Most small online businesses have limited resources, especially their marketing budget. But how to scale your humble brand without wasting money on paid ads and other expensive promotional means?
Affiliate marketing for small business is your answer.
We get that the thought of paying someone else for promotion is impractical for small merchants. However, you can actually profit a lot from using this method the right way.
Now that more consumers believe in peer recommendations skip the traditional strategies. This article provides all you need to know to start affiliate marketing for your online business.
What is Affiliate Marketing?
When online brands want to promote products or services, they adopt affiliate marketing to recruit a number of content creators (“affiliates”). They can be bloggers, influencers, or affiliate marketers who have a solid base of active followers.
After assigning unique affiliate links to your affiliate program, these people will promote them on different channels. Social media, websites, email newsletters, blogs – anything will do.
In this process, they drive sales for your business and improve brand awareness. You get access to a broad audience with lower marketing costs.
The affiliate commission is a reward for each purchase made via their links.
Why Affiliate Marketing Works for Small Businesses
Have not tried affiliate marketing for small business before?
Here are the best reasons why you should utilize this marketing strategy for business growth.
Increase brand awareness
Every business owner dreams of having a recognizable brand by many potential customers.
Affiliate marketing helps drive traffic to your store, increasing brand awareness and reach. This is achievable by having affiliates promote your products and brand name widely on their personal platforms. Engaged audiences will consider their recommendations and come to your brand.
These people get a revenue share for successful purchases, so they make efforts to contribute to your success. Affiliates can be your loyal advocates to build trust with prospective buyers.
Boost social proof
Consumers today need a great amount of information to decide on something because they have higher expectations.
Consequently, social proof has become a powerful tool to enhance a brand’s reputation. Did you know that 95% of consumers look at online reviews before purchasing?
Thanks to affiliate marketers, your affiliate products or services now have credible feedback on actual experience. Their fanbase trusts what they use and recommend, and there is no better social proof than that.
You needn’t pay for these reviews, though – it is a part of their job.
Cost-effective
One of the reasons why affiliate marketing for small business is essential is due to the low budget. Affiliate marketing is much more cost-effective compared with other marketing costs. And certainly cheaper than the money you need to spend on paid ads.
Due to the performance-based nature, you only pay affiliates when they generate a sale.
Moreover, you get to decide the commission structure for your affiliate program. So, no more wasted money on ineffective campaigns or poor-performing advertising partners.
Gain higher ROI
Determining return on investment (ROI) can be challenging and unpredictable for most marketing campaigns.
However, the performance-based model enables you to profit from affiliate marketing.
Businesses will not pay for potential customers via clicks or impressions, only successful sales. This is why many small brands utilize affiliate marketing to sell their products.
Channeling your marketing efforts through an affiliate program is a smart tactic to reduce promotional costs. You gain more influence and higher revenue while sharing only a part of your profits.
Reach more target audience
The best part about affiliate marketing for small business is how you can tap into your affiliates’ engaged audience. As a result, it expands your brand reach and awareness.
These potential buyers may be difficult to identify and target using other marketing methods.
For example, you invest in paid ads targeting Facebook users who follow popular pages in your niche. However, not all interested individuals interact with such pages beyond question.
Choosing affiliates who resonate with your business ensures traffic quality.
Maintain control
Another reason to initiate your own program is complete control over the affiliate marketing resources and relationships. You get to decide how these work and evaluate the final results.
Of course, affiliate marketers are responsible for all the legwork. But you are in charge of the resources and methods your partners use for promotion.
Whether it is a campaign overview or specific messaging, you have full control over your brand presentation on the market.
Best Practices to Start Affiliate Marketing for Small Businesses
Define a realistic goal
A small business should start with a practical goal for your affiliate program. It should be something achievable within a planned time period.
Begin with baby steps – humble goals and figure them out on the way.
They needn’t be “generated revenue” or “number of sales” because it will overcomplicate things from the start. Monitoring the conversion rate is ideal, but you can do it later.
At this stage, you should set goals for how much traffic affiliates drive to your site. Or keep track of direct searches for your business on popular search engines like Google.
Decide which essential metrics to measure your performance. Click-through rate, number of sales, monthly visits, engagement rate, generated revenue, etc. – stuff that a basic marketing analysis report can show.
Track them regularly, such as on a weekly or monthly basis. This helps you identify spaces for improvement and find ways to strengthen them.
The SMART strategy is a famous goal-setting method for your program goals. It enables you to set eyes on something specific and measurable. And at the same time, attainable, relevant, and time-based.
Do research on your competitors
Before setting up your affiliate marketing for small business, you must analyze how competitors are doing.
This is a crucial part of your general affiliate marketing strategy. By figuring out their strengths and weaknesses, you can adjust yours from the fresh stages.
Do a Google search to see whether other businesses in your niche also have affiliate programs. Use terms like “[competitor name] affiliate marketing/program” for the most optimal results.
Remember that you are not only competing with other brands’ audiences, but also attracting high-performing affiliates to your program. Look at 1 or 2 competitors’ programs and take note of:
- The commission structure, whether affiliates earn a percentage of the sale or a fixed rate
- Level of simplicity for the application process
- The affiliate recruitment method, whether through their own or an affiliate network
- Terms and conditions, especially requirements defining how affiliates can promote links
- Promotional and branding resources available for affiliates
- Professional training for affiliates
- In what way and how often does that brand communicate with their partners
- The cookie duration and how they track back to a sale
After the analysis, do you think you can provide something helpful or valuable that they missed?
Build your affiliate program with affiliate software
The key to a successful affiliate marketing program for your business is using affiliate software.
This ready-to-use tool automates all necessary tasks in running a program. For example, enrolling new partners, following up on affiliate referrals and sales, and monitoring payouts.
Furthermore, you have full control over data and insights. They inform you of the most profitable affiliate relationships that drive the most sales.
Consider this as an advantage compared with using third-party affiliate networks. They are in control of all your data and affiliate communication, restricting small business growth.
Also, many affiliate software come with dedicated support and educational resources. Less worry about setting up your program correctly.
UpPromote is an excellent platform for developing your business with affiliate marketing. The software allows you to have more than 1 program, with a default one including a 10% standard affiliate commission.
If you want to diversify the commission structure, there are 3 options:
- Flat rate per order: Commissions in dollars with a fixed amount per order
- Flat rate per item: Commissions in dollars calculated on product unit
- Percent of sale: Commissions calculated based on a percent of the total value made
Also, you can check out their specific product commission to drive more sales for targeted items.
The feature allows you to set a special commission rule for each specific item or all the products in a collection. When there is a successful sale, affiliates will earn a special rate instead of the program’s standard commission.
Decide on your affiliates’ commission
Now that you understand the available commission structures, let’s talk about your program’s affiliate commission rate.
This rate must balance 2 factors: being attractive for affiliates but reasonable for your small business. To begin with, you should analyze your profit scale, which is the difference between the sales price and production cost.
Then, use the data to decide how much you can commission an affiliate per sale. It should be in an acceptable range where you needn’t compromise your humble revenue.
For instance, a fresh affiliate program does not have to offer up to 30% commissions for a successful sale. Your competitors’ programs are only for reference of your niche’s average rate; do not feel too pressured to catch up with them too soon.
One more way to encourage affiliates is to provide them with extra incentives. Performance tiers are ideal since you reward top affiliates with large bonuses or commissions.
Generally, make it easy for people to earn money from your partnership but at a reasonable rate. But as a small business owner, you should only pay for a closed sale. Do not opt for pay-per-click or lead.
Create terms & conditions
Not only is this necessary for affiliate marketing for small business, but for businesses of all sizes. You need to work on an affiliate marketing agreement before running a program.
When everything is transparent on paper, both parties are clear on expectations and how to drive the relationship forward. Typically, affiliate agreements will cover these:
- Terms definition and their relationships to each other
- The agreement’s beginning and end dates
- Branding guidelines
- Detailed instructions on how affiliates can promote your business
- Any promotional or marketing restrictions
- Your program’s commission structure and rate, plus when and how the payouts be sent
- Other terms and conditions, such as privacy preferences or functional cookies
At first, you might have a hard time drafting your own affiliate agreement. Search for downloadable templates on Google and adjust them according to your own terms and conditions.
Also, read affiliate agreements from other competitor programs if possible. You will get a good overview of what your niche usually offers and requires from affiliate partners.
Find affiliate partners
There are several methods to find potential affiliates for your online business.
If you have a budget, hire an affiliate recruitment agency to request for services. Most affiliate platforms also have ready affiliates, but they do not often give you complete access to these relationships and program data.
Another more practical and affordable solution is collaborating with high-quality content creators. But how exactly can you find these people, though?
Go to social media channels and manually look for specific niche keywords. Also, visit Facebook groups, online forums, or TikTok trends, where you can easily see rising influencers in your industry.
Try micro-influencers and bloggers with fewer than 10K online followers. This is because you are at an early stage of business; thus, it is easier to build relationships with new content creators.
Do not worry that small followings are not profitable for your growth. Despite having tight-knit communities, these influencers may interact and engage well with their audiences.
A fresh face like you could really use committed followers. They are more willing to purchase according to what the influencers recommend.
Even better if you can work with someone who knows about your brand or has organically promoted it. They will deliver authentic reviews that increase customer trust.
Decide on factors you’ll consider when picking affiliates
Understand that affiliates are the extended version of your marketing team. It is essential to do background research before approving them for your program.
- Check out their website and social media profiles to get a sense of their tone, personality, and style.
- Identify whether they have consistent activities, increasing followings, and high follower engagement.
- Browse their public account for potential red flags (spamming, unethical behaviors, etc.).
- Do they provide quality content that brings value to their audiences? Do their sponsored posts sound salesy or genuine?
- If possible, ask them for previous experience or results in affiliate marketing. Crucial metrics like total followers, website visitors, and generated sales can help you estimate ROI.
- Ask potential partners for their plans to promote your brand to gain a mutually agreed outcome.
The more you get to know your affiliates, the more you can benefit from these business relationships. Make sure you recruit those who are willing to contribute to mutual growth.
Regularly communicate with your affiliates
As you need to nurture business partnerships, affiliate relationships require the same retention. Your efforts will not go to waste since long-term relationships will bring better results.
Build a simple system or platform to maintain regular communication with your partners. Send them the latest deals, promotional resources, and other updates as soon as possible.
Host a quick monthly meeting or live webinar to connect directly with them. Provide useful marketing tips to assist them on the way.
Do not forget to give them a means of contact. Make sure affiliates can easily reach you for support, whether via a phone number, an online form, or email.
There are helpful features on UpPromote to help you effectively communicate with affiliates, including
- Chat with your affiliates within the app: Send direct messages to your affiliates within the app
- Chat plugin integration: Involve chat plugins that provide the script code for integration. For example, Tido chat, Chata live chat, Tawk.to, and Crisp chat.
- Send bulk emails to affiliates: Use email marketing to send messages to affiliates via email, both individually and the whole program
Track and optimize your affiliate campaign
Doing affiliate marketing for small businesses requires you to keep track of the affiliate sales. That is how you know whether you are reaching your business goals or being slowed down by any low-performing aspect.
Nonetheless, not every small business owner has the time and manpower to track an entire program. There are too many metrics to evaluate, and you probably cannot conduct a thorough report at this point yet.
As for now, we recommend you use affiliate marketing software to automate the whole process. It can optimize your affiliate program by keeping track of crucial insights.
Most software comes with a customizable dashboard to display all relevant metrics to your performance. And that is how you know where to pinpoint and improve your strategy.
Keep these data in mind when assessing your marketing campaign:
- Impressions: The number of times a user visits a website and sees your advertisement.
- Clicks: The number of times the user clicks on your ads.
- Click-through rate (CTR): The number of clicks your ads get divided by the number of times they are shown, e.g., 8 clicks and 100 impressions equal an 8% CTR.
- Conversions: The number of users taking a desired action with your links or ads (respond to your call-to-action).
- Conversion rate (CR): The number of site visitors divided by those who purchase, e.g., 100 visitors and 3 customers equal a 3% CR.
- Return on investment (ROI): Justify how your marketing campaigns generate revenue. An efficient campaign may have a 5:1 cost ratio – $5 generated for every $1 spent and a 400% ROI.
Affiliate network vs Affiliate software. Which is suitable for small businesses?
As you begin affiliate marketing for small business, you might be confused between an affiliate network and affiliate software. They both sound beneficial in different ways, so how do you decide?
Take a look at these criteria that distinguish a network and software for affiliate marketing.
Level of control
Working with affiliates via a network means you do not own key assets like their contacts or the program data. The network functions like a middleman and is in charge of your affiliates.
Due to the lack of visibility with your partners, it is difficult to form strong relationships with them. These people are less likely to go a long way with your business.
Understand that without meaningful affiliate relationships, a program cannot deliver its complete value for your small brand.
All the while, affiliate software allows you to operate your own program. You will personally review, approve, and manage affiliate marketers throughout your partnership.
No need to worry about low-quality partners. Unlike when you are limited to available choices in a network.
Plus, even the means of affiliate communication are based on your liking, whether via an in-app integration or email. Consequently, you have more control and chances to interact with affiliates.
Level of competition
When joining an affiliate network, you cannot avoid the competition between brands. There will be multiple other businesses in the same niche competing for quality affiliates.
Assuming you are running a small business that sells sports apparel and accessories.
What if the network you join partners with major names like Nike or Reebok? One thing is for sure – newbies should not dream of beating these global companies.
Also, people are more intrigued to promote these brands due to their worldwide reputation. Everyone knows about them, making it easy to drive sales and earn commissions.
So, it is not a wise choice for your newborn to dive into a sea full of sharks. Potential partners will hardly notice your presence among a variety of brands.
Despite having to source your own affiliates, a software is just a tool to support your program. You are in complete control of how it works without any direct competition.
Extra fees
Did you know that affiliate networks usually charge more for commission and other services?
Many networks are known to require up to 30% of commission per sale. This means your profits will be reduced and so are the payouts for affiliates.
Moreover, there could be other types of costs associated with these networks. It depends on the network, but some might bill you with setup and monthly maintenance fees.
For example, ShareASale charges $550 for one-time network access and at least $100 for deposit. While the initial setup cost for CJ Affliate partners is around $3,000.
How can a small business with limited resources handle this regularly?
When using affiliate software for your brand, there are fewer concerns regarding additional fees.
Most platforms enable a free plan with basic tools to start your program. Merchants only need to pay when they want more upgrade features for better marketing results.
Affiliate authenticity
The key to success in affiliate marketing is how effectively your affiliates promote the brand and make sales.
As mentioned earlier, you need to fight for attention from high-performing affiliates on popular networks. Being a small name becomes your disadvantage in such a context.
So, what is the point of adopting affiliate marketing if you lack quality promotion partners?
These networks often have a ready list of affiliates and present them to merchants. Even when they work in your niche, it does not guarantee their enthusiasm to collaborate.
Finding potential affiliates on your own allows you to establish a solid relationship. As they proactively come to your program, their characteristics should resonate well with your branding.
As a result, it can increase customer trust, urging their audiences to purchase or subscribe to your business. Make sure your affiliates believe in your brand value and take pride in promoting it, not just for the money.
In general, small businesses should always use affiliate software at the beginning of their journey.
Not found any reliable affiliate management software yet? Consider partnering with UpPromote for your small business.
It is a smart affiliate and referral marketing solution, designed for eCommerce businesses of all sizes. The software enables merchants to fully manage their affiliate programs and marketing campaigns.
Of course, there is no competition as you use the tool independently. Plus, you get dedicated 24/7 support from their team for any inquiries or technical issues.
New signups get the free plan by default, including all the necessary basics to kick-start your affiliate marketing campaign. There are 3 more pricing plans to match more complex needs:
- Growth: $29.99/month
- Professional: $89.99/month
- Enterprise: $299.99/month
In case you insist on trying an affiliate network, UpPromote Marketplace would be a great choice.
It functions like other networks where your brand is presented to a wide range of affiliate marketers. The network manages your affiliate performance, sales, and revenue, and provides detailed reports for improvement.
FAQs
- Does affiliate marketing work for small businesses?
Affiliate marketing has gained massive popularity throughout the years. It has become a powerful tool to help many businesses to scale their growth.
So, a small business can also utilize this approach to drive more sales and gain broader brand awareness. Without costing ineffective money in marketing efforts.
- How do I start an affiliate program for my small business?
A small business wanting to adopt affiliate marketing must create an affiliate program.
After defining your niche and business goals, research competitors in the market. Use affiliate software to build your program, with specific terms and conditions for how it functions.
Recruit affiliates and maintain regular communication with them.
- Why small businesses shouldn’t use an affiliate network?
As much as an affiliate network sounds enticing, it is not for small businesses. When a small business joins a network, it encounters a lot of problems.
You have limited control over the affiliate and program data. There might be extra fees over time with high competition from multiple brands.
Conclusion
If you are still hesitant to start affiliate marketing for small business, this is your sign.
This marketing model does not cost a fortune to initiate and maintain. In contrast, it is an effective way to grow your online brand and increase sales without a considerable budget.
Although it might be challenging at first, you can take baby steps to adopt this method for your business. Thanks to helpful software in the market, you needn’t even build an affiliate program on your own.
Trust us – try adding affiliate marketing to your strategy and witness major changes that lead to success!
