They say your network is your net worth, and it’s hard to disagree. The right partnerships can open doors and help your business achieve new heights. Affiliate marketing, without a doubt, takes this concept even further.
Affiliate marketing helps businesses expand their reach and drive sales. In fact, major brands attribute 5% to 25% of their overall online sales to affiliate marketing.
But how does affiliate marketing for small businesses work? And what steps should you take to set up a successful affiliate marketing program?
These are just some of the points that this guide will touch on. While we’re at it, we’ll also explore the benefits of affiliate marketing and share practical tips for getting started.
Let’s get to it!
What’s affiliate marketing, and how does it work?
Affiliate marketing is a performance-based marketing strategy where businesses team up with affiliates to promote their products or services. These affiliate marketers, in return, are rewarded for leading potential customers to the website or, even better, when those customers complete a purchase.
This simple approach has turned into a booming industry valued at over $17 billion. It’s even expected to reach $27.78 billion by 2027.
At its core, affiliate marketing works by dividing the responsibilities of creating and promoting a product among multiple parties. Here’s the process in a nutshell:
- The seller and product creators. These are the businesses or individuals behind the product or service being offered.
- The affiliates or advertisers. These are the partners spreading the word about the product through blogs, social media, or other channels.
- The consumers. These are the buyers who discover the product through the affiliates and decide to make a purchase.
Is affiliate marketing right for your business?
In 2023 alone, affiliate marketing contributed over $12 billion to worldwide consumer sales. However, affiliate marketing isn’t something that works for every business.
First off, think about your target audience. Are there affiliates out there who have already connected with the people you’re trying to reach? Do they have the right platform and following to help spread the word about your products?
Next, take a good look at your profit margins. You’ll need to offer competitive commissions, but make sure it doesn’t hurt your bottom line. Can you afford to reward affiliates without sacrificing your bottom line?
Finally, consider your resources. Running an affiliate marketing program isn’t easy. You’ll need time, tools, and the right systems to manage everything from tracking links to paying commissions. Do you have the capacity to handle it all?
Take these factors into consideration to determine whether affiliate marketing is a good fit for your business or if another approach might work better.
Top benefits of affiliate marketing for small businesses
Affiliate marketing isn’t just for big companies. Small businesses can really benefit from affiliate marketing. For one, it allows them to compete with larger companies at lower costs. Plus, it helps draw in more customers, drive sales, and build brand awareness.
Here are more reasons why small businesses should leverage affiliate marketing:
Helps you scale without the upfront costs
The best part? You only pay for actual sales, not clicks or views. It’s a performance-based model with no large upfront advertising costs. You pay affiliates only when they help you make a sale—simple as that.
As stated by Web.com Director of Acquisition Marketing Steve Vezain, “Affiliate marketing is like virtual word of mouth that expands your audience reach and extends your budget. You are investing in performance sales, not just extra audience traffic.”
Delivers a high return on investment
Affiliate marketing is one of the most cost-effective marketing strategies out there. Why? Because you leverage affiliates who already have access to your ideal audience.
In short, you work together to reach the right audience. In the end, you’ll see a return on investment that beats many of the traditional marketing efforts.
You can leverage others’ expertise and reach
Affiliate marketing lets you benefit from the audience and expertise of your partners. These affiliates already have a following in your target market. By partnering with them, you gain access to new customers without spending time and resources on marketing initiatives.
Puts your brand in front of new eyes
No matter if you’re a local business or aiming for a global presence, affiliate marketing helps you reach people far beyond your usual audience. Affiliates promote your product through all kinds of channels—social media, blogs, and more.
In fact, Kinsta found that 54% of brand marketing pros consider affiliate marketing one of their top three channels for customer acquisition, with 20% naming it their number one.
Builds trust with your audience through affiliates
When affiliates promote your products, they’re essentially vouching for your brand. Their followers tend to take their recommendations to heart. This, in turn, can translate into more sales and long-term customer loyalty.
Helps you diversify your marketing strategies
Teaming up with affiliates in your industry gets your business in front of new customers who might not have heard of you otherwise. The more affiliates you work with, the wider your brand’s reach across different platforms.
It’s a practical way to build credibility and promote your products and services, all while you focus on running your business.
How to get started with affiliate marketing for small businesses
Getting started with affiliate marketing can feel like a lot to take in. But you can put your worries aside! Here’s a simple breakdown of what you need to do to launch your affiliate marketing strategy:
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Select a platform
To get started with affiliate marketing, you need to choose a platform. Here are your options:
- Third-party networks. You can use third-party affiliate networks like ShareASale or Impact or set up your own in-house system. Third-party networks are easy to use—they help you find affiliates and take care of the technical details like tracking and payments. The downside is that they take a cut in your earnings.
- In-house systems. If you want more control, you can go with in-house software. This way, you manage everything yourself, but it takes more work.
- Combination. Many businesses find that using both third-party networks and in-house systems offers the best of both worlds. Networks help you quickly connect with lots of affiliates, while in-house systems let you build closer relationships with key partners.
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Choose the right affiliate marketing program for your business
Finding the right affiliate marketing program is no easy feat. Check out these tips to help you select the best fit for your business:
- Think about what your business offers. If you sell physical products, networks like Amazon Associates or ShareASale can help you find affiliates who already promote similar items. If you’re in services, like SaaS or consulting, setting up your own affiliate program gives you more control and flexibility.
- Focus on your target audience. An affiliate program works best when it connects with your ideal customers.
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Set goals and metrics
Like with any marketing strategy, you need clear goals. What are you hoping to achieve? More sales, new customers, or increased traffic?
Once you’ve set your goals, track your progress using tools like Google Analytics or reports from your affiliate platform.
A good bank balance is a clear sign you’re doing something right, but to really understand how your program’s performing, keep an eye on these key affiliate metrics:
- Traffic
- Clickthroughs
- Return on investment (ROI)
- Net monthly sales
- Conversion rates
- Ad spend
- Overall revenue
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Choose affiliate partners
The next step is to choose the right affiliate partners for your business. Look for people whose audience matches your business. Influencers, bloggers, and niche marketers are often a good fit.
Consider factors like their reach, following, engagement rates, and how authentic their product promotion feels. Still, don’t overlook emerging affiliates—they can bring fresh perspectives to the table.
Here’s how and where to find affiliates for your small business:
- Use affiliate networks. Affiliate networks like ShareASale, Rakuten, and ClickBank are great starting points. These platforms connect businesses with marketers eager to promote products and monetize their channels.
- Explore social media channels. Search hashtags and engage with influencers creating content in your industry.
- Reach out to your existing customers. Your customers already trust your brand. Some might even have the influence or audience you’re looking for.
- Use SEO tools for research. With SEO tools like SEMRush or Ahrefs, you can identify websites or blogs promoting similar products by analyzing your competitors’ backlinks.
- Join online forums and communities. Find where your target audience or potential affiliates hang out online. Facebook groups, Reddit threads, or other forums related to your industry are goldmines for connections.
- Attend industry events. In any case, attending industry conferences or affiliate-specific events never fails to provide opportunities for networking. Talk directly about your program, gauge interest, and see if it fits both sides well.
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Decide on your commission structure
Next, decide how you’ll pay your affiliates. There are a few common structures to consider, and the right one for you depends on your goals:
- Per sale. This is the most basic commission structure. Affiliates earn a commission each time they drive a sale. It’s a great fit for e-commerce businesses.
- Per action. With this model, affiliates are paid for actions like newsletter sign-ups, contact requests, or form submissions. It’s perfect if you’re looking to gather leads or grow your email list.
- Per install. If you’re promoting apps or software, you can pay affiliates for every install they generate. It’s a solid choice for tech or digital products.
- Per lead. Here, affiliates get paid for generating leads, like when someone fills out a contact form or shows interest in your service. This works well if you’re looking to build a potential customer list.
- Per click. In this structure, affiliates earn a commission for each click on their link. While this doesn’t focus on sales directly, it’s a great way to get your brand noticed and bring more traffic to your site.
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Set up tracking and payment systems
Once everything’s in place, it’s time to set up systems for tracking sales and paying affiliates—trust us, it’ll make everything run much smoother.
There are many tools available to help with tracking, like Refersion or Post Affiliate Pro. These tools connect to your website and ensure that affiliates get credit for their referrals.
For payments, you can use options like PayPal or bank transfers. Just keep things straightforward so your affiliates don’t face any hassle.
Lastly, don’t forget the legal side. The FTC requires that you and your affiliates disclose any financial relationships. Be transparent to build trust with customers.
Tips for successful affiliate marketing
Running a successful affiliate program is about more than just setting things up. Here are a few easy strategies to help keep your program growing and performing at its best:
- Offer tiered commission structures. How about giving affiliates the chance to earn higher commissions based on their performance? This motivates them to bring in more sales or leads. It’s a win-win—your affiliates make more, and your business grows faster.
- Regularly communicate with your affiliates. Don’t just set the program up and leave it to run itself. Send your affiliates updates on product launches, upcoming promotions, or changes in your business that might affect their marketing campaigns.
- Reward loyal and top affiliates with exclusive perks. Have affiliates who are consistently hitting their targets? Show your appreciation by offering them exclusive perks—like higher commissions, early product access, or invites to special events.
- Get creative with your affiliate campaigns. Affiliate marketing doesn’t have to be the same year-round. Try running seasonal campaigns or limited-time offers to keep things fresh and exciting for your affiliates.
- Be transparent with your affiliate partners. Transparency, as always, goes a long way. Make sure your affiliates know exactly how their commissions are calculated and what counts as a sale or lead.
- Let affiliates help create content. Affiliates often know their audience best, and they can be a great resource for content creation. Encourage them to create product reviews, tutorials, or even fun social media posts. It helps your affiliates, and it also gives you some great content to share with your audience!
Common challenges in affiliate marketing and how to overcome them
Affiliate marketing has a lot to offer, but it does come with its challenges. The good news is that most of them are usually easy to overcome if you’ve got the right approach.
Managing affiliate relationships takes time
Building and maintaining a network of affiliates isn’t a “set it and forget it” process. Affiliates need support, guidance, and regular communication to stay aligned with your goals.
How to handle it:
Set clear program guidelines from the start. Provide resources through tools like email templates, FAQs, and an affiliate portal. Schedule regular check-ins to share updates and recognize top performers—this investment pays off over time.
Finding quality affiliates
Not every affiliate will be a good fit for your brand. Some may have followers outside your target audience, or their values might not align with yours.
How to handle it:
Be selective when choosing affiliates. Focus on their engagement rates and the relevance of their content to your business. Use affiliate networks or platforms to find partners with the right audience.
Tracking performance can be tricky
Without proper tools, it’s hard to tell which affiliates are making the sales and just how well your program is working overall.
How to handle it:
Invest in tracking software or platforms that provide detailed analytics. These tools can help you monitor ROI, conversion rates, and clicks, so you can make data-driven decisions.
Ensuring compliance with affiliate guidelines
Sometimes, affiliates might inadvertently violate your terms, such as making exaggerated claims or using improper marketing tactics. This can damage your reputation.
How to handle it:
Create clear terms and conditions for your affiliate program and share them upfront. Regularly audit affiliate activity to ensure compliance and address any issues right off the bat.
Scaling your program without losing control
As your affiliate network grows, keeping everything organized can become overwhelming.
How to handle it:
Consider automating repetitive tasks like payouts, reporting, and onboarding. Affiliate management software can streamline your processes, thereby allowing you to focus on strategy instead of micromanagement.
Get started with affiliate marketing today!
If you’re looking for a way to grow your business without a big upfront investment, affiliate marketing definitely fills the bill. Start small, try out a few programs, and scale up when you see what works. The trick is simply to find the right affiliate marketers and keep improving your strategy along the way.
Ready to spruce up your marketing strategies? Explore the many benefits of working with affiliates and watch your business grow.
