The Insider Perspective

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How To Turn Your Customers Into Affiliates

What makes the Internet so different is that the customer is in control. Unlike advertising in television, print, or radio, where the goal is to get the viewer to pay attention to what is in front of them, the Internet offers them many, many choices.

This is one of the most difficult parts of online marketing, the amount of choices. Lots of choices confuse people, often blurring one item with another. The real goal of an affiliate program is to get your customer focused on a specific purchase decision and guide them down that path.

The biggest mistake companies make with affiliate programs, and Web Site marketing in general, is to get sucked into the mechanics of their business. They try to define themselves as a specific kind of e-commerce shop (HINT: When you use the word e-commerce, it means you don't know what you really want to do with your customers...but it sure makes people who know the Internet smile ;-).

This internal focus creates a business model, projections, and assumptions about their customers. The goal of such a business is to make the customer understand how their operation works. The assumption is simple; if I can show that dumb consumer how to work my e-commerce system, I'll make tons of money.

Your customers don't want to figure you out. They have lives of their own, which not surprisingly, they care more about than your business. They are at your site for a variety of reasons, and may not be in the purchase decision mode. So all your convincing and systematizing of your business is fruitless if you do not address their specific needs.

For example, Amazon.com has a policy that prohibits affiliates from ordering books from their own Web Sites. If I am an Amazon.com affiliate, I cannot get the discount my visitors get. On the surface this may seem logical, yet wouldn't most affiliates try this anyway? (See the last section, Repeat Business, for the secret of how this may be the strongest weapon for affiliate networks.) Amazon.com is actually trying to stop people from doing what they normally would do, instead of enhancing a natural consumer behavior into a long term, buying loyalty program.

Your goal is to find out how your customers want to shop and reward them for doing so. Customers need to gather information about your company, proof that you are reliable and worth extending their trust - their hard earned money - into your business.

Your goal is even simpler:

A. Customer-centered marketing: Gather as much information as possible about the customer without intruding on their privacy

B. Personalization: Determine how close to buying the customer is

C. Define how big the potential purchase is.

D. Repeat Business: Create ways to quickly and conveniently follow up with your customer.

Affiliate programs are usually bogged down by an over reliance on hardware and software solutions. Let's focus on the real solution, your "customerware", and put a specific idea on how to turn them into your real affiliates.

Customer Centered Marketing

Gathering information is usually defined as giving a customer a bunch of questions to answer, and hoping they answer them. If you focus on making the customer work, the results will be minimal.

For example, a company called BonusMail wanted to gather information about its consumers. BonusMail offers paid email, by rewarding its customers with points that can be redeemed for travel, dinners, movies, and many other items (http://www.bonusmail.com). Their goal is to learn about their customer and send them offers tailored to the customer's specific needs.

The problem BonusMail had was common; they asked too many questions up front. It was like someone meeting you on the street and getting personal. The questions became an intrusion. So BonusMail developed a system that asked these questions over time. They dramatically reduced the initial number of questions and increased their customer base. In fact, they are one of the fastest growing sites online. It's easier to ask questions after someone gets to know you.

Remember that your customer's comfort is most important, and you are really introducing yourself to them. To get the most out of your customer-centered marketing, focus on the following:

1. Define what kind of information you really need to get and the time frame for getting it. If you need to know simply who your customer is and where they are located, you can ask just for name and zip code. If you want to know what sort of products they buy, or important demographic information (such as, do they own their own home? Do they have children? How much is their yearly income?), you need to develop these questions over time and reward people for responding.

2. Instead of always asking questions, what if you measured behavior? Set up a system that invites people to take actions. Affiliate programs are an excellent way to measure behavior. Set up a page of related products and see which ones your customers go for. Measure this by clickthroughs on your advertising, by responses to your email forms and surveys, and by actual buying behavior, the SellThrough ratio we talk about in the book. Use affiliate programs as a testing mechanism.

3. Be sure you let your customers give you feedback about what they want. Tailor the shopping experience to them by rewarding them for input outside of your common sales process. If they take the extra steps, give them a discount or add bonuses to each purchase. Make it profitable for them to buy from you again and again, and pay attention to them.

Personalization

This term is the most over used on the Internet, for a good reason. The real goal of online business is to create a customer base that always buys from you. This is the promise of one to one marketing, of being a direct connect to the buying behavior of your customer base. To do this, you have to personalize the shopping experience.

Many think that by simply splashing up someone's name on a Web Page, they've made it personal. The problem is that your business can only offer a limited number of products and services. Many Web Sites have attempted to personalize shopping by asking a bunch of questions, or setting up password protected areas where customers fill in enormous amounts of data.

Once again, if your customer has to work to work with you, the approach is doomed. Personalization is about consumer behavior, tracking it and delivering suggestions. Here's some examples:

1. Build an email list with consumer advice and the latest news in your specific business. Create cooperative advertising with related products and services who deliver information about their specific business. If you try to do this all by yourself, you will run out of things to say. Broaden your effect by targeting more than just your business; target the specific interests that revolve around your product/service line.

2. Take advantage of the glut of content online and make joint venture deals to supply good content to your customer base. A successful Web business operates much like an infomercial; a bit of content, a bit of sales, a bit of content, and a little bit more sales. There is so much great content you can deliver to your customers. One idea is to contact online experts and use your affiliate program to sponsor a specific section of their site. They get traffic and build sales for your affiliate program, while getting paid for each sale they generate.

3. Create a special system to remind your customers of new products and services related to their interests. For example, I buy business-related books and history books from Amazon; why don't I get a book of the month recommendation for business and for history?

4. Recognize what your customer wants and record all behavior in a database. You can track this via cookies for clicks, and via orders for shopping behavior. How often do they buy? Is it seasonal? What is their birthday and why don't you send them a card on this and other important holidays? Where do they live? If I know someone's sex, zip code, and their date of birth, I'm armed with significant information to personalize their shopping experience.

Define How Big the Potential Purchase Can Be

One of the most crucial factors you need to understand about your customer is their capability to buy what you have to offer. If you don't have the right price for the right product, to the right audience, your business will fail.

Establishing how big a potential purchase can be is not that hard. Here's a technique for determining the possible buying behavior by using a survey to open the doors.

The Direct Response Survey

Surveys are an excellent way to measure customer interest before they buy. The two major oppositions of buying online are price and security. Use these to your advantage to determine if your target audience will buy what you have to offer. Send a direct mail or direct email to your current customer base, or ask prospects as they get situated into your business what they would like.

Begin the process by creating an immense reward for their input. You can define this in a number of ways; give them a free report, free access to your password protected information online, discounts, coupons, special bonuses (buy one, get one free), and added incentives. Set three levels of pricing for what you offer (high, your price, and low price). Then ask them five simple questions as follows:

1. When you are looking for information about (your product), what Web Sites, magazines, and other resources to you go to find what you are looking for?

2. If you were to buy (your product) today, would you consider (insert your high price here):

   Too expensive   The Right Price   Too Cheap

3. If you were to buy (your product) today, would you consider (insert your target price here):

   Too expensive   The Right Price   Too Cheap

4. If you were to buy (your product) today, would you consider (insert your cheap price here):

   Too expensive   The Right Price   Too Cheap

5. When is a likely time for you to make such a purchase?

   Now   1-3 months from now   6-12 months from now   Not Sure

Repeat Business

The core of any business is its repeat customer business. Affiliate programs should be a way to encourage repeat behavior. Yet many businesses are, unknowingly, fighting this.

Most Internet businesses focus on the first sale and little, if any, on the back end and repeat business. Affiliate programs are a means to generate an initial sale, but the real gold is in mining the customer's behavior and encouraging them to work with you.

Earlier in this article I mentioned how Amazon.com prohibits affiliates from ordering books from their own Web Sites, ie getting the discount on buying books through their own program. Amazon tries to monitor this, but it is practically impossible unless the person is ordering many, many books.

Please understand that I'm not recommending that Amazon.com extend an extra 15% discount to every affiliate. But I am suggesting that this behavior should be expected, is natural, and in fact should be encouraged with perhaps a 5% discount on any book they buy.

What better way to get customers buying than to turn an affiliate program into a customer loyalty system? If I buy my books through my own affiliate program (and remember, Amazon.com has over 100,000 affiliates) and get a 5% discount, the affiliate becomes a loyal customer. How many stores have tried to put customer loyalty programs in terms of discounted prices to their repeat customers?

Amazon.com is trying to fight a natural behavior, instead of encourage it. Their lesson should be yours; to encourage repeat business, give them a good reason to always buy from you.

As affiliate programs evolve, it is becoming clear that the customer is the ultimate affiliate. Extend the concept of affiliate programs into customer loyalty programs and give people a reason to always return to your store to buy.

If we take the Amazon.com affiliate model, you understand that most affiliates will not create the HTML code for every book they want to buy. They may buy a few books and gain the benefit, but long term they will plug into Amazon.com to buy their books immediately. After all, 5% is not that much to save in terms of time on a $20 book (the customer is really facing a $1.50 decision; is it worth it to save a $1.50 on every book I buy, or to buy now?).

Affiliate programs should not only be a way to generate leads from other businesses, but can be integrated into Internet businesses to make customers loyal. Imagine if you went to a bookstore that promised you 5% off of any purchase you made at the store by becoming an affiliate? And that reminded you to come back to visit?

The secrets of affiliate programs are not only generating leads and sales from other Web Sites, but in building up a loyal customer base. Reward programs and customer loyalty systems will be critical factors in developing a long term customer base.

Watch as many businesses fail online because they fail to recognize that the most important asset is not the sale, but the long term customer who buys from you again and again.