Foundations For Successful Affiliate Incentives
As we approach the pre-holiday rush, many advertisers will be looking to launch affiliate incentives as part of their fourth quarter marketing campaigns. But with affiliate marketing continuing to show strong growth, advertisers can expect increased competition for exposure on the best affiliatesâ€™ sites.
So what makes an affiliate incentive successful and what ideas should advertisers avoid?
There are three golden rules in designing affiliate incentives:
- First, know what you want to achieve. Very often this might not be a simple increase in sales. Recruiting more affiliates, reactivating existing ones, or gaining better placement on affiliatesâ€™ sites could also be objectives that you choose to design your incentive around.
- Second, make the incentive as simple as possible. Affiliates will be deluged with communication about incentives in the run-up to the holiday season. If they have to read more than a few lines to understand what you are offering or what they have to do to be successful, your message is likely to be ignored.
- Third, make your incentive as inclusive as possible. The best-designed incentives are those that have the lowest barrier to entry so that as many affiliates as possible feel they can participate.
Rather than offering cash prizes, one of the most effective ways to incentivize affiliates is to offer them a â€˜money-canâ€™t-buyâ€™ reward. Examples might include VIP tickets to sold-out sporting fixtures, concerts, or other events. Gift and experience advertiser Buyagift provides an excellent example, offering six of its affiliates the chance to go on adventure weekends to destinations such as Monaco and Las Vegas.
Advertisers looking to recruit new affiliates to their programs should work with their affiliate network to identify strong affiliates with a proven record in their sector, and approach them with a generous private commission increase for the first month on the program. Similarly, if you are looking for ways to reactivate your existing affiliate base, start by looking for those that have dropped off over the last year and make contact to negotiate a private, performance-based incentive in return for additional exposure. Make sure you can be flexible with their creative requirements to get the most out of the opportunity; consider offering co-branded banners, email creative or landing pages.
While there are drawbacks to using cash as an incentive, you might still consider offering bonuses to affiliates who drive conversions from your target customer base. For example, you may value new business over existing accounts or, conversely, loyal and long term customers. Consider awarding affiliates bonuses for driving these kinds of customers, perhaps giving a $100 bonus for every tenth new customer, for example. Often times this is more effective than a prize draw or an incentive based on who sells the most, as affiliates are clear about what you as an advertiser are looking for: do x and they get y. With this method, affiliates are not dependent the performance of others that are participating in the incentive promotion.
What Doesnâ€™t Work
The crudest incentives are those that reward only affiliates generating the most sales. The problem here is that the same, top-performing affiliates will always win while smaller affiliates will feel shut out. Instead, advertisers should consider ways to re-engage their base. A very simple way to do this is to reward on the percentage increase, rather than the number, of sales produced.
Winner-takes-all prize draws are also unattractive to the vast majority of affiliates for similar reasons. Instead of offering one large prize, advertisers should try to keep their incentives as inclusive as possible and offer a number of smaller prizes to attract more participants. As well as offering trips to Bali, Cannes and Venice, experience retailer Red Letter Days won an A4U Award for Best Advertiser Incentive thanks to the inclusiveness of their offer. By tiering the volume targets and increasing the prize values as the targets got higher, they were able to offer guaranteed prizes to a wider range of affiliates. As a result, affiliates collectively drove a 152 percent increase in revenue year-on-year. The chances of winning â€˜low-chanceâ€™ or â€˜no-chanceâ€™ contests are vastly disproportionate to the effort affiliates would need to expend to win them. One affiliate noted, â€œIf I wanted the â€˜chanceâ€™ of winning something I would play the lottery.â€
Becoming an affiliate is no longer a novelty. The industry is now fully mature and many affiliates are themselves sizeable businesses. Cash prizes of $100 no longer motivate them as the money is swallowed up in the companyâ€™s capital, reinvested and (of course) taxed. Other low-value but ubiquitous incentive prizes include XBOXs, LCD TVs and iPods â€“ anyone that wants one of these probably already purchased it themselves. iPads, however, are new enough to still attract interest as an incentive and, like laptops, are productivity tools that affiliates will always find a use for.
Lastly, advertisers should remember to follow through on what they promised and reward successful affiliates for their efforts. One advertiser running a â€œfree flightsâ€ incentive was forced to admit the flight did not involve getting on a plane; rather the prize was a â€˜flightâ€™ referring to the back of a dart!
In preparing holiday marketing plans, advertisers should remember that affiliates represent a rich tapestry of innovative opportunities but that competition for their support is fierce. With most affiliates joined to a plethora of programs, a well thought-out incentive will grab their attention and engage them creatively at the most lucrative time of year.