Every business, no matter what they offer, direct people to their offer in hopes they will buy. Directing people to an offer is known as marketing. Affiliate marketing is directing people to an offer in exchange for a percentage of the revenue when something is purchased.
Affiliate marketing is similar to referral marketing in that both refer people to an offer. However, affiliate marketing, most widely known on the Internet, generally goes beyond referring the people you know.
Although more people are familiar with the affiliate marketing done on the Internet, any marketing that shares in the revenue of a sale is thought of as affiliate marketing.
The percentage of sales (commission) paid to an affiliate marketer is generally agreed upon in advance via an affiliate marketing agreement.
Affiliate marketing can be done in many ways, and although most commonly associated with the Internet, affiliate marketing can include offline marketing efforts such as event promotions, direct mail and door hangers, to name only a few.
Typically, affiliate marketing is done through a blog, website, article or advertising. A blog or website, for example, can be developed for marketing to a specific audience, such as golfers, to direct people to a very specific offer, such as golf clubs or golf lessons. Articles are distributed that contain active links to the affiliate marketing offer. Advertising can be purchased to target buyers searching for something specific.
Key factors to consider when choosing an affiliate marketing offer include: percentage of the sales revenue received as commissions, high perceived value-to-price ratio, and the conversion rate of the offer. If any of these three are low, you won’t be able to generate enough income to fire your boss.
Common commissions for affiliate marketing can range anywhere from 5% to 10% and even go as high as 25% in some cases. Digital products such as those sold through Clickbank, typically have higher commissions. Commissions range as high as 50% to 75% on digital product offers because the same product can be sold over and over, but the price range is generally lower so you would need A LOT of sales in order to fire your boss.
The higher the price, the fewer sales needed, but if the value-to-price ratio is low, the conversion rate (see below) will be much lower as well. The ultimate is to direct people to a high priced offer with an even higher perceived value. For example, an offer perceived as being valued at $8,000 but sold for $900 has a high value-to-price ratio. Just saying something has a retail value of $8,000 doesn’t give it a perceived value of $8,000. The buyer sets the perceived value in their mind.
A conversion rate is the percentage of people who make a purchase, once they see the offer. Conversion rates depend to a large extent on how well an audience is targeted. For example, offering steaks to vegetarians will have a low conversion rate, while offering a cold beverage on a hot day is likely to produce a higher conversion rate. Again, the value-to-price ratio must be good in order for the offer to convert. Offering a cold bottle of water for $700 would typically be perceived as too expensive for the value. But, if the offer were given to someone swimming in money but dying of thirst, the perceived value, and therefore the conversion rate, would likely be higher.
Conversion rates are also dependent on the company’s ability to “make the sell” when the offer is being considered. When considering an offer for your affiliate marketing efforts, review the offer for appeal and professionalism. If you direct people to an unprofessional website, you will be wasting your time. Often you can determine very quickly whether or not you would include them in your affiliate marketing efforts.
Conversion rates for offers online typically range from 3 to 5% which is considered good. 7 to 12% is considered great, while 15 to 25% is considered exceptional and anything higher is rare.
Of course, if you’re set on firing your boss, you’ll want to keep as much of the commissions as possible on offers that over-deliver with a high perceived value-to-price ratio and a high proven conversion rate. These type offers are few and far between, but do exist. Taking the time and making the effort to seek them out is well worth it.
As an Affiliate Marketer, Shelia Norling helps people enjoy the lifestyle of their dreams through a simple and highly profitable means of affiliate marketing that pays 100% commissions with proven conversion rates over 40% due to the extremely high value-to-price ratio. Learn more at www.MyAffiliateMarketing.biz Watch the video in the sidebar. Currently paying 100% commissions in nearly 300 countries worldwide.