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This article was contributed by our partner Refersion.

If you want to start and maintain a successful affiliate marketing program, you first need to understand the basics of how one works. Marketing as a concept is as old as trading one thing for another. Giving someone benefits for helping to promote your goods also isn’t new, but the application of it has certainly evolved, especially after the onset of the digital age. You can also think of affiliate marketing as the ultimate goal in performance marketing.

What is affiliate marketing?

Affiliate marketing is a contracted arrangement that rewards an affiliate for generating sales, either by commission or a similar payment structure. Affiliates typically perform a combination of marketing and direct sales that can vary by industry.

The main benefits of affiliate marketing for a company is that marketing costs are deferred until the sale is completed. Pay-per-click digital ads and referral bonuses are also forms of affiliate marketing that pay for the completion of certain actions rather than a final sale. In either case, payment comes after the successful effort. Contrast this with traditional forms of marketing, such as billboards, print ads, and television spots, which cost a fixed price regardless of the results.

The difference between influencers and affiliates

Affiliates are paid to generate sales and may do this in a variety of ways. Blogging, email marketing, coupon sites, referrals, and even handing out business cards are all methods that affiliates can use to generate commissions.

Influencers, on the other hand, typically focus on their social media followers. Their personal identity is shaped by their brand choices, so sharing product discoveries is something they already love doing.

For both affiliates and influencers, the platform on which they are marketing will determine a portion of their content decisions. Certain important baseline patterns will emerge no matter the individual approach.

On Twitter, the focus stays on short, often humorous taglines. Comment threads, thumbnail photos, and gifs are attention-grabbers to get tweets reposted and shared.

An influencer using Instagram will favor bright, colorful, or aesthetically pleasing photos meant to draw people to their link-in-bio. Along with hashtags appropriate to their content, Instagram influencers will also include directions on how to find any products mentioned in the post. Now that Instagram has implemented going live, stories, interactive videos, and the ability to swipe up for links, accomplished influencers have more ways than ever before to reach their followers with marketing content.

Facebook marketing will do best if it revolves around videos, text, and links to the items being described. Facebook live, Facebook Stories, and the ability to link Facebook and Instagram accounts provides more options than ever before for the social media influencer.

The history of affiliate marketing

Though affiliate marketing has existed in many forms throughout history, from royal endorsements of a certain company to hiring a paid spokesperson, the internet kicked off the form that is most recognizable today. Internet marketing lends itself to affiliate relationships because it’s so much easier to find individual influencers in their marketing niches. The key is to find the affiliates that mesh with your company image and will gladly introduce you to the world.

How influential is affiliate marketing?

Some estimates attribute 15% of digital media advertising revenue to affiliate marketing efforts., and that market sector is expected to increase by 10% in the next few years. Up to 30% of all advertiser-generated sales came through affiliate marketing. As a flourishing market sector poised to continue its growth, affiliate marketing is necessary to the growth and success of any business.

How does it work?

First, you need a software platform to manage your affiliates and track their sales. That’s where Refersion comes in. With their full suite of affiliate marketing services, partners, apps, and integrations, they provide you with all the setup and tracking options you need.

A good software framework will provide you with tracking options that allow you to manage your data effectively. You need to keep track of orders referred by your affiliates, the commission they earn, and their effectiveness across various marketing realms. You need a way to manage their onboarding, identity verification, payments, tax reporting, and bonuses. Refersion supplies all of that with a no-hassle system that practically runs itself.

What are the costs?

Part of what makes affiliate marketing such a popular choice is a low initial cost of investment. Since payment isn’t made until a sale is completed, your cost will never outpace your profit. Unlike some forms of marketing that can easily run over budget, your commission costs will always remain proportional to your profit. Just make sure to get the best in platform software to get the job done right.

Save on the back-end

Save yourself time and headaches by starting your affiliate platform correctly. Using a professional software solution to automate as much of the process as possible allows you to focus on more important things. If you let Refersion handle the process, you can focus on putting your marketing data to good use.

Know the metrics and terminology

While we’re focusing on data, it’s important to be aware of the terminology you’ll run across in the affiliate marketing world. Keep an eye on your key performance indicators (KPIs)–such as effective earnings per click (eEPC), total revenue per affiliate, and average order value (AOV) every step of the way. This will help you identify areas of both strength and weakness, so that you can tailor your plan going forward.

Paying Affiliates

There are several ways to compensate your affiliates, but all of them are tied directly to sales performance. While you may give your affiliate exclusive branded merchandise or free products upfront, cash payments are generally made only in proportion to sales generated. Reward points, referral bonuses, cashback earnings, and exclusive membership perks are all examples of compensation that aren’t strictly commission-based.

Commissions are pretty straightforward: each affiliate is given a percentage of sale value after the purchase that they generated is complete. Therefore, working with an affiliate doesn’t cost you any money until the sale has already been made.

What’s a good offer?

Average commission rates vary by industry, so make sure you do your research. If your margins are slim or your budget constrains you, get creative with other ways to attract influencers. Exclusive membership perks

Should you treat your affiliates and influencers as your employees?

Though affiliates are a sort of independent contractor, they do work for and represent your company. As such, they are bound to follow your terms of service and abide by your company’s ethics. If one of your affiliates or influencers is stepping outside of the boundaries, you need to reel them in. Anyone who represents your company to the world can affect your reputation for good or ill. Let any errant affiliate know what’s going wrong and give them a chance to rectify it. If they don’t, you may have to terminate your working relationship.

How to find great affiliates

Start with your best customers. Those with the highest order values, repeat customers, and anyone who signed up for your VIP program is the best place to start. Approach these top customers with an affiliate offer, and keep an eye on their performance. Send a referral email to customers as a follow-up to a recent purchase and see who signs up. Some will fail to make any sales and fade out of the system, but a certain percentage will turn into great affiliates.

Nurturing affiliates

Offer assistance with content generation, keep them in the loop with your weekly newsletter (you have one of those, right?), and set up affiliate-only chat rooms and message boards. Leaderboards can foster a healthy sense of competition, and performance bonuses are always a great way to perk up anyone with flagging motivation.

Bringing on board an agency like Grovia Partners will help you properly manage and automate this critical nurturing process of your affiliates.

Scale with super influencers

Once you’ve launched your affiliate marketing program and set it firmly on the road to success, it’s time to look at scaling upward. Your infrastructure should be mature enough to handle the expansion, and you should have plenty of inventory and warehousing capacity. After you’ve laid the groundwork, bring in the super influencer.

Super influencers don’t just have more followers. They’re a major force in their respective industries, helping to shape what products catch on and which ones don’t. They can affect how industries develop and what trends affect the market. Approaching super influencers is the final piece of the scaling puzzle, and you should do this only with a plan firmly in mind.

Influencers that are established in the industry may try to negotiate for a higher commission rate or even an upfront fee-per-post, as many Instagram influencers now do. So don’t set your sights on the top ten list right off the bat. Work your way upward and try to sign up influencers that don’t want special treatment or boosted rates, but still have the longer reach of more followers.

Refersion can help you build the infrastructure you need at every stage of your affiliate marketing journey.  From laying the foundation of your software platform to automating onboarding, and integrating other marketing and communication options, Refersion has you covered. Contact them today to launch the affiliate marketing program that’s right for you!