Developing affiliates

[crabjack]

I've been reading Ros's newsletter for several months, developing the groundwork (I hope) to get an affiliate bus. started. I have several ideas that I would like to go with eventually, and one that I want to get running A.S.A.P. It is a niche with a growing population and very little competition(opportunity); however, so far I don't think that many of the manufacturers whose products I will need have affiliate programs. Has anyone nurtured a relationship with a business that turned into an affiliate relationship? And do you have any suggestions for approaching a company that does not have such a program?

I've got more ?s, but one at a time.

John

[jack2008]

hai john.am reading that newletter last month onwards.that one is really good.
can i have details affiliate marketing.am having plan to do this business.

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karry

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[profitclinic]

Hi John,

Not knowing the kind of businesses/products you're referring to makes it a little difficult to offer really specific, practical advice, but the basic principles still apply, so here's a start.

First, any business that plans to stay in business has to know its customer acquisition cost. it also has to know its cost-per-sale.

In other words, how much it costs them to acquire a new customer and how much it costs them to make each sale.

Customer acquisition cost is arrived at by a fairly simple formula that divides their marketing costs by the number of new customers acquired by those marketing campaigns, multiplied by the statistical life-time value of their average customer.

Cost-per-sale is usually calculated as a simple function of dividing marketing costs by revenue earned.

These will vary according to industry type. For example, the "lifetime" of a typical customer of a bakery or hairdressing salon is likely to be very different to that of a wedding reception center or funeral parlor!

Industry associations are often useful sources of this kind of statistical data.

Once you have some idea of the customer acquisition cost of your target business and the cost-per-sale, you can approach them with a proposal to bring them new business (new customers and repeat sales) for an affiliate commission that's lower than their customer acquisition cost and cost-per-sale.

Point out to them that, not only will they be saving money on what they're already spending, they'll only pay on actual results.

If you're really entrepreneurial and they're not interested in setting up and managing an affiliate program themselves, strike a deal where you do it for them. You take a percentage of every affiliate commission you pay.

For example, if cost-per-sale averages 35%, you might offer to take 33% and pay affiliates 25% commission.

There's no risk to the company, they save on their current costs, they get new sales they may not have otherwise had, and you become a valued marketing partner and affiliate program manager.

That's one approach you could try. Just do a little homework first and take it in stages, with each stage designed to sell the next stage of the process.

Hope this is helpful for you!


John Counsel
CEO, The Profit Clinic