RAIC Insights: Demonstrating How a Strong and Profitable Affiliate Program Delivers Brand Goals

The variety of brands and advertisers that turn to affiliate to drive traffic, leads, and sales is huge. Practically all online retailers – and many non-retail brands offering online transactions, like finance and travel – already use or are considering affiliate strategies to reach their goals.

The main challenges retailers face in developing strategies for their affiliate programs are common among all. We need to develop strategies that are fair to partners, do not affect operating margin too much, and do not waste investment paying commissions on sales that would’ve occurred anyway or by cannibalizing other marketing channels for the same sale.

This leads to similar solutions to the same challenges. What I have seen in the market in general are very similar strategies across basic programs without much creativity. Partners are incentivized with the same commission on any type of sale where they are the last click regardless of the type of customer (for example, new or recurring), regardless of whether the publisher is positioned at the top or bottom of the sales funnel, and regardless of the value-driven to the advertiser. It is perhaps not that difficult to understand why this approach would not attract investment from the C-suite and other business leaders.

However, with my experience of almost seven years in affiliate marketing – two of those in my current role leading the channel for AliExpress, part of the Alibaba Group – I have learned a lot and experienced a slightly different way of creating an affiliate program. A way that is profitable and aligned with company objectives, and therefore a way that will get senior stakeholders across the business on board.

Here, I share some of the strategies I have come across in recent years based on different objectives that I believe are relevant to most advertisers.

Commission by product categories

We know that for certain categories, retailers, merchants or marketplaces have higher margins on products than others. So why not commission more for those products that have higher margins, and less for those with lower profits? The tools exist within the affiliate channel that allows you to pay publishers differently based on a set of predetermined goals – whether that be launching a new product or moving last season’s stock. This enables you to build an interesting and competitive affiliate portfolio that doesn’t directly affect the channel’s margin and provides an attractive variety of offers for publishers to advertise.

Commission by publisher type

There are dozens of different publisher models positioned in the market. Some aim to drive awareness and discovery of different brands and products, such as influencers or content sites, while some position themselves closer to the point of conversion, for example, voucher and cashback sites. Both have enormous importance for the success of the program but if commissions are awarded based on the last click, or last point of contact before placing the final order online or in-store, it is more difficult for upper funnel publishers to be rewarded than those already closer to conversion. Employing multi-touch commissioning strategies encourages and incentivizes those who support awareness and brand discovery by paying commissions for the role they play in the path to purchase.

Additional commission for publishers who hit the exact right place at the right time

A very common user journey in affiliate marketing goes something like this: a publisher promotes a particular product on behalf of an advertiser, the consumer visits the brand website via the affiliate link, browses multiple pages on the website, and then goes on to purchase something entirely different from the original product advertised. Of course, the publisher in question deserves the commission for having attracted the customer and encouraging the sale. But if a promotion leads to the sale of the specific item shared with their audience, it suggests the publisher has hit that sweet spot everyone is after – reaching the exact right audience at the right place and right time. Incentivizing this authentic and action-oriented connection warrants additional reward through increased commission.

Commission incentive for affiliates with sales growth

The affiliate channel can be leveraged to work harder for your business and generate great results. One way to do this is by pre-determining growth goals with your partners based on things like seasonality or promotional periods. Having common goals with partners will lead to greater dedication to your brand and consequently a gain in increased traffic and sales. In return, your partners are rewarded with an extra commission for achieving his extra effort.

Commission by customer type

Every customer is valuable for your brand. However, we know that new customers are more difficult to win over and often have a special position in the hearts of marketers. Strategies to encourage affiliate partners to find and convert new customers include offering exclusive new-customer-only coupons or paying higher commission for people new to the brand.

Something a bit different: gamify promotions to bring publishers closer to you

Another strategy, not very common in today’s affiliate programs to keep publishers engaged is to create internal challenges for a group of affiliates according to their characteristics, for example, “Type of the publisher category”, “monthly GMV range” or “whether the publisher is new or mature in your program”.

The challenges can be anything – for example, promoting certain types of products, selling certain types of categories, or even watching video training on a new tool, in exchange for bonus commissions. It’s a kind of gamification in which we can see a high increase in publishers accessing the platform daily, using the tools, and promoting different types of products.

This, in addition to bringing the publishers closer to your program daily, can help them make to make sales and generate traffic for those types of product categories that you do not usually sell a lot through the affiliate channel.

These are a few of the strategies I believe are a little out of the ordinary, which can make your affiliate program smarter, more profitable, and even exciting for both your business and your partners!