Affiliate Marketing is promoting other people’s (Company’s) product and earning a commission in return (If a sale is made).
There are basically 3 entities involved in affiliate marketing:
1. The Merchant: Merchant is the one who wants to sell his services or products online through his website.
2. The Affiliates: Affiliate is the one who is promoting the services and products of merchant though his own website.
3. The Customers: Online visitors who are looking for products or services offered by merchant
How it works?
Basic types of affiliate programs
Pay-per-sale
In this arrangement, the merchant site pays an affiliate when the affiliate sends them a customer who purchases something. Some merchant Web sites, like Amazon.com, pay the affiliate a percentage of the sale and others pay a fixed amount per sale.
Pay-per-click
In these programs, the merchant site pays the affiliate based on the number of visitors who click on the link on the affiliate website to come to the merchant’s site. They don’t have to buy anything, and it doesn’t matter to the affiliate what a visitor does once he gets to the merchant’s site.
Pay-per-lead
Companies with these programs pay their affiliates based on the number of visitors they refer who sign up as leads. This simply means the visitor fills out some requested information at the merchant site, which the merchant site may use as a sales lead or sell to another company as a sales lead.
Most popular models of affiliate marketing
There are various models of offering affiliation opportunities by any merchant. The most popular of them are:
Banners or Text Links
This is the oldest and well proven model of affiliate marketing where an affiliate places a banner or text links that explains the products of services offered by the merchant website. When a visitor clicks on such banner or link, he is forwarded to the merchant’s website where he can find more details on product/services and even can buy it. In such model, the affiliate is paid as per the agreed upon affiliation program.
Storefronts
Some merchant prefer to set up multiple affiliate storefronts for various reasons like promoting specific product line, by region for language and currency differences etc. Such storefronts are optimized for efficient selling to a specific audience. Here affiliates can quickly setup their niche storefront without any physical inventory and promote the products though their website. When a user selects a product for purchase he is directed to the merchant’s website for payment. In the typical scenario, the merchant website will handle all the sales.
Direct E-mail Marketing
Promoting affiliate products through email is known to convert well, if done the right way.
Multi-tier Marketing
Some merchants even offer multi-tier affiliate model that distribute commission into a hierarchical affiliate network. This means that when an affiliate makes a sale or referral it will earn commission not only on the sale or referral it makes but also on the sale or referral anyone in its downlink makes.
How to Use Affiliate Marketing with Magento e-Commerce Platform?
As per recent study the number of merchants that are running their e-commerce store over Magneto platform is increasing day by day. Magento is the most scalable and secure platform that offers inbuilt support for multi-domain and multi-store capabilities. To implement any of all of the above affiliate marketing models over Magneto platform is highly efficient and result oriented. Here is how:
- There are lots of good affiliate program extensions available on Magento Connect that helps you create affiliate programs that people can easily sign up to sell items for you and get commissions. They offer all required features line banner and link management, account management, flexible commission, discount & payout configurations, automated performance tracking etc.
- Using Magento’s multi-store capabilities, a merchant can setup the main store as the fulfillment center that manages the overall physical inventory and sales while he can create multiple affiliate stores each promoting a niche product segment. The merchant can configure the product line for each such store individually as well as set base price for each product with set commission. Affiliates can adopt the base price of products set by merchant on main fulfillment center or set their own price. All the sales are ultimately registered over the main store, and merchant can automate the commission payment process as per his requirements. So you can implement the storefront affiliate program in Magento multi-store setup as follows:
- Online main stores where you sell your products
- A private Magento backend that works as ‘fulfillment center’ to manage your online business.
- Additional affiliate stores to increase your sales
If you need any assistance in setting up a good affiliate marketing program on your Magento store, please consult your requirements with one of our technical expert and get the help in deriving right implementation strategy to formulate your affiliate program.