One of the most difficult parts of scaling a business is figuring out which channel is actually sustainable for bringing in new customers. JEBCommerce focuses heavily on new customer acquisition and increasing profitability for our clients in the affiliate channel.
New Customer Acquisition is one of the methods we measure affiliate programs by as well as a tactic to increase margin and overall success.
In 2017, a Hubspot survey found that lowering the cost of customer acquisition and proving the ROI of marketing efforts are the two most important marketing priorities.
In this guide, you’ll learn the basics of new customer acquisition in the affiliate channel: what is a new customer and how to acquire new customers. By the end, you’ll be ready to build a new customer acquisition strategy that will withstand the test of time and ever-changing trends.
What is a new customer?
What defines a new customer will differ for each company. Let’s take a look at three examples:
Outdoor Gear Retailer:
Client A sells outdoor gear and kayaks, etc. Some of their products their customers purchase every year, but many they purchase either once in a lifetime or every 5-10 years.
They have 25 stores, mostly in one geographic area, and do not push out any catalogs. So, what is new to them?
The most appropriate, determined by themselves, was anyone who hasn’t purchased at all in the last 8 years from any channel.
So, if Lucy buys a kayak from their store today and then buys hiking boots from their website two years from now, that second order is an existing customer. But if Lucy then waits 9 years to buy another kayak from their store, she would be considered new.
Women’s Apparel Retailer:
Client B has 150 stores, a very active catalog division and a very active web division.
They also measure those channels independently, almost as if they were different businesses.
They don’t have cross channel insight, what I call path to purchase behavior.
They also know that a customer makes a purchase every other season, so at least once a year. Because of those things, anyone who hasn’t shopped through their online store in at least the last two years, and shops now, is considered new.
Even if they have purchased from a catalog 2 months ago, but they haven’t purchased through their website in over 2 years.
They may have made 100 purchases over their lifespan, but not in the last two years. And, if dad buys something, then the son buys something and they live at the same house, the son is considered a separate customer and is new. I’ll get into that more below.
Health and Fitness Retailer:
Very similar to Client B, but they do two things differently. They consider new to be brand new to any channel.
If you shopped through their catalog, but never through the web, doesn’t matter, you aren’t new. They also do something very common to the catalog industry – their household.
Householding is when you group any purchases/purchasers in the same address as one customer. So if Dad makes a purchase, then mom makes a purchase, they consider them the same customer. So you can’t have an existing customer at 26598 Pines road and a new customer there as well.
The definition of a new customer is unique to each business. It must satisfy your business goals, provide clarity in the performance of individual campaigns and channels so you can make better decisions.
The metrics used in defining a new retail customer comes down to:
- Time Frame: Is a lifetime really a human lifetime, or is it a given purchase cycle.
- Channels: If they never shopped in your channel, but shopped in others, is that new for you?
- Households: If two people buy from you at different times but live at the same address, do you treat each one as unique, or group them together.
How can we bring in more new customers?
There are many ways to increase the amount of new customers coming to your website and the affiliate channel is a great cost-effective way to make that happen. Here are several of the successful methods that we use at JEBCommerce.
The right strategies for optimizing your affiliate channel is vital to gaining those coveted new customers. In order to get those new customers you need to get in front of more “eyeballs” or visitors/members of affiliate websites that have yet to discover your brand.
The vast majority of coupon and loyalty partners in affiliate marketing work with 10,000+ merchants – all competing to get that same attention and are willing to pay money to do so.
If you’re not competing in this sector, it often means that your customers are finding coupons or cash back for your brand by direct search bar entry in their browser or a popular search engine like Google or Bing.
However, if they’re doing this chances are this person is not a new customer since they’re actively searching for your brand.
The good news is that there are several strategies you can implement to increase your exposure with partners (without a flat fee budget) including your commission payout structure, revenue share increases, exclusive coupons / vanity codes, new customer only codes, and more.
Before we get started there is an assumption that needs to be addressed. Many retailers only want niche partners in their program. There is a false assumption that niche affiliates drive the highest percentage of new customers.
Many don’t really value coupon or loyalty partners, assuming they will make the sale anyway since their customer only went to that affiliate for a coupon or cash back code.
In working with many retailers over the past 10 years and analyzing the data, we can respectfully say the assumption that coupon or loyalty partners don’t drive new customers simply isn’t true.
Frequently we see the coupon / loyalty partners actually drive the highest percentage of new customers, while niche partners actually drive the lowest amount of new customers.
A great strategy to increase new customers is to increase your commission rate for short term durations with specific partners. While this may not seem like much, it is highly valuable depending on your relationship with that affiliate and the power of your brand.
One of the most important strategies to increase new customers to your company is to make sure your commission structure is incentivizing your affiliates to drive more new customers by offering a considerably higher commission payout on that coveted new customer.
I’ve seen the commission level on new customers be 3x more than a return customer, which naturally motivates your partners to optimize their traffic with you by driving sales on new customers versus return customers, which means more money for them and more new customers for you.
This can be done by an account manager filling up remnant inventory within relevant categories for your brand or more often than not, that partner’s deal algorithms, which determine who gets free placements based off of the commission level, conversion rates, and a variety of other factors within their category placements.
A great strategy to have at your disposal is the ability to increase your commission rate for short term durations with this partner. While this may not seem like much, it is a valuable strategy depending on your relationship with that affiliate and the power of your brand.
It can help you secure a lot of additional exposure without taking on all the risk of a flat fee placement.
With a very well-known brand, I’ve even seen a commission increase secure home page exposure with some of the most successful partners in affiliate marketing!
This goes to show that having the ability to increase your commission payout from 5% to 8 – 9% for short term increases can really help to secure a lot of additional exposure. The most important thing to note is that this commission increase is NOT permanent and is intended to default back to your baseline (5%) after the additional exposure with this affiliate has ended.
If you want new customers you must be able to get in front of more ‘potential’ customers by utilizing strategies designed to increase your exposure with your affiliate partners.
Exclusive Coupons and Vanity Codes
Exclusive coupons and vanity codes are a strategy that I feel is underutilized within the affiliate channel – but is an incredibly useful strategy.
The exclusive coupon is a discount that only one partner has and is able to use, usually for very short durations (under 1 week).
Being able to pair a vanity code with this offer to apply the discount is also known throughout the industry to increase the conversion rates and more importantly, partners often offer additional exposure for these exclusive deals / vanity codes, which can lead to more new customers!
In some cases I’ve seen an short term exclusive coupon + vanity code cut a total placement cost by $8k! (There were other costs & factors, but it does help to illustrate how useful this strategy can be to gain additional exposure on partners’ websites.)
New Customer Only Discounts
An excellent strategy to gain more new customers is being able to offer new customer only discounts. However this will be dependent on how robust your backend tracking system is and if you can verify a customer is new in your cart in real time.
If this is possible then it’s one of the most effective strategies in affiliate marketing with the ability to increase the amount of new customers coming in since you can offer a steeper discount (to acquire this new customer) vs. a return customer.
By nature of the new customer only discount, it will drive more new visitors to your site. If you can offer this discount as an exclusive coupon, negotiate prime real estate with partner websites, and offer a vanity code you’ll give yourself the best chance to secure a very large percentage of new customers from this placement.
Every business needs new customers to grow and succeed, so whether you’re a company of five or 5,000, having a roadmap for customer acquisition is a smart move.
This article covers just a few of the strategies JEBCommerce uses to increase new customers coming through the affiliate channel.
If you want new customers you must be able to get in front of more ‘potential’ customers by utilizing strategies designed to increase your exposure with your affiliate partners. The top affiliate partners drive a ton of traffic and are able to bring an incredible amount of new visitors to your site.
But in order to properly execute this your affiliate management team needs the right optimization strategies to get the job done. Click here to set up a free 15 minute assessment with an affiliate marketing management expert.