The affiliate channel is complex, don’t make this mistake with it

[00:00:48] Jamie: Hey everybody. This is Jamie Birch and you are listening to the Profitable Performance Marketing podcast. I am your host today and founder of JEBCommerce, your award winning management, affiliate management agency. Today, I’m excited to talk to you about the complexity of the affiliate channel, and really, what do you do with that?

[00:01:09] As far as reporting, optimizing, we’re going to talk about how you need to understand, evaluate and optimize because of that complexity. Before we get started, we want to share with you guys. We have revamped our product offerings completely. We now have four packages available for affiliate management.

[00:01:28] You can go to jebcommerce.com/elements to read all about it, but I really want to highlight our Bronze package. This is our introductory level package. It’s for igniting growth. Now, this is perfect for a client looking for reliable support and steady growth within the affiliate program, but maybe they haven’t been able to afford the budget of full management.

[00:01:52] A couple things to note, there’s no long term contracts with the Bronze package. We provide guidance in program setup as well as set commission ranges for your recruitment. So we have a one time onboarding strategy call, a commission review and program audit.

[00:02:08] We do your daily affiliate inquiries, we handle those. Your weekly affiliate approvals, and we have automated reporting. Monthly, we do a targeted recruitment and targeted optimization. We do an affiliate newsletter and a compliance audit in full reports and quarterly, we do a recruitment drip campaign.

[00:02:26] So this is a zero setup fee for existing programs, $500 setup fee for new programs. We can help you guys get started. You need someone paying attention to the program. You may not have staff to take care of this in house and you need an expert to come in and help with that. So go check out our packages at jebcommerce.com/elements.

[00:02:48] Okay. Now what I want to talk to you about today is how complex the affiliate channel is. So this episode is going to be great for anyone who is new into the affiliate channel. Or anyone who’s been in the affiliate channel, maybe you’re an affiliate manager in house and you have to report up and maybe you’re getting a lot of heat for the channel’s performance as a whole and you have high goals to hit and you want to make sure that the program is being evaluated correctly.

[00:03:13] This is a really good topic of discussion. I was having a conversation with one of our guests and we got into this and here’s the concept. Most of your channels are managed as a channel. This is your SEM channel. This is your display channel. This is your social channel.

[00:03:29] And there’s generally one type of activity with each channel. So your SEM, that’s all your paid search. Your SEO, that’s all your organic. Your display, that’s your display campaigns. Your social, those are your social campaigns and all the different ad groups and campaigns within those channels, they’re all relatively the same and easy to evaluate and optimize very similarly within each of those channels, and that makes it very easy.

[00:03:57] Probably the biggest mistake CMOs make or e comm executives and even affiliate managers when it comes to running their affiliate program is they treat the channels one thing, and it’s the same thing across the board.

[00:04:12] So the mistake is they take the whole channel and they measure it one way. They evaluate it one way and they optimize it one way. And this creates a lot of issues. Different affiliates and different affiliate models need to be incentivized differently. So let’s look at some of those and reported, evaluated, optimized. They all should be done separately and individually.

[00:04:36] Why is that? Let’s talk about what affiliates do. Now, I’m not going to be able to list every business model, every type and way that every single affiliate reaches out to their customers. But I’m going to give you just a few and you can see as I lay that out, why they would need it to be evaluated differently.

[00:04:54] So you have your coupon and promotion websites. Those do tend to be more bottom of the funnel in the consumer’s path to purchase. You have loyalty sites. So these are websites that have built a brand for themselves and consumers go there first. Sometimes that’s their first shop at first and last shopping destination.

[00:05:15] If you’re not there, you’re not doing anything. And those can be at the top, in the middle, at the bottom of the funnel. They’re new to file rate over time decreases, but they have large audiences and a lot of websites are bringing in a cashback reward or loyalty component.

[00:05:32] Then you have your SEM affiliates. Those are affiliates that are engaged in search engine marketing. You have SEO affiliates, you have content producers. Now those content producers. They may be doing social content they may be doing other types of content that may be vloggers, podcasters, YouTubers and the like.

[00:05:52] They’re creating content. They tend to be top of funnel. Not closers in the customer’s path to purchase. And you have technology affiliates. These are affiliates that have created abandoned cart recapturing software and plugins that you get to use. Wildly different than an SEM or a coupon affiliate and every year, every week, there’s a new business model. That affiliates come up with something new that we haven’t seen before and quite different than what we have seen before.

[00:06:26] So there’s all these different types of affiliates. They’re engaging customers in different spots of that path to purchase. And they’re reaching different types of customers, different parts of your audience that you want to get to. And it’s really difficult to commission a content producer the same way as you would a coupon site.

[00:06:47] So let’s just look at that for a second. If you’re going to incentivize them the same, the content producer does a great job of introducing your brand and its products to audiences, but they tend not to close because the other affiliates, that’s what they’re really good at. And maybe your other channels as well.

[00:07:06] So if you’re paying on a last click model, that content producer, eventually they’re not going to get credit for this stuff. They’re going to move on. You’re paying and you’re incentivizing one way, but there’s really two models. There’s two ways these should be incentivized. That’s one thing.

[00:07:23] When you look at your channel, definitely take a look at it as a whole. Evaluate it as a whole with the same metrics that you evaluate other channels, for sure. But you also want to take a step at each category or individual partnership.

[00:07:40] We take a look at each individual partnership. And here are three things that I want you to do. I want you to understand what they do. Understand their audience. Understand how they reach them and understand what their audience is doing with your website and your products.

[00:07:57] How is that one particular audience coming from that particular affiliate? How are they behaving on your site? Are they vastly new customers? Are there no new customers? Are they closers? Are they introducers? Do they have a high conversion rate, a low conversion rate? So you want to understand what they do. And in order to do that, you’re going to have to speak to the affiliate. You’re going to have to engage with them.

[00:08:24] I know I say this a lot on the podcast and it shouldn’t be new information to anyone in the affiliate space by now. We’ve been doing this for 25 years or more. It’s always about relationships. This is very much a sales function. So you have to build relationships with your affiliates and you need to understand what they do.

[00:08:45] You may think every coupon site is the same, but I guarantee you, they are not. You may think every loyalty site is the same. They are not. And you may think every content producer is the same. They’re not. So you need to engage with those partners. Learn about their audience. Most of them will have a media kit, so they’ll be able to share some of that stuff, but you’ll have to test some things with them and learn about them.

[00:09:08] So first understand them individually. If you go through your affiliate list and you don’t have a contact name for all your producers that you know, and you’ve talked to, there’s your first task today, your first homework. Run a report for the last three months, sort it by revenue. And start reaching out to each one of those and do not stop until you have someone on a phone call. Get on a zoom with them, build a relationship with them.

[00:09:33] So one: understand them individually. Then I want you to evaluate them individually. So take them out of the channel. And how did they do in terms of how you evaluate any campaign, any channel, how did they do? Measure them up against that, but also look at how they performed in ways outside of that.

[00:09:55] So is there something they’re producing that you’re not looking for from other channels? Is that a high conversion rate, a high new to file rate, a low new to file rate? Are they sending a ton of traffic? What are they doing?

[00:10:08] Evaluate what they’re doing individually and look at how they’re marketing you. One of the things we do on a weekly basis at JEB is we audit our clients. So we actually look at what each affiliate is doing. What promotions they’re having, what creative they’re pushing out what verbiage they’re using, all of those things, we evaluate their performance individually.

[00:10:31] Then I want you to optimize them individually. So what do you do here? Once you know how they’re doing, according to your metrics, whether that’s just revenue production or new to file, customer production, anything like that, you’re going to look at how they measure up.

[00:10:46] Now, just because they have a low metric doesn’t mean that, you shouldn’t work with them. It just means that’s what you need to optimize for them. So if one of your metrics is new customer acquisition and you have a partner who’s very low at that. Now you need to optimize for that. So how do you optimize for that? I talk a lot about alignment. From the top to the bottom. At the top, you have your board, your CEO, whatever their goals are, and at the bottom you have the consumer.

[00:11:15] Now, what happens a lot of times is you’ll want a new customer acquisition here, and it’ll go from the CEO to all the department heads, then it gets down to the affiliates, but there’s no reporting. There’s no incentivizing. There’s no commission rate. There’s no consumer offer. Nothing about new customers.

[00:11:33] So in that line, what you can optimize here is you can optimize commission rate. So you can give a bigger bounty for new customers. You can give a higher commission rate for new customers. Again, if that’s what you’re looking for. Maybe you’re looking to sell your own manufactured products and not resell others.

[00:11:52] So you want to align your commission rate and your incentive with that. And then you can also align the consumer’s incentive with that. So do you have a new customer only offer? Single use offer? Do you have special discounts and incentives for the consumer on those products you want to sell? So you want to optimize each of the partnerships individually.

[00:12:14] So you want to look at the traffic. Are they getting a good conversion rate? What’s the landing page they have for you? What are they doing on their site? You want to go through everything individually. Look at the creative, look at the landing page on your site. Where are they sending consumers?

[00:12:30] So whatever you found out in the evaluation stage of this, you want to look to optimize that, and we’ll probably go into that more, but if you want if you want further clarifications, if you have questions of how you optimize a single affiliate, please let us know. You can email that question to gethelp@jbcommerce.com. I get that email. I’ll answer it right away. If I don’t get to it right away, our CEO, Jake Fuller, we’ll do that and get on that.

[00:12:56] But really what you want to do is you want to understand them individually, evaluate them individually. and optimize them individually. So if you have any questions with that, please let us know.

[00:13:06] Now you can get by with evaluating the channel as a whole, but you are going to miss nuggets. You’re going to miss understanding your partners, finding opportunities that they have, that they’re not talking to you about. And you’ll be able to increase those metrics that are important to you overall.

[00:13:23] When you manage this channel as a whole, and you can go down to categories of affiliates. So here’s how we manage, optimize, incentivize, evaluate loyalty sites. And here’s how we manage, incentivize, evaluate coupon sites. And here’s how we manage, evaluate, incentivize content sites. That’s what you want to do.

[00:13:44] That will all filter up to the channel to get exactly what you want from the affiliate network. So did you know you can give a different commission structures to different affiliates? You may not have known that. Did you know you can commission on new customer acquisition? You can commission on different product categories differently. You can even give some categories zero to de-incentivize anyone from promoting them at all.

[00:14:10] Hopefully that gives you an idea. The mistake here is if you manage the channel as a whole, you’re going to be missing all these golden nuggets within there.

[00:14:19] The affiliates in general, they are just different and they warrant at the very least category management, if not individual management. So hopefully that helped today. Again, if you need help and you’re not sure about either the understand evaluate or the optimize step in this, please let us know at gethelp@jebcommerce.com. I’d love to help you solve that problem and even explain more if this podcast was confusing or you felt there needs to be more, let me know. I’ll record another one as well. We can also jump on the phone or Zoom and record that as well.

[00:14:54] Now, if you found this episode useful, man, send it over to a friend, share it on Facebook, X, or LinkedIn. But the best thing you can do is leave us a five star review at Apple Podcasts, Spotify, whatever podcast player that you use. And we would love to hear from you. So if you have ideas for podcast guests, or you’d like to be one again, email us at gethelp@jebcommerce.com.

[00:15:18] If you have a question that you want addressed send that to gethelp@jebcommerce.com and we’ll make that episode happen and may even give you a little credit and a shout out on the podcast. So anyway, thank you guys for listening to today’s podcast. I hope this is helpful. Don’t forget to go over to jebcommerce.com/elements. Check out our new packages and let us know if there’s any way we can help you grow your affiliate program this year.

[00:15:45] Thanks for listening.