Site Optimization Affiliate Marketing Tested, Section 1 (Research) | Affiliate Marketing Tested, Section 1 (Research) |
| Sunday, 05 October 2003 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 Topic: Affiliate Marketing — How Our Test Site Achieved $6.5 Million in Sales with Just 50 Active Affiliates.Test Number: #090503-AP Word Count: 6500+ Focus: 8 Questions
Credits:
 Many sites generate a significant part of their revenue (40%) from capturing the email addresses of their visitors and following up with polite, permission-based marketing. Traffic will spike on the Net during the final months of 2003. But you should move into 2004 with more than a revenue spike; you should also have gleaned a large list of future customers. Our next report will study: HOW TO INCREASE CUSTOMER RETENTION AND CUSTOMER VALUE WITH CAREFULLY CRAFTED EMAIL CAMPAIGNS This is one of the most overlooked opportunities in (even mature) marketing operations. >Our test site made an additional 1000 sales per month, without buying any new traffic. We are also working on several other research projects, including:
 How is it that AFFIILIATE PROGRAM A achieved a success ratio of 80%, with sales per affiliate ranging between $100,000 and $1 million per year, While... AFFILIATE PROGRAM C projected (a very promising) $3.6 million per month, and yet has failed to generate even 10 percent of that number? What made the critical difference? Can the average company still grow through affiliate/partnership marketing? Dale Carnegie said, "You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you."i Our 10-month research project on Affiliates has proven this maxim to be especially true of Internet relationships. Here is what we discovered... Can affiliate programs still be effective in the Post-Dot-Com-Crash era?A TALE OF TWO AFFILIATE PROGRAMS PROGRAM A - The MuscleMaster Story BACKGROUND: Nick Chunias is the co-founder of MuscleMaster.com, Inc. The company sells more than 2,000 health related products, including nutritional supplements, weight loss products, anti-aging products, vitamins, minerals, and fitness accessories representing 120 major brands. They have grown at a rate of 75-100% percent per year. AFFILIATE SOFTWARE: Custom START DATE OF PROGRAM: May 2000 URL: http://www.musclemaster.com/ Nick writes: Initially our affiliate marketing focus was on traditional affiliate marketing utilizing third party programs like BeFree and Commission Junction to track and administer our affiliate program. While this type of affiliate program can be effective, we concluded that it had limited long-term growth potential, as the affiliates were not being properly rewarded for their efforts. So three years ago, we devised a true strategic partnership program which we refer to as our full e-commerce partnership. With this program, our strategic partners can still offer all of the 2,000 products that we carry on their websites while they build their own customer list and get the benefit of repeat sales. How successful was the program?ii
In Section 2 we interview Nick to discover the six key principles to an effective affiliate program. Nick also answers these questions:
PROGRAM B - The BrainQuicken Story BACKGROUND: Tim Ferriss is the founder of BrainQuicken.com, a leading developer and distributor of bioactive and pharmaceutical-grade neural acceleration products. AFFILIATE SOFTWARE: MyAffiliateProgram iii START DATE OF PROGRAM: October 2002 Tim comments: In the past year, our affiliate program has had disappointing results. Our experience has been very frustrating, but that doesn't mean that affiliate programs can't work. One important lesson that we learned was that the higher your commissions, the harder affiliates will work to close sales and promote your product. We are completely re-launching our program with a significantly higher payout. Our initial efforts produced the following results:iv
In Section 2 we interview Tim to discover his top 10 lessons to achieving success with an affiliate program. He answers also the following questions:
How much can you depend upon affiliates for the growth of your business?PROGRAM C - The Infopia Story BACKGROUND: J. Hartman is the Co-Founder of Infopia.com. Infopia is an online marketplace reaching more than 200 million buyers with product listings valued at $2 billion. Here is his story in his own words. It is replete with the wisdom of hard-won experience. AFFILIATE SOFTWARE: Custom START DATE OF PROGRAM: July 2000 During my tenure in the business development division of Infopia, I was tasked with identifying and crafting co-marketing partnerships. My goal was to create mutually beneficial relationships and expose a self-service version of our Marketplace Manager software to as many small business owners as possible. As I browsed through the documents and files that supported the project, I came across an Excel spreadsheet titled: "Partnership Marketing Forecasts: Worst Case Scenario 2001" It listed all of the companies we had either entered into an agreement with, or were planning to. It also lists the estimated size of each partner's customer base.
Upon further investigation, I saw that I had assumed that over time at least 2% of these customers would eventually register for our service, and at an average monthly bill rate of $35, we stood to generate over $3.6 Million in recurring monthly revenue. Even with some attrition, these were great numbers. Without getting into too many of the gory details, I will say this: The plan did not work! KEY POINT: The program achieved only 5% of its original projections. Looking back, I can group our mistakes into five primary obstacles that will keep an affiliate or partnership program from being a success. (See Section 2 of this report.) What is a good participation ratio? What should you expect from your initial efforts?These are numbers gleaned from TEST PROGRAM D. They represent a time period from 07/16/03 to 09/30/03 . They are useful; in that they help you consider the difference between affiliate sign-ups and ACTIVE affiliate sign-ups.v
The contact/follow-up strategy included: 2 emails, 1 personal call, and a follow-up email approximately every 3 weeks. So what are we learning from all of this testing? Affiliate marketing can still be a powerful way to grow an online business, but there are several critical principles to success. In Section 2 of this report, we outline those key principles, and we lay out a step-by-step blueprint.Section 2 (Continue...) |
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What You Need To UNDERSTAND: MuscleMaster.com generated OVER 10 TIMES the revenue with a customized, full-featured partnership program than they did with a traditional affiliate program.
