This is the sixth part in our series on “How To Increase Your Sales… Without Increasing Your Marketing Budget”, a series of articles we've put together to help you make the most of your existing marketing budget generate more sales. The other parts of the series can be found below:
Here's our sixth tip/tactic, we hope you enjoy it.
#6 – Create An Affiliate or Referral Program
One of the quickest ways to increase sales is to drive more customers to your offers, after all if you have a proven system and consistent rate of conversion then every extra visitor to your store or website will add to your bottom line.
But if this report is about not spending more money on advertising, then how can you drive those visitor numbers up, without investing more money? A great answer is to implement an affiliate or referral program.
The purpose of an affiliate or referral program is to allow other people, some of whom are likely to be customers, to refer new customers to your business in exchange for a cut of the sales they help to generate.
Yes, there is a cost to you in that you are giving up a portion of your profit per sale to another party, but on the flip side, you are only paying for sales that have actually happened, if a referral doesn’t buy it costs you nothing.
It’s the affiliate marketer or referrer that bears the costs of getting the visitors to your website or store, you can continue to spend the same amount each month on advertising while benefiting from the extra sales affiliates generate.
How it works
You currently spend $1,000 on marketing per month, generating $10,000 worth of sales. For the purposes of this example we’ll go with a 50% margin, leaving you with $5,000 of profit at the end of the month.
After implementing an affiliate program where you pay a 25% commission on the sale price, your sales look like this… $10,000 from your advertising and another $10,000 from affiliates.
It costs you $2,500 to pay the affiliates, leaving you with an additional $2,500 of profit for that month ($5,000 new profit less affiliate commissions). So now, you’re still only spending $1,000 but there’s $2,500 of extra profit each month!
And you don’t have to pay commissions that high.
Amazon pays its affiliates between 1% and 10% commission depending on the category of product that the affiliates are referring buyers to, so it’s really up to you how you would like to structure any affiliate or referral program you start.
(Source: Amazon Affiliate Program)
And, if you don’t want to pay a commission then you can provide other benefits to affiliates, especially if you’re not a traditional retailer. A mechanic for example could provide a discount to both parties, 15% off a service or repair.
The great thing about the affiliate marketing model is that is such a popular way for people to earn additional income, or even build full time businesses from, that a well-designed program should have no shortage of takers.
It’s also a way to generate more sales from existing customers, after all if they can benefit from referring friends or family to your products then it’s likely they will buy more from you in order reinforce their belief in your brand.
There are a wide range of options for starting your own affiliate or referral program, you could keep it simple and run something in house or you could choose to use a specialised affiliate network to manage it all for you.
What you decide to do is doing to be dependent on the types of products that you are offering and what the goals for the program are. A few examples of programs you can use are below:
With a little research and the right approach, you could see a big impact on your bottom line by using an affiliate marketing or referral program to drive more prospects to your business.