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8 Reasons Why Small Businesses Should Use Affiliate Marketing

ByAdam Enfroy,
business.com writer
| Last Modified
Nov 15, 2018
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> Marketing
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Marketing your small business involves creating campaigns, testing, tweaking, optimizing your website and getting your customers to act, all while maintaining a strong return on investment. One simple way to scale your marketing efforts is with affiliate marketing. 

Affiliate marketing is the process of you choosing and working with other people and businesses that market your products and send traffic to your site. You pay those people or businesses, called affiliates, a commission on each conversion. It's a great marketing tactic for small businesses because you only pay commissions for sales after they occur. Here are some other points to consider:

  • U.S. affiliate marketing spending is expected to top $6.8 billion by 2020.
  • Sixteen percent of all online orders are generated through affiliate marketing.
  • Eighty-one percent of brands and 84 percent of publishers leverage affiliate marketing.

Affiliate marketing is one of the most ROI-positive ways for a small business to market online. While using affiliate marketing for your website has the power to increase your revenue, there are several other benefits that come with using this selling technique.

Here are eight reasons your small business should use affiliate marketing.

1. Track your progress

Most affiliate marketing programs offer real-time tracking, which lets you know exactly when a link is clicked and a visitor goes to your site. Affiliate platforms also provide metrics on impressions, clicks, sales, and custom conversions like form submissions or email signups. Everything is trackable, and you can clearly understand the effect of your marketing campaigns.

2. Enhance promotions

Affiliate marketing lets you supplement your promotions with affiliate links. For example, if you have a product launch coming up just before Christmas, send that product information to your affiliates so they can ignite buzz around the product.

Your online promotional campaign may include a product launch countdown where you offer a discount on a different product each day until launch. Perhaps you're giving a behind-the-scenes look in a Facebook Live video of how the product was developed or a live Q&A. Whatever your promotion plan is, affiliate marketing can enhance your efforts.

3. Provide social proof

Affiliate marketing is one of the strongest ways to incorporate social proof into your online business. What is social proof?

Social proof is the idea that customers will conform to the actions of others if they believe it is the right choice. Social proof exists all around us, but it's especially powerful considering your customers' reliance on product reviews, suggestions and testimonials.

  • Nearly 95 percent of shoppers read online reviews before making a purchase.
  • Sixty percent of consumers have been influenced by a social media post or a blog review.
  • Seventy percent of millennial consumers are influenced by the recommendations of their peers in buying decisions.

4. Performance-based payment structures

Affiliate marketing differs from traditional promotions or marketing in that you only pay your affiliate when a sale is made. If the affiliate's work is not producing sales, not only do you not pay for the marketing, but you also have the opportunity to shift your focus to other affiliates. With most e-commerce affiliate commission rates around 5 to 15 percent, you can enjoy a return on ad spend (ROAS) of 10:1 or higher. This is a highly cost-effective marketing tactic that guarantees a return, because you are the one that sets your commission rates.

5. Scale your online business

By incorporating affiliate marketing into your online business, you partner with bloggers, businesses and influencers who engage with their audience daily. Your affiliates are an indirect sales team, able to promote your products on their own websites and generate more revenue for your small business. To scale your affiliate's reach and create more revenue:

  • Diversify your affiliates: No one affiliate should bring in more than 25 percent of your affiliate revenue. Use coupon sites, customer loyalty sites and a number of other content sites to ensure you don't become too reliant on one affiliate.
  • Know your competition: Do your due diligence to know which affiliate programs or influencers your competitors are using and their commission rates. When you make your brand easier to work with and offer a solid commission, affiliate bloggers and businesses may be more inclined to work with you.

6. Website sustainability

Ecommerce websites have about an 80 percent failure rate, which makes enlisting the power of affiliate marketing even more crucial.

One of the top reasons websites fail is lack of traffic. Using affiliates to create brand awareness and supplementing that with strong social media engagement will help build your traffic and launch you into the 20 percent margin of success stories.

7. Strong ROI

CJ Affiliate's Affiliate Customer Insights reveals the revenue benefits of affiliate marketing. Affiliate purchases result in:

  • Twenty-one percent higher average order value (AOV)
  • Thirty-one percent higher per customer order average
  • Fifty-eight percent higher average customer revenue

8. Increase sales

Over the past two years, sales revenue driven by content publishers has risen 240 percent. Building relationships with strong affiliates takes time and guidance, but if you're committed to putting in the work, your time will pay off.

Summary

Affiliate marketing accounts for 16 percent of all online orders. If you're not utilizing this inexpensive, effective way to increase revenue for your small business website, you're leaving cash on the table. It takes a lot of time and capital to market your small business, so enlist the help of a few trusted affiliates and get ready for more sales with a strong return on investment.

Adam Enfroy
Adam Enfroy
See Adam Enfroy's Profile
Adam Enfroy is an accomplished digital marketing consultant working in the SaaS space. From directing a team of developers and specialists in an agency setting, to overseeing eCommerce marketing for national retailers, to scaling strategic partnerships for a large tech startup, Adam has a comprehensive background in digital marketing that spans many disciplines. Adam also happens to be a personal development fanatic who loves attending seminars and speaking at conferences to share motivation and insights to help entrepreneurs unleash their full potential. That is why AdamEnfroy.com lives at the cross roads of online entrepreneurship and personal development, as it takes both the right digital marketing tools, as well as the right mindset to accomplish big things.
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