Would you like to start an affiliate program for your business? It could be a great idea, and there are quite a few benefits at stake. Affiliate marketing is a great solution to increase brand awareness and boost sales for most merchants. However, it may not work in all cases and all circumstances.
Sometimes, it’s a question of timing. Other times, it’s a matter of products or services, resources, or strategy. Almost every time, you will find someone out there willing to take your money and start an affiliate program for you. At AM Navigator, we believe in affiliate marketing done right, at the right time, and with great results.
That’s why we advise merchants who find themselves in the situations described below not to rush things. Rather than start an affiliate marketing program doomed to fail, invest your time and effort into overcoming obstacles and improving your odds of success. We’ve covered it all in the following lines where we present to you the ten scenarios when you should not start an affiliate program.
1. New Website
It’s amazing that you’re considering affiliate marketing so early in your sales journey. However, you first need to make sure that everything, from your website homepage to checkout, payments, customer service, deliveries, and returns, works well. Affiliates are not guinea pigs. They invest time, effort, and resources into their promotions, into sending targeted traffic to your website.
Do your testing and SEO optimization before starting an affiliate program. Drive some traffic to your website through PPC or social media ads and see if it converts, how buyers respond. Ask buyers for feedback. Use online tools to test website speed and functionality. And once you have confirmed that everything works well, you have plenty of time to start an affiliate program.
2. Uncompetitive Products or Services
Affiliates can help you rise above your competition as long as your products or services have what it takes. Today’s buyers look around, compare, and only complete their purchase when they are sure that they have found a worthwhile offer. Before you start an affiliate program, make sure that you have a competitive advantage, a unique selling proposition. Common examples include:
- Lower price for similar specifications
- Better quality for a similar price
- Extended warranty and/or trial period
- Unique, innovative components or functions
- Different presentation (packaging, form, size, quantity, additions, etc.) that makes your product more convenient
If your products or services are not competitive, affiliates will not want to promote them. Even if you find a few to do it, chances are they won’t see results and they will eventually give up. Therefore, focus on getting some good, sellable products or services out there, and only then start an affiliate program. If you haven’t yet done your competitive analysis, do it! It helps to know where you stand.
3. Limited Inventory or Products Unlikely to Sell
Affiliate marketing works for most products and services, but not all. An important condition is for the products or services in question to be sellable online on their own. Think of all those small, affordable, albeit very important products that you add to your shopping cart online or in local stores but rarely if ever go to the store for them alone. Common examples include toilet paper, dish soap, face masks, etc.
You need them and you buy them frequently, but rarely, if ever, place an order online just for those. If you have a large inventory of related products (napkins, wet wipes, makeup removal disks, and furniture and car dashboard wipes besides toilet paper, other detergents or kitchen products besides dish soap, sanitizers, disinfectants, gloves, test kits, and other Covid protection products besides masks, etc.) and your offer is competitive enough, it could work.
Otherwise, it won’t, and there are several reasons for that:
- Buyers’ unlikeliness to shop for those particular products only and order them from you
- The low order value, which translates into your inability to provide free shipping and pay high commissions to affiliates
- Low earnings potential, meaning that affiliates won’t bother to promote you knowing that they can’t sell or, if they do, they will earn insignificant amounts
That doesn’t mean that your business is doomed to fail and you can never market through affiliates. There’s always the option of expanding your product or service line, partnering with other merchants to diversify your offer and increase order value, etc. But if the situation described above resembles yours, think twice before your start an affiliate program!
4. Low Conversion Rate
Perhaps you already have some good products, and your website seems to work well. But does it convert traffic into sales? According to GrowCode, although there are significant variations according to industry, traffic source, and device, with average conversion rates varying from as little as 0.99% to 3.79%, the average conversion rate for an ec0mmerce store is 2.27%.
This means that, for every 100 website visitors or online sessions overall, you should see at least two sales, preferably more. If you do not, then you should not start an affiliate program just yet. Focus on optimizing conversion first, and only then get affiliates involved. The good news is that, being more targeted, affiliate traffic converts better than overall website traffic.
The higher your overall website conversion is, the better results your affiliate program will bring. Also, the conversion rate is one of the most important statistics affiliates take into account when assessing whether a merchant is worth promoting. This means that the increased conversion rate will make your program more attractive to affiliates.
5. No Affiliate Program Manager
Starting an affiliate program is the easy part. Growing it and steering it in the right direction is the tricky part. If your plan is to just get an affiliate program live and see sales flowing, you should not start one. Without a manager, it will not grow and it will not be successful. You will just waste time and effort to get it live and see it fail.
Affiliate marketing means trusting others to market your products and services, your brand. Some, like reviewers, media websites, influencers, etc., will play by the rules and actually bring value. Others will only be interested in making easy money and hesitate to harm your reputation or steal commissions from other affiliates.
You need an affiliate program manager to create and enforce program rules, to make sure affiliates comply with them, and take measures against those who do not. The manager will intermediate your relationship with affiliates, protect you against bad ones, recruit more good ones, get you more exposure, and make sure that you only pay commissions on qualified sales, driven according to your program terms.
Think daily analysis of traffic and sales, hundreds, if not thousands of emails sent every month, meetings, and specialized advice on how to scale with affiliate marketing. And just in case you think that the affiliate network you have in mind for your affiliate program will cover it, think again.
Affiliate networks provide the infrastructure, affiliate program management is separate. So don’t start an affiliate program until you have someone who knows what they’re doing to manage it. And once you do, they may be able to help you start that program with lower costs and higher chances of success.
6. Inability to Support Affiliates
In order to drive sales, affiliates need support. They need creatives, budget for paid placements, deals and promos, in-depth information about your products or services, ideal buyer profiles, answers to questions, and advice on how to optimize promotions in order to sell and earn. If you’re not able to provide that, then you should not start an affiliate program, at least not until the situation changes.
Just like your car uses gas and some oil to take you where you need to be, affiliates use the above to get you traffic and sales. You have three options:
- Fuel up or equip affiliates with everything they need to get you to your destination faster
- Leave knowing that you’ll run out of gas or have your car break down in the middle of nowhere or start an affiliate program knowing that you won’t provide affiliates with what they need and they won’t be able to drive sales
- Walk, or take it slow, and only start the affiliate program when you know that you can support it properly
The first option is obviously the best. If it’s not possible, then we highly support the third option – Do things right or don’t do them at all.
7. No Product or Service Testing Options
The most valuable affiliates, the ones who drive the most sales, got to where they are because they chose the brands they work with carefully. Most of them will want to test your products and services before endorsing them, for several reasons:
- To be able to keep or monetize the product or service
- For a first-hand experience of the product or service and the details related to those (shipping, customer experience, packaging, use instructions, etc.)
- To identify the strengths and the weaknesses of your product or service and find the best way to present it to their audience
- For the ability to take their own photos and videos and thus create more original, more convincing reviews
Therefore, before you start an affiliate program, we suggest that you put aside a few products for reviewers and influencers or plan for sending them. If you provide services or online products, make sure you can create demo accounts for them. There’s more at stake than just the sales those affiliates can bring.
Each review, image, or video published will represent another brick building your brand reputation, another asset for you to use (with the author’s consent, of course), and another backlink contributing to SEO and improving your website’s rank in search results and your domain’s authority.
Not all affiliates will be worth sending samples to, of course. Some may be based in countries you do not ship to. Others may not even want them. There will be quite a few who will request them even though they are too small to drive results. Your affiliate program manager can help you assess the potential of each affiliate and keep costs under control.
8. No Time to Scale
If you want results fast, starting an affiliate marketing program won’t provide them. It’s not just about getting the program live, it’s also about making it attractive to publishers, marketing it, recruiting, equipping, and activating affiliates. And even if that can be done relatively fast, affiliates need time to create and optimize content, some even more than one month.
Results also depend on your offer’s competitiveness, on your brand awareness, and on your reputation. Depending on your niche, the buyer journey may be longer and dependent on other factors, like financing, setup and installation requirements, related products and services, etc.
Usually, when starting an affiliate program from scratch, it takes between 3 and 5 weeks to start seeing sales and 3-4 months to break even. Assuming everything works well, and both the buyers and affiliates are happy with what you have to offer, your affiliate program and, with it, your business, could grow exponentially. But that never happens overnight, and surely not without knowhow, effort, and commitment.
9. Inability to Honor Multi-Channel
Your affiliate program will sooner or later overlap with your own marketing campaigns, be they traditional, paid search, social media, influencer, etc. These will cost you money and you will be tempted not to pay affiliate commissions on those. However, you should. There is no way to limit buyer exposure to a single ad, a single marketing campaign, or a single source.
For example, someone receiving a flyer in the mail or seeing an ad you paid for and gaining interest in your products, will read reviews and look up coupons or discount codes before buying. They may also use a cashback app or browser extension to make sure they get back some of the money they spend. Perhaps they don’t buy and you bring them back through retargeting or shopping cart recovery emails that also generate costs.
Don’t deny your affiliates commissions on those sales. Without those reviews out there, reinforcing your unique selling propositions and vouching for your worthiness, there wouldn’t be any sales anyway. And the “spillover” works the other way around too.
People read affiliate reviews and trust endorsements but don’t click affiliate links. Some click links but use cookie blockers or safe or incognito browsing options. Affiliates are often paid for only 2 out of 10 sales they influence. The least you can do is reward all tracked sales. You will recover your money from those that went untracked.
It is in your best interest to pay them, too. If affiliates don’t get their commissions, they will stop promoting you. And yes, you may learn your lesson and reconsider but, once they give up on you, they are very difficult to win back.
10. No Sustainability
You know your business better than anyone. If you’ve built it from scratch, you want to make it profitable at any cost, and affiliate marketing may seem like a good way to do so. However, if you know that you can’t deliver the products you sell, can’t afford affiliate commissions, or can’t honor trials or warranties, don’t start an affiliate program.
The truth will surface before you make any considerable money, and with it, your reputation will be ruined for good. Besides, even if you get some sales and compromise your affiliates’ reputation in the process, karma is a bitch. Those sales won’t make you rich. They will cost you any chance of working with those affiliates again.
Perhaps the above is not what you expected to hear but don’t despair.
Let us analyze your business and your specific circumstances and provide personalized advice. And if we believe you shouldn’t start an affiliate program but you still want to do it, there are quite a few affiliate managers and agencies out there willing to take your money. You’ll at least have an honest opinion to rely on when making your decision.