Creating Win-Win Affiliate Partnerships

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More and more e-commerce companies are forming strategic alliances on the Web, and most are pleased with the profits from these ventures. Companies and industry analysts are finding that affiliate partnerships bring in customers who spend more and that program setup costs are minimal.

By 2002, 25 percent of Internet sales will result from affiliate partnerships, Web industry author and Los Angeles Times columnist Jaclyn Easton said at the 17th Annual Catalog Conference & Exhibition in June. She also reported the average cost of acquiring a new customer via e-commerce partnerships is $1.67, compared with $30 for a banner ad.

Here are some suggestions if you are considering launching or signing up for an affiliate program:

• Research competitors. If your e-commerce site has competition, it's likely you will end up vying for affiliate partners. Find out what your competitors offer their partners - and devise a more attractive package.

• Offer more than one linking option. Different affiliates want different linking methods. For some, a banner within their site that links to the merchant's site will suffice. Others may want an article for added content, or a co-branded, customized window within their site that allows customers to access the merchant's site without appearing to have left the affiliate's site. Offer a private label option that gives the subscriber license to sell the same products and services that are offered on the merchant's site - but under the partner's name. Ensure the solutions are platform-neutral, interoperable and scalable.

• Provide a reliable tracking tool. Affiliates need assurance they are getting credit for every referral. Set up a reporting system that allows affiliate partners online access to their referrals' order histories. With a sophisticated reporting tool in place, affiliates can count their own profits and the merchant can count on fewer telephone inquiries regarding order status.

• Create tiered commission schedules. Devise a commission arrangement that will motivate affiliates to give the link to your site optimal placement within their Web sites. The more sales volume they generate, the greater their commission rates.

• Determine a sensible commission period. Should affiliates receive commission only on their referrals' initial purchases? For purchases made within the first year? Or indefinitely? Should they get a cut every time a referral visits the merchant's site, or when the referral enters the merchant's site via a link from the affiliate? It depends on your business model; merchants should consider what it would take to give incentive to their affiliate partners.

• Establish qualification guidelines. It doesn't pay to have a lot of unqualified traffic hit your site, especially if it overloads your server. Only sign up affiliates that will bring qualified traffic. Don't lose control of your brand as it is distributed over tens, hundreds, perhaps thousands of sites. Qualify affiliate program applicants and don't be afraid to turn away those that won't complement your brand image.

• Dedicate staff. Assign a person or department to manage your affiliate program. It is critical that affiliate partners have a dedicated contact within the merchant company. If you view your affiliate program as a lead generation effort, consider putting it with the marketing group; if you view it as a sales program, assign responsibility to your sales group.

How to Find Your Best Partners

• Start with your customer databases - online and offline. Advertise your affiliate program to your current customers.

• Conduct Web searches for sites that offer allied products and services. Check the sites that turn up - would they be a good fit with your brand and offerings?

• Check online affiliate program directory services. Three worth looking at are, and Commission Junction's

How to Maintain a Successful Partnership

• Treat affiliate partners like you would any business partner. Respect your affiliates, listen to their concerns and ideas.

• Solicit feedback from affiliates and respond appropriately. Plan to continually improve your program based on feedback from your associates. Check out, an independent rating system that enables affiliates to voice their opinions about the programs in which they participate. This is a free, online service offered by Cashpile.

• Make dedicated staff accessible to partners. The person or department that oversees your affiliate program should do more than sell the link. It should manage the ongoing relationship with your partners.

If you are considering signing up for a merchant's affiliate program, ask yourself these questions:

• Will your customers benefit? By offering products and/or services complementary to your site's content, you give visitors to your site added value - and increase the likelihood they'll return to your site.

• Does the merchant's image enhance your reputation? You don't want to associate your company or brand with a nonreputable merchant.

• Does the merchant provide excellent customer service? If not, expect your referrals to complain - to you. Before you refer your customers to a merchant, be assured the merchant will serve them well.

• Could you lose business to the merchant site? Even if you might lose some sales to the merchant site, you may increase profits through commissions earned. Weigh the commission potential against the prospective sales loss.

Paul Theriot is vice president of business development at AccuData America and, Cape Coral, FL.

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