![\"How](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2020\/09\/How-Affiliate-Marketing-Works.png\" "\\"\\"")
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The content creators (or affiliates) place an affiliate link on their own platforms to your select URL.<\/p>\r\n\r\n\r\n\r\n
When a lead sees your brand on an affiliate\u2019s channel, clicks through to your site, and then makes a purchase, you compensate the affiliate with a commission<\/a> \u2013 usually an agreed percentage of the sale.\u00a0<\/p>\r\n\r\n\r\n\r\n In turn, you get to reach a larger audience, drive traffic to your website, generate more leads, and grow your revenue.<\/p>\r\n\r\n\r\n\r\n Affiliate marketing is a multi-billion dollar industry that countless digital marketing brands use to grow their business.\u00a0<\/p>\r\n\r\n\r\n\r\n Here are the many benefits of affiliate marketing for small companies<\/a> and startups:<\/p>\r\n\r\n\r\n\r\n Source<\/a><\/p>\r\n\r\n\r\n\r\n Takes advantage of social proof: <\/strong>Social proof describes how people tend to copy what they see other people doing. This greatly influences someone\u2019s purchasing decisions: up to 97% of consumers<\/a> will look for a product\u2019s reviews and recommendations before they buy.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n For this reason, affiliates who’ve already earned the trust of their audience are more likely to generate sales for your business, simply by recommending your products or services.<\/p>\r\n\r\n\r\n\r\n Gain access to a larger, targeted audience:<\/strong> Affiliates have an established audience that listens to them, and that’s aligned with your own target market.<\/p>\r\n\r\n\r\n\r\n Whenever an affiliate recommends your business on their channels, they share your brand to a larger, yet still targeted, audience you wouldn\u2019t otherwise have the same access to.<\/p>\r\n\r\n\r\n\r\n Low-risk investment<\/strong>: Affiliate marketing doesn\u2019t require a huge amount of capital to start. You only pay affiliates a commission when they bring in a new sale, meaning you won\u2019t spend money unless you see results. Plus, you set affiliates’ commission rates, meaning your startup can mitigate your risk by setting rates you’re sure you can afford.<\/p>\r\n\r\n\r\n\r\n Cost-effective for startups, compared to other forms of marketing<\/strong>: Recruiting affiliates costs less than paid ads or hiring marketing agencies. You only pay commissions for sales, unlike with PPC marketing campaigns. There’s no money needed upfront to sign on affiliates, which creates a low-cost investment perfect for startups with limited budgets.\u00a0<\/p>\r\n\r\n\r\n\r\n An affiliate\u2019s expertise improves your campaigns<\/strong>: As a startup, hiring marketing agencies can be costly. Affiliates can bring the same knowledge and experience to your campaigns, without the need for extensive resources. Since they\u2019re running their own business and have also promoted others, you can expect the same value from them.<\/p>\r\n\r\n\r\n\r\n Your business is in control<\/strong>: You maintain complete control over your affiliate program. From which affiliates you work with, to how much you pay in commissions, to the marketing messages affiliates will use \u2013 you can manage your affiliate program in a way that works best for your startup.<\/p>\r\n\r\n\r\n\r\n Although affiliate marketing is a great strategy for small businesses<\/a>, not all startups are ready for an affiliate program. To increase your odds of success, your startup needs to have the following:\u00a0<\/p>\r\n\r\n\r\n\r\n A product or service that appeals to a wider audience: <\/strong>To get the most value from your affiliate program, your affiliate product or service needs to have a wide appeal, at least to the audience of your selected affiliates. Since affiliate programs get you in front of a larger audience, it\u2019s best if you can attract potential customers with varying tastes and preferences.<\/p>\r\n\r\n\r\n\r\n Awareness of your profit and expenses: <\/strong>Even in the early days of a startup, it\u2019s important to assess your profit margins to determine what you can spend to still maintain a profitable business.\u00a0<\/p>\r\n\r\n\r\n\r\n Ability to pay commissions on every sale<\/strong>: A reasonably new product may not be able to pay commissions on every affiliate-driven sale. And even if you have the budget, the affiliate commission you offer may not be attractive enough to get you high-quality affiliates. (In these cases, you can try a referral program <\/a>instead.)\u00a0<\/p>\r\n\r\n\r\n\r\n Access to affiliates with a similar audience: <\/strong>Do you know where to reach suitable affiliates with similar audiences to your business? Content creators with large followings may not always be the perfect match for your startup, especially if you\u2019re still running a small production. Instead, consider smaller creators who’ve used or talked positively about your products.\u00a0<\/p>\r\n\r\n\r\n\r\n Pro tip: <\/strong>If your startup isn\u2019t ready for an affiliate program, consider starting a referral program first. Referral programs encourage your own customers to recommend others, and then reward them for bringing you new business.\u00a0<\/p>\r\n \r\n\r\n<\/p>\r\n You\u2019ll still pay out rewards when a customer\u2019s referred friend makes a purchase, but have the added flexibility to give out rewards other than cash.<\/p>\r\n \r\n\r\n<\/p>\r\n Learn more about referral programs for small businesses<\/a>.<\/p>\r\n<\/div><\/div>\r\n\r\n\r\n\r\n To make your affiliate program as effective as possible, here are some best practices to implement:<\/p>\r\n\r\n\r\n\r\n Having goals is necessary for achieving success as a business owner. Your goals should be SMART-driven: specific, measurable, attainable, relevant, and time-bound.<\/p>\r\n\r\n\r\n\r\n For instance, how much revenue do you want affiliates to bring in quarterly or yearly? How many new sales do you want to make through your program?\u00a0<\/p>\r\n\r\n\r\n\r\n The answers to these questions are great examples of clearly defined affiliate program goals.<\/p>\r\n\r\n\r\n\r\n The best way to get started with your affiliate program is to use affiliate marketing software<\/a> for startups. Affiliate software will automate all the tasks involved in managing your program, from tracking all affiliate links<\/a> and sales to compensating your affiliates.<\/p>\r\n\r\n\r\n\r\n Moreover, you get full control over your data and how the program runs, which third-party affiliate networks won’t give you.\u00a0<\/p>\r\n Referral Rock<\/a>\u00a0affiliate software<\/strong> lets you take full control of your affiliate program, with all the tools, data, and support you need for success:<\/p>\r\n Your affiliate commission rates<\/a> must be attractive to affiliates. Affiliates are usually paid in cash or in a cash equivalent, like a gift card. This could be a flat rate fee on every purchase, or a set percentage on each sale.\u00a0<\/p>\r\n\r\n\r\n\r\n Look at your competitor\u2019s affiliate commissions and set your rate to be competitive in the market. (You\u2019re likely targeting the same affiliates as the competitors in your niche, and most programs often have a non-compete clause in their affiliate marketing agreement.)\u00a0\u00a0<\/p>\r\n\r\n\r\n\r\n Referral Rock can handle any commission structure you desire, including tiered rewards where top-performing affiliates earn higher commissions.\u00a0<\/p>\r\n<\/div><\/div>\r\n\r\n\r\n\r\n To find the best affiliates<\/a> for your startup, we recommend doing an initial online search for content creators (bloggers, social media influencers, publishers, etc.).\u00a0<\/p>\r\n\r\n\r\n\r\n Alternatively, you can perform a manual search for specific industry keywords, comb through relevant hashtags on social media channels, or use brand mention software.<\/p>\r\n\r\n\r\n\r\n Remember, smaller content creators will be most accessible to startups and often have close-knit communities that are passionate about their niche.\u00a0<\/p>\r\n\r\n\r\n\r\n If you find someone who\u2019s familiar with your brand or has even promoted you before on their own, that\u2019s even better for your startup.<\/p>\r\n\r\n\r\n\r\n Your startup can also publish an open application on your website to promote your affiliate program.<\/p>\r\n\r\n\r\n\r\n It\u2019s important to screen all potential affiliates, whether they reach out in person or apply through your website. They should meet the following criteria:\u00a0<\/p>\r\n\r\n\r\n\r\n An affiliate marketing agreement<\/a> should define the working relationship between your brand and your affiliates, and contain all the details of your program. Ultimately, it’s the set of written terms and conditions both parties sign and agree to uphold.<\/p>\r\n\r\n\r\n\r\n Points to cover in your affiliate marketing agreement include:\u00a0<\/p>\r\n\r\n\r\n\r\n As with any other business partners, you need to regularly communicate and interact with your affiliates.<\/p>\r\n\r\n\r\n\r\n Start by training them on key aspects of promoting your business. For example, does your startup use a casual or more formal voice in its messaging?\u00a0<\/p>\r\n\r\n\r\n\r\n After the initial onboarding, keep your affiliates in the loop with any brand or program updates, and make sure they know how well they’re promoting you to their audience. Referral Rock helps keep affiliates engaged by sending monthly emails with updates on their progress. That way, affiliates know how they’re performing and are motivated to keep sharing your brand.<\/p>\r\n\r\n\r\n\r\n Additionally, make sure your affiliates know how to contact you if they have any concerns, whether through email, text messaging, or an online feedback form.<\/p>\r\n\r\n\r\n\r\n As a startup, you may not have enough resources to track all your affiliate metrics. Fortunately, there are affordable affiliate software tools to track them for you.\u00a0<\/p>\r\n\r\n\r\n\r\n Tracking affiliate sales is by far the most important metric to gauge the progress and performance of your affiliates. This helps you see whether you’re meeting your goals, or if any area of your affiliate program needs improvement.<\/p>\r\n Referral Rock affiliate software gives you full visibility on important metrics, with detailed data reports, so you’ll always know your program ROI. Plus, let affiliates track their own progress via a dedicated portal.<\/p>\r\n\r\n\r\n\r\n Many startups think affiliate networks will make things easier for their emerging business. But these third-party affiliate networks may not always be the best choice for your startup.<\/p>\r\n\r\n\r\n\r\n Unfortunately, affiliates on a network belong to the network, rather than signing on as a partner to the business they promote.\u00a0<\/p>\r\n\r\n\r\n\r\n Affiliate networks handle practically all contact with affiliates, which makes it difficult to foster authentic connections with your affiliates. Your startup instantly loses out on the ability to build meaningful relationships with those who promote your products and services.<\/p>\r\n\r\n\r\n\r\n Even worse, affiliate networks own all the valuable information from your program and control how much data you can access.\u00a0<\/p>\r\n\r\n\r\n\r\n On a network, your startup is directly competing against the offers of all the other brands.<\/p>\r\n\r\n\r\n\r\n Naturally, bigger businesses with the ability to offer higher commissions wield an unfair advantage on networks. This can leave your startup out in the cold.\u00a0<\/p>\r\n\r\n\r\n\r\n Affiliates can easily compare your commission rates with other programs on the network, and choose the most attractive offers.<\/p>\r\n\r\n\r\n\r\n Affiliate networks charge extra fees for finding affiliates, as well as other services. Third-party networks are known to charge up to 30% as a sort of finder\u2019s fee<\/a> for their services. And that\u2019s on top of the commissions you\u2019ll pay your affiliates.<\/p>\r\n\r\n\r\n\r\n Some affiliate networks will also charge additional fees, like setup fees, monthly maintenance fees, and even minimum monthly fees.\u00a0<\/p>\r\n\r\n\r\n\r\n Often, affiliates on networks are most focused on partnering with brands that offer high commissions. They may not be as focused on building partnerships with brands they love (particularly smaller brands).<\/p>\r\n\r\n\r\n\r\n So, networks aren\u2019t usually the best choice for finding affiliates who love your brand and who will deliver authentic content\u00a0 about your startup.\u00a0<\/p>\r\n\r\n\r\n\r\n It\u2019s better for your startup to hand-pick content creators on your own to be your affiliates, after you\u2019ve seen them already love your business and share positive content about your products for free. That way, they\u2019re more equipped to show off what makes your startup unique.<\/p>\r\n\r\n\r\n\r\n Running your own program using affiliate software<\/a> is often a better choice for startups than using affiliate networks. That\u2019s because software gives you full control over all aspects of tracking and managing your program.<\/p>\r\n\r\n\r\n\r\n With software, it\u2019s easier to handpick content creators who align with your brand, and build a program that\u2019s mutually beneficial. And once they\u2019ve signed on, you\u2019ll own your own affiliate relationships, and will have the power to develop meaningful connections with them.<\/p>\r\n\r\n\r\n\r\n You can customize and run your program however you want, as there’s no need to fit into constraints and rules of a network.<\/p>\r\n\r\n\r\n\r\n And you\u2019ll have complete control over your data, including real-time access to detailed performance reports. So, you\u2019ll be empowered to make the right decisions to refine your program and accelerate your brand\u2019s growth.<\/p>\r\nBenefits of affiliate marketing for startups<\/h2>\r\n\r\n\r\n\r\n
![\"The](\"https:\/\/referralrock.com\/blog\/wp-content\/uploads\/2021\/12\/the-many-benefits-of-affiliate-marketing-for-startups.png\" "\\"\\"")
<\/figure>\r\n\r\n\r\n\r\nIs your startup ready for an affiliate program?<\/h2>\r\n\r\n\r\n\r\n
Affiliate program best practices for startups<\/h2>\r\n\r\n\r\n\r\n
1. Set program goals<\/h3>\r\n\r\n\r\n\r\n
2. Use the right software to run your program<\/h3>\r\n\r\n\r\n\r\n
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3. Choose the right commission<\/h3>\r\n\r\n\r\n\r\n
4. Develop a plan to find the right affiliates<\/h3>\r\n\r\n\r\n\r\n
5. Choose affiliates who meet your needs<\/h3>\r\n\r\n\r\n\r\n
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6. Create an affiliate agreement<\/h3>\r\n\r\n\r\n\r\n
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7. Communicate well with affiliates<\/h3>\r\n\r\n\r\n\r\n
8. Track affiliate sales<\/h3>\r\n\r\n\r\n\r\n
Why startups should avoid affiliate networks<\/h2>\r\n\r\n\r\n\r\n
Your startup doesn\u2019t own the affiliate relationship\u00a0<\/h3>\r\n\r\n\r\n\r\n
You\u2019re competing with other businesses for affiliates<\/h3>\r\n\r\n\r\n\r\n
Affiliate networks are more costly<\/h3>\r\n\r\n\r\n\r\n
Affiliates on networks may not be as aligned with your business<\/h3>\r\n\r\n\r\n\r\n
Affiliate software gives your startup more control<\/h3>\r\n\r\n\r\n\r\n