Affiliate Marketing can provide you an added revenue stream for your business. The basic structure of an affiliate marketing program is straight forward. You convince website owners to promote your products on their pages, and when their visitors comes to your website product detail page and purchases your product the affiliate receives a credit for the sale.
On a cyclic basis (usually monthly) you add up all the credited sales for each affiliate and pay them a small percentage of the profit for each item ordered. Affiliates will generally be very knowledgeable about their cost to acquire a customer. This important factor is known as Cost Per Acquisition. Everyone who operates a successful ecommerce business online spends money doing so. If you add up your monthly cost of operations, and divide that by the number of customers you acquire, you will have calculated your average Cost Per Acquisition.
Your CPA cost is a very important number. If your average gross profit per transaction is less than your CPA you will be out of business in very short order. All affiliates know their CPA and will compare this against the payout per item ordered when making a decision about working with you. |
Affiliate Marketing Program
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As an example lets assume you have a nice camera for sale on your website. You promise to pay your affiliate $30.00 for each unit they sell. Assuming that their CPA is about $12.00 per order, they would make $18.00. This would be an attractive opportunity as most affiliates try to limit the CPA cost to less than 30 percent of the payout.
When deciding what items to market, you should focus on marketing your highest profit items with affiliates. When your setting a payout amount for each product sold by an affiliate, keep in mind that your CPA is zero. Since you incur no cost to acquire the customer, you can pass along a better payout, thus attracting more affiliates to sell your products. Provide good payouts for items you sell, and affiliates will flock to your door and help you sell.
There is a goldmine in a properly executed affiliate program. Catfish Software stands ready to assist you in establishing, running, and managing a successful affiliate program. Contact us today! |
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Affiliate Programs
