Like all other major Internet trends, the affiliate marketing industry is also a decade late in the Indian market, but the good news is, we are seeing some real action on this front now. A lot of this action is led by leading e-commerce players in the country who have started to realize that affiliate marketing can ring in good numbers if it is given its due as an important sales channel.
With the growth of Internet technologies, it has become extremely easy for e-commerce stores to add an affiliate program to their business. Thousands of online stores globally have leveraged affiliate marketing to increase their sales by several percentage points and today most major e-commerce players in India also have either a private or a public affiliate program.
If the smaller players are listening, they need to have an affiliate marketing program running too, and soon.
Why affiliate marketing, of all things?
For one, it’s a proven and positive ROI model.
E-commerce stores pay a percentage commission for every sale that affiliates drive their way. So if a store knows that they make 20% profit on sale of a t-shirt (including all taxes, logistics, and marketing expenses) – they can very well afford to give an affiliate a 10% commission per t-shirt sold via the referral. Which is why, affiliate marketing is sometimes also referred to as performance marketing. Affiliates only get paid when they perform (drive sales/leads).
These days the amount of money e-commerce players spend on marketing is being closely scrutinized. However, most marketing and advertising channels have no guaranteed ROI metrics. An e-commerce store may decide to spend money on TV ad spots but it is virtually impossible to judge the ROI of such a campaign beforehand. On the other hand, affiliates as a sales channel, only get paid when they perform.
Apart from sales, affiliate marketing also works wonders in building a brand. How? If a popular blogger decides to become an affiliate and puts up banners about a store’s products on their blog – it builds instant credibility about the store in the minds of the readers of that blogger.
How do affiliates promote products/services?
Affiliates come in all shapes and sizes; from a hobbyist blogger operating from his dorm room to big review portals like TripAdvisor. A lot of advertising professionals in India have also taken to online advertising – such as Facebook ads, Google Adwords, PPV ads, media buys etc. These professionals can create advertising campaigns that are purely meant to drive sales to e-commerce stores via their affiliate links.
There are various ways in which affiliates can promote brands - blogs, comparison sites, review sites, coupon sites, social profiles, email newsletters – the list goes on and on. Virtually anyone that publishes anything online can integrate their affiliate links in banners, in-post links, emails, widgets and ads.
When does it start to make sense?
One of the biggest reasons why e-commerce stores should go for affiliate marketing is customer acquisition.
Let’s say an affiliate refers Ram to XYZ store to buy a t-shirt. Ram buys the t-shirt and XYZ store gives the affiliate 10% commission.
Once Ram receives the t-shirt, he’s so happy with it that he refers other friends to XYZ store and also buys 20 more t-shirts from them (by visiting the website directly) a few months later.
Moreover, XYZ store has Ram’s phone number and email address to further send out newsletters and promos.
The biggest kick here is that XYZ store does not have to pay a commission to the affiliate for those 20 t-shirts that Ram buys later. Also, those customers who bought from the store based on Ram’s word of mouth recommendation become additional customers for whom the retailer does not have to pay any commission. (And for all other future purchases as well).
Step-by-step process for an e-commerce store to start and run an affiliate program
1. The Numbers Game: It is imperative to know the numbers before launching an affiliate program. The simplest way to do that is to calculate the Gross Profit percentage per sale.CPS (Cost-per-sale) affiliate program is essentially a profit-sharing system.
What matters most to affiliates is their EPC (Earnings per click), which depends on the conversion rates of the e-commerce store. With so many affiliate programs to choose from, an affiliate typically sticks to the one that gives them the highest EPC.
To increase EPC’s for affiliates; a merchant may increase the percentage commission per sale, or optimize their landing pages for better conversion rates, or both.
2. The Technology: Once the numbers are put down, it is time to setup the technology that will power the affiliate program. While some popular e-commerce systems (Magento, Shopify etc) have plugins for running an affiliate program – these plugins simply provide the technology. The plugins won’t help the store in recruiting affiliates.
Which is why, many e-commerce stores prefer to run their affiliate program via an Affiliate Network that provides the technology as well as the ability to recruit affiliates.
3. Recruiting Affiliates: Recruiting affiliates is a key part of the game. Affiliates are like a ‘sales team’. However, one does not have to give them salaries, make contracts, create compensation plans or ‘manage’ them! The stores that recognize the importance of affiliate marketing have a team in place whose sole job is to identify and recruit good affiliates for their program. The simplest way to recruit affiliates is to contact the big publishers/websites in their particular domain.
4. Moving Forward: Regular communication with affiliates is critical for the success of any affiliate program. Send newsletters to affiliates with the latest coupons, promos, banners etc. Keep them in the loop with commission structure changes, new product lines, contests and affiliate testimonials. If nothing, invent a reason to communicate.
Make sure to keep a close eye on tracking, click sources, conversion rates, and payouts. Many e-commerce stores find lucrative markets and advertising ideas by simply looking at what their best performing affiliates are doing to drive sales.
If the rising trend of affiliate marketing in the ‘Internet-developed’ countries is any indication, it is imperative that e-commerce stores in India also start paying close attention to affiliate marketing as an effective sales channel.
Publishers in India are always looking for new ways to monetize. Many publishers have already monetized their websites via affiliate programs of leading e-commerce stores in India like MakeMyTrip, Yatra, Flipkart, and Amazon.
It is high time the smaller and niche online merchants also get on their surfboard and get ready to ride the affiliate marketing wave.
About the Author
Ritoban Chakrabarti is the founder and CEO of Dekh.com, an affiliate tracking software and affiliate community. He has launched several digital courses on affiliate marketing in the last three years, and taught over 27,000 people globally. His key interest areas include startups, entrepreneurship, and of course - affiliate marketing.