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Don't I Know You?

Affiliates can be your best friends--that is, if you treat them right.

An affiliate program is truly performance marketing. Sit back and let other companies market your products or services. Then pay them a commission on sales they generate--no cash upfront, and no paying for marketing that doesn't work. But before you sign up a bunch of affiliates to drive sales through your Web site, create a strategy. After all, your affiliates should complement your marketing efforts, not compete with them.

The first rule is simple: Don't fish in the same pond. Affiliates provide value by reaching untapped markets. For example, a company with an e-zine may make a good affiliate because its subscribers are hungry for resources. So introducing your offer through a "trusted" company can grab the attention of prospects you might not have otherwise reached.

What marketing efforts should be off-limits to affiliates? That's easy--any channel you are using, such as search engines, content sites or e-mail lists. The typical affiliate commission fee of 10 to 50 percent per lead or per sale is a nice profit in your pocket. So don't compete with affiliates for the same sales. Put marketing restrictions into your affiliate agreement and notify partners immediately. Hey, it's your program. You set the rules. Feel free to let your affiliates run the majority of your Internet marketing if you prefer. The savvy ones know how to work the Net for maximum sales.

Once you have protected your prospecting pool, maximize your affiliate program by working with the best and leaving the rest. "Most marketers know that 80 percent of their revenues come from 20 percent of their customer base," says Allan Gardyne, CEO of AssociatePrograms.com, an online directory of affiliate programs. "However, 2 to 5 percent of affiliates will make nearly all of your affiliate sales." Because it can be time-consuming to manage a larger affiliate network, consider selecting only a few companies initially. Interview them. Affiliates are an extension of your sales force and represent your brand on the Net, so choose partners carefully.

Of course, you may think "What about Amazon.com?" True, Amazon.com has more than 600,000 affiliates, and there's no doubt they have helped drive sales and the online brand. But businesses with limited time should focus on strong strategic partners. A few key affiliates can be all it takes to boost your bottom line.

Finally, consider extra revenue. Think about your customers' needs: What other products or services would interest your site visitors? Join those affiliate programs. If you offer a monthly wine e-zine, for example, consider partnering with a winery for a piece of the online action. For more ideas, visit AssociatePrograms.com.

Affiliate programs can increase your sales with no upfront cost to you. Plus, joining an affiliate program can create an additional revenue source. It just takes a little time to plan your strategy and select the partners that will have the greatest impact on your business.


Speaker and freelance writer Catherine Sedaowns an Internet marketing agency and is author ofSearch Engine Advertising.

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This article was originally published in the February 2003 print edition of Entrepreneur with the headline: Don't I Know You?.

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