results.
6. Find the right affiliates
To find the right affiliate partners, you can search manually for specific keywords on social media channels. Or consider using brand mention software to find creators who have already talked about your brand and products online.
You’ll find that some affiliates are openly available for collaborations, which makes it easy to reach out.
When looking for affiliate partners, consider smaller creators and micro-influencers, as they have more engaged audiences compared to macro-influencers. Larger creators have a wider reach, but can be more difficult to recruit and compensate.
You could also place an application form on our website for potential partners to join your program. However, you’ll still need to screen every potential partner who applies for your program.
Grove Collaborative invites affiliates to apply to their program.
7. Choose the best affiliates who meet your needs
Always screen every affiliate before accepting them into your program. It’s important to check whether they’re the best fit for your direct-to-consumer brand’s needs.
The ideal affiliates will have:
- An audience that matches your target audience and aligns with your buyer personas
- A personality, style, and tone that are in sync with your brand
- A consistent content creation schedule
- High, positive engagement from their audience (a sign they’re trusted)
- A plan for how they’ll promote your product to their audience
- Ethical behavior, including in their editorial guidelines and SEO practices (no spammy linking or other suspicious conduct)
8. Create an affiliate agreement
An affiliate agreement details a written set of terms and conditions of your affiliate program. Signing the affiliate marketing agreement needs to happen before a partnership rolls out, so the roles of all parties are clear.
The affiliate agreement covers the commission structure, allowed methods of promotion, branding guidelines, payout terms, and deadlines, as well as any other terms.
With an affiliate agreement in place, each party knows what to expect and what to bring to the table. And if affiliates engage in unethical behavior even after being screened and signing on, an affiliate agreement would protect your business from harm.
9. Train affiliates to best promote your brand to ideal customers
Part of the appeal of affiliate programs is the control DTC brands have in telling their stories.
Because you work directly with consumers, you have the data to create compelling messaging that puts customers at the heart of your brand and speaks to their needs and preferences.
You should train affiliates on the best way to communicate with your ideal customers.
- Share the types of messages that make these audiences more likely to convert.
- You could even use commission bonuses to encourage affiliates to target your most ideal customers (the segments who have the highest average order value or are most likely to repeat-purchase).
- Make sure affiliates are ready to communicate what makes your brand unique, including specific details that differentiate it from competitors, and speak to the value customers will gain by buying your products.
Don’t forget to re-establish what affiliates can and can’t say about your brand. And provide affiliates with marketing assets, such as product images, descriptions, and other media to ensure brand compliance.
10. Communicate well with affiliates
Even with enticing incentives on offer, many affiliates will become disengaged if they feel they lack adequate support from your business. To keep your DTC affiliate marketing program successful, keep the communication channels open.
Your affiliates should always be able to reach you, whether that’s via email, phone call, or a feedback form.
Finally, always keep your affiliates updated on brand news and any affiliate program changes.
11. Look beyond coupons
Many DTC brands have affiliates distribute discount codes to their audiences, as a way to encourage conversions. However, DTC affiliate marketing is about more than just having affiliates offer discounts.
Instead, focus on supporting affiliates to create quality content that speaks to your customer’s needs. Great content about your products, written by trusted personalities, can be as effective for driving customer conversions as coupons.
That’s why it’s crucial to work with affiliates who align with your brand values, and who can authentically share all they love about your product.
12. Keep affiliates motivated with variety
Affiliates, just like your customers, prefer to work with businesses that make them feel valued. Part of valuing your affiliates is creating an experience that makes them want to stay and direct customers to your program.
Here are some proven ways to motivate your affiliates;
- Permanently increase their commission whenever they hit performance milestones
- Temporarily increase everyone’s commission rates for limited windows of time
- Award additional incentives for the month’s or year’s top-performing affiliates
13. Track affiliate sales
To ensure your affiliate program yields the expected results, schedule times to evaluate and track performance. It’s easy to do this if your affiliate software integrates with other tools, for example Google Analytics, to track every sale an affiliate sends to your website.
Tracking the source of sales will help you discover the goals reached, top-performing affiliates, and the areas that need a little refining.
Key takeaways for DTC affiliate marketing
With affiliate marketing spend expected to hit $8.2 billion in 2022, DTC brands should be making the most of this effective strategy to acquire customers.
Affiliate programs are a low-cost investment, produce results, and can be customized to fit your brand’s needs. But like with any other marketing strategy, you need to follow the best practices we just shared to see the desired results – including choosing the right affiliate software for the job.