The Risk of Giving the Wrong Rewards for Affiliates

Launching a successful affiliate program can be a fantastic way to generate interest and awareness for your brand. It can also boost sales and be an opportunity to help grow your business to unprecedented levels.?

Assuming that everything about launching and selling your program to potential partners - is being done in the best way possible…

However, sometimes things can go wrong and mistakes like giving the wrong incentives and rewards to your affiliates?

Often affiliate managers will find themselves turning to increased price negotiations to secure more traffic - instead of trying to find alternative solutions, in order to help affiliates gain momentum in their affiliate programme. There is a misconception in the affiliate world that those who pay the highest, get the best placements and I can tell you that’s simply not true!?

Offering a competitive pricing strategy for sales is a good way to build momentum at the start of your program launch but once you’ve established relationships driving your prices higher is not going to mean you get more sales.?

In fact, this type of tactic isn’t a long term solution at all, rather it’s a short term play adopted in order to offset one competitor against another, for a period of time and something I actively try to encourage affiliate managers not to do.?

Instead, I like to suggest affiliate managers rather invest in fostering a different more intuitive approach to their relationships with partners in their portfolio.?

One that enables you to see and understand the value of your partner, without the tedium of negotiating constantly to outbid your competition, derail your margins and keep driving sales.

But how do you avoid price driving commercial negotiations?

There are countless ways of working with affiliates that don't encourage price driving commercial negotiations to outperform your competitors.?

Sometimes it can be as easy as offering additional support, like when you’re working with an SEO affiliate. If you’ve got an in-house content team, perhaps there is an opportunity to offer your team to create content that engages and entices the affiliate’s audience and helps them rank higher for keywords you’re not targeting. Leveraging your in house resources vs just your budget is a good way to overcome simply offering increased prices to retain position or gain momentum with a partner’s site.?

Whether that’s through your resources helping them rank higher, offering unique promotions or incentive bonuses or simply offering a human touch - direct account management and a person they can call in times of need, affiliates who want to build long term partnerships tend to appreciate this kind of approach.?

But what works for one partner might not work for another…

You might find that the different types of partners that are in your programme, such as an influencer, for example, will have differing wants and needs. Influencers might want merchandise as opposed to high revenue share or commercial deals and in that case, some unique merchandise being funded to motivate conversion in their social feeds - might just give you the edge you need.?

It’s about so much more than just the price…

That’s why it can be helpful to think about the type of affiliate you're speaking to before you want to offer higher-priced commercials because often there are services or other aspects that you can help or assist them with, that are far more valuable (to them) than money.

By understanding their unique and specific needs you can appeal to them even more. That’s why you need to utilise all of the assets that you have in your own locker before resorting to the same tools everyone else can also access (money). Whatever it is you want to really emphasise how special their experience with you is and how you're not giving it to other affiliates that just help to deliver more in your programme.

That’s why asking questions is so crucial…

Ask as many questions as you can!

You want to be able to better understand your affiliate and what it is they’re after before you start giving the wrong rewards and weakening those partnerships because failing to do so - can cost you and it can impact your margins of profit.

But if you’re still unsure about how to reward your affiliates without driving up the price - look at your competitive analysis, see what other programmes are paying and where they’re benchmarked on your partners' websites. Understanding where you’re positioned against your nearest competitor also means you’re at least beginning to have engaging conversations and asking lots of questions about where the affiliate's cost margins are in terms of taking you on as a new advertiser versus one of your established competitors.

This will provide you with some much-needed insight on how to reward the affiliate efficiently and effectively so that it suits their business model as much as it does you.

Looking to the future?

Nowadays most affiliate programmes are running in platforms or networks with the ability to create multivariate and different types of commercials, which means you don’t always stick to the standard commercial terms that are in your affiliate programme.

You can however try to see if you can tweak them and meet the affiliate halfway, in order to give them a little bit of ROI in terms of encouraging them to provide you over your competitors.?

It’s important though to always check where the traffic sources are coming from and what those traffic sources are like in terms of value to you, as this will be indicative of the types of reports you can then give.?

This allows you to get a little creative and you could start to do tiered incentive structures instead of flat incentive ones where you pay the first 10 customers on a 10 pound CPA and the next 10 customers on a 20 pound CPA. There’s no denying that these can encourage the affiliate to deliver more but it can also reduce your margins of cost.?

It’s about weighing up your options and only paying the incrementality after the delivery of a higher volume.

Main takeaway…

You need to think about the rewards that you give to your affiliate marketing partners as it needs to match the traffic sources that you're bringing in to have a positive and long-term impact on your affiliate program.

What I’m Reading, Listening, Learning this week:

Read:?

https://www.adexchanger.com/content-studio/why-the-cookieless-future-will-look-a-lot-like-the-mass-media-past/

https://techcrunch.com/2022/04/29/elon-musk-lined-up-twitter-ceo-ideas-monetizing-tweets/ ?

Listened:

This week I only listened back to the conversation I had with Dustin Howes and a lot of Apple Radio as we put the final touches on our ELEVATE summit agenda.?

Learned:

Partnerize released a nifty report in March along with Forrester which I just had a quick look at and is worth a read and then also skimmed on the best affiliate programs in the US this week on their blog which delivered some great insights to brands that are popular with affiliates over there.