Do affiliate deals deliver?
My company provides luxury city breaks in top European locations. Most of our business comes from word of mouth or through the web and we’ve got high return rates. However, we’ve spent a lot on advertising in the press without great return on investment. My marketing manager suggests we cut back on advertising and concentrate on building a number of affiliate partnerships where we offer a commission for passing on business to us. She says our brand will also be strengthened by association. I’m not against the idea, but am concerned it’ll take a lot of time for the reward it’ll bring. Can affiliate deals really grow my customer base?
A. James Hibbert of Dress2Kill writes:
In my experience affiliate deals can and should benefit and grow your customer base as well as helping your brand gain credibility.
To get this right, you will need to first establish which other, preferably larger, companies have a similar customer base to you. Once you have established some potential affiliate partners, you will need to think about how best to approach them. There is no hard and fast rule, but in my experience, networking is the best way to meet affiliate partners and you should always be on the lookout for new partners.
Alternatively, you can just go all out for a more gutsy method, as I did, and try writing to the chief executive of the company you’d ideally like to partner up with. In our case this was Sir Richard Branson of Virgin. As a result of this I was invited to his house for a chat and we then created a very healthy affiliate with Virgin Atlantic and Virgin Money – and we even supply him with suits too!
It’s essential to remember though that the potential affiliate deal has to benefit both parties and you need to plan your proposition carefully. You need to position yourself strongly with a solid case to interest a potential partner as initially you’ll be selling to them – even if all you’re selling is an idea to benefit you both.
This is also key to negotiating the right split of revenues. Make sure you do not undersell yourself – as we all know, profit is key and there’s nothing worse than establishing an affiliate deal that brings you lots of customers but where you give all the profit away. Know in advance what percentage you can offer and don’t negotiate down from it.
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Regular reviews with the affiliate are highly recommended, especially early on so that the agreement can be fine-tuned until it’s working for you both.
And remember, not all affiliate deals need to be long-term revenue earners – your business can also benefit by striking deals with companies interested in your product. For instance, I recently struck an affiliate deal with Viacom (the London Underground advertising agency). We offered them bespoke suits for their sales staff in return for some free advertising space at various tube stations.