Affiliate business. Quick to assemble, with a simple operation without breaking the bank. But like everything in this life is not gold that glitters, and before you take the plunge and create a revenue strategy with this model you need to understand exactly how it works and especially when mounting and its implications
The affiliate business models are not anything new whatsoever, and although we have become accustomed to seeing in the environment of e-commerce (Amazon's been using since 1996), actually there since the world began. If you've-traveled a bit know that when you approach a taxi driver and ask for a good place in which to dine / buy / fun it is likely to take you to a place where they give commission for every tourist who take.
That is a model of the Affiliate membership although formally be defined as:
An affiliate business model is one where one of the actors, usually a company (the seller) provides any rewards for people or businesses (affiliates) that they customers or orders.
They are win-win model, allowing the seller to get new customers at a fraction of the cost (commission) he would have to invest to attract and allow the affiliate to make money without closing the sale and take risks to put start a trade, although usually not obviously be as "pretty" and have profound implications you should know.
In this article we'll talk about this kind of business models from the point of view of the seller who wants to establish a new channel for customer acquisition based on membership. As we have said they are interesting to the seller because they allow riding on channels cost of attracting interested customers (leads) for which only be paid if sold, often reaching potential clients that default would not have access (supposed change from one model "push" in which we are the ones who make the effort to go for customers to generate a "pull" in which affiliates bring us clients) strategy.
It is a model which usually is paid to success, that is, only the commission is paid if the client has brought the affiliate ends up buying something very interesting which makes not only scalable business model but potentially very profitable (the capture still a fixed cost and variable and becomes attached to closing the sale).
This strategy is certainly interesting, but usually as trade is not a good idea to base all our customer acquisition channel in affiliates, since being a channel that does not depend on us and on which we have no control can not be sure performance and make more pressure when we want (eg campaigns or times where we want to increase sales with specific actions).
Usually are business models where the affiliate is rewarded following some of the following strategies:
CPA (cost per acquisition) - Sharing of income: If the A site (affiliate) sends to B (seller) a client and it ends up buying the site A (affiliate) a% invoiced takes (very rare use margin).
CPL (cost per lead / pay per lead): It's very similar to the CPA with fixed fee, that is, it always pays a fixed matter, but in this case the payment does not occur if the client sent by the affiliate (site A ) buy a product, but if the customer registers or subscribes seller's place (Site B).
CPA (cost per acquisition) - Fixed Commission is a model exactly like the previous one but in which the affiliate (site A) gets a fixed fee if the customer ends up buying in the seller (Site B) regardless of the purchase amount .
From the seller's point of view we could say that in a way is a long tail model in which instead of putting all the effort in a few channels catchment little effort on many channels (affiliates) becomes.
SOME KEYS TO A GOOD RIDE AFFILIATE PROGRAM
In my experience we need to consider at least the following points if we put on a good affiliate model:
EDGE: The key to using this type of business models as a marketer is to have a sufficiently sanitized margin on products sold (which rules out the normally dropshipping) because although the% payable varies greatly between sectors and markets, we must establish a "juicy" enough commission to the affiliate make the effort to sell our products.
TECHNOLOGY: It is very important to be aware that if we want to launch an affiliate program should not only establish good commissions but technologically we have to be able to "draw" the origin of a sale to attribute the correct fee affiliate sent the customer to us something for which many sellers are not yet ready. This involves not only be able to trace and attribute the origin of a visit by web but also by email (the best tool affiliation).
CONVERSION: In my experience the key to work a model for affiliation from the point of view of the seller is that our site or e-commerce is absolutely optimized for conversion, that is, that for every qualified tour send us an affiliate convert for sale as many as possible, because even though we pay a great commission, if no visit our affiliates for sale just stop quickly send valuable traffic. This implies that we should never ride an affiliate program if our trade is not selling well.
HELP AND CARE: Our members are usually people who not only work with us, so they have little time to devote. If we make a real effort to make life easier by preparing all possible work (content to promote your product ...) and giving them tools to make your effort is minimized (campaigns, revenue reports, links ..) our affiliate program You have much better reception, because usually the "good" members have a lot of work and little time to devote.
When it comes to really get to work with our affiliate model there are two options to do so:
Riding an affiliate program we "own", which implies not only technologically, but above all prepare, manage the relationship with affiliates: find new affiliates, verify them, manage their payments etc. It is advisable if we have a strong brand or a product with demand as the members themselves are likely to be those who want to start working with us, we will also have more room with which to operate.
Working with one of the many existing affiliate networks that already have a defined format work, hundreds or thousands of affiliates who can potentially work with us and a lot of visibility. A good option to start if you are unfamiliar or have no experience, but implies that we put to an intermediary in the chain (which your% to be paid) and we have little control over the quality of the sites that sell our products ( some of the best known are Zanox, Webgains, Antevenio, Trade Doubler, Commision Junction, Affilinet and Adjal). Briefly we discuss how affiliate business models work from the point of view of an affiliate and how you can exploit them in the best possible way and their requirements and implications.