A frequent reader of my blog has e-mailed me a question which I would like to address today. He wrote:
For an affiliate program to be deemed successful, what percentage of overall company sales should it be doing. From previous experiences and talks with other AM’s, it’s my understanding that if an affiliate program accounts for 10-15% of a company’s sales then it’s good specially if it’s around 15%. Your thoughts?
On page 18 of my A Practical Guide to Affiliate Marketing I addressed a very similar question. Back in late 2006 I wrote:
Q.: What volume of sales should I expect?
A.: This is obviously tied to the sales volume you are already experiencing, but a medium-size business may realistically expect approximately a 10% sales growth after the introduction of an affiliate program. This growth may be expected within the first few months of actively running the program (read: “announcing, promoting, and recruiting”). One of the programs I manage is producing 25% of the business’ sales from January through September, and over 45% of the company’s gross sales from October through December each year. Such volume was achieved after running the program for under one year.
Today, I would’ve given a slightly different answer:
Much depends on (a) the size of the business at the point of starting the affiliate program, and (b) the niche in which the business operates. In reality, it is next to impossible to quote the exact percentage. If it’s a small business in a moderately crowded niche, 40-45% is a realistic growth to expect. If, on the other hand, it is a Fortune 500 business with a solid online presence and a good flow of Internet sales prior to starting the affiliate program, a 10-15% growth is a great result to achieve through the affiliate channel.
4 thoughts on “What Percentage of Sales Can An Affiliate Program Bring?”
Geno – thanks for the insight. That’s great to hear that an affiliate program for a small business can reach up to 40-45% of overall company sales. In your experience, does it matter if it’s a well know brand or affiliates would be eager to promote a no-name brand as well depending on the niche and types of incentives available?
Having an established brand definitely contributes to a faster growth of its affiliate program (it is simply easier to market). But, in my experience, affiliates can help you grow a new, not-so-well-known brand considerably, from 0 to a 5-6-figure number in sales within a year.
Competitiveness of the company/offer (which is directly tied to the conversion affiliates will see), and your aggressiveness in marketing it through affiliates (active recruitment, incentives, performance-based bonuses, etc) will determine your success.
Love your blog. I read some of your chapters online and bought your book on Amazon as a result. cant wait to get it! how do you charge for consulting? We are small start up and see the need for a solid affiliate program. Best regards
Duane, thank you for your kind words and the book order. If you’ve enjoyed my blog posts, I’m certain you’ll love the book.
Re consulting: email us, and let’s discuss.