It’s a bit like a friend of a friend of a friend

And the way many companies make money today: through referring customers. It’s quite a simple concept, one attracts a customer and then redirects it to a purchase, program or whatever really, to get a commission. When you ask a friend of a friend for a favor, you used the said “initial friend” as a resource, and the least you can do is thank them for that (in a perfect friendly world, a nice thank you it’s a good commission).

What is Affiliate Marketing?

It’s the passive way to make the world go round. Promotion is the key component of affiliate marketing, as one promotes a product on behalf of the seller to potential customers they might otherwise not reach. It broadens the customer base, and everyone wins. The customer gets the product they were looking for, the brand gets a customer, and the intermediary gets rewarded for the introduction. There are affiliate programs which are built specifically for this purpose, and connect intermediaries with sellers (and they themselves get a percentage of the sale).

 affiliate marketing

Going through the hoops

Sharing economy or not, affiliate marketing is based on sharing the revenue of a product. It is a common belief that there are four parties involved in this process (the larger the party though, the smaller the share). Let’s start from the product, which is sold by a merchant, who uses an affiliate network, which uses a publisher to reach  a broader audience, which reaches the customer. If you think it’s a little complicated, just think of your Instagram influencer. They are simply a “window” into a product. So when you click on the product, and you are redirected to the Gucci website, you are experiencing first hand affiliate marketing (and most probably, a product that is just slightly too expensive for your budget).

Affiliate rewards

All cool. But what does affiliate marketing have to do with rewards? Affiliate marketing programs are often referred to as the archenemies of loyalty programs. The reason for this being that loyalty programs are seen as a way to create a branded “currency” which a loyal customer can use with a particular brand. On the other hand, affiliate programs claim to make a direct connection between the retailer, the advertiser and the customer. Because of the way affiliate programs work, advertisers are able to directly appeal to each customer - something loyalty programs often fail to do since they work with currencies that expire.

Why will your future self thank you?

The truth is that old style loyalty programs are dead. On the other hand, loyalty programs work best when it comes to keeping a customer away from competitors, as well as nudging customers to spend  extra  in order to earn a reward. Affiliate programs are also evolving, as they are bound to financial gain, and sometimes that is painfully clear to customers (when you see your favorite YouTuber adding random products to their videos… that is what we are talking about). So maybe - just maybe- the answer is to combine the two. What if affiliates also  aimed at building loyalty, on top of ensuring sales? In that way customers would also gain from an affiliate program, and could earn inexpiable, transferable rewards on their purchases.

Extra bits:

  1. Keep on scrolling. Over 50% of affiliate marketing revenue comes from mobile devices.

2. A great TEDX talk on loyalty programs? We got you.

3. 1994: the date affiliate marketing started being a thing.