Most affiliates don’t really have much strategy when it comes to their affiliate marketing campaigns. Instead, they have a collection of little tricks that use to improve campaigns.
I wanted to write an example of how I’ve used a business concept and applied it to affiliate marketing. There aren’t any official books on affiliate marketing, but at the end of the day it’s still business.
A few years ago I read one of my favorite books called “Getting Everything You Can, Out of Everything You’ve Got” by Jay Abraham. You can think of Jay like your “guru’s favorite guru.”
According to Jay Abraham, there are 3 simple ways to grow a business. Everyone thinks that growing a business is complex, but he simplifies the process with 3 key concepts:
- Increase the number of clients. You can grow a business with more customers.
- Increase the average transaction. The more money each client spends, the more money you make.
- Increase the frequency that the average client buys from you. Does your customer only buy once or buys every week? Increase the number of times they buy with you.
I’m going to explain the concepts with a made up example from outside the industry. After you understand the basics, I’ll share a few ways to use the framework for your next affiliate marketing campaigns.
James Wants to Grow His Personal Training Business
James is a personal trainer at a gym.
He loves working out and helping people, so he thought why not get paid for it? The problem is he’s a complete beginner on the business side.
Lets see if we can help him out by applying Jay Abraham’s 3 Laws of business growth:
1. Increasing his number of clients.
I like to separate this section into “front-end” and “back-end” optimization.
The front-end would be increasing the number of leads he gets. In this case, how many people hear about James personal training business. He needs to get more eyeballs on his business.
After people contact James about personal training, he offers them a free personal training session to see if there’s a good fit.
That’s the back-end optimization. How many curious leads will turn into paying clients.
The problem is he doesn’t have much of a budget to work with. How can we grow his client base without spending too much money?
a) He can start by asking his existing clients for referrals. This is almost a free money hack. I would split-test two methods: ask his clients for referrals as a small favor, and to test out offering 1 free training session as an incentive for each paid referral.
b) James drives around town a lot. Maybe he could get a cheap sign made and display it on his car.
c) He offers everyone 1 free personal training session, but the conversion rate into a paid customer is only 40%.
Like most of us, James wasn’t born a natural seller. He’d offer them the personal training session, and cross his fingers they’d become a customer.
He goes on Kindle and reads some books on selling to really understand the psychology of selling. Overtime he gets more comfortable. James starts individualizing each sales pitch based on asking questions, and figuring out what the person’s true goals are. He improves his 40% conversion rate to 75% by studying sales.
2. Increase the Average Transaction Value
James charges $60 per hour like most people.
He’d love to charge more, but he doesn’t have the reputation or experience yet (that can take years to build)
How can he start charging people more money for his time. The long term way of doing this is improve his branding. If he establishes himself as a premium trainer, the he can command higher prices.
Some ways of doing this include: landing celebrity clients, building a social media following, improving his body even more, and collecting testimonials.
Is there anything he could do in the short term? This reminds me of a scene from The Wire.
Instead of offering generic personal training, he could develop a specialized brand and give it a name. Maybe he could do a summer fat blasting camp and charge $75 / hr. Maybe he could do “weight loss designed for the obese.”
3. Increasing the Frequency of Transactions
You don’t want a client who only buys 3 personal training lessons and then disappears forever. The money is having clients who are with you for years. That’s the difference between making $180 and $3,000 off the same person.
Most likely at this point he’s managing everything by hand and using excel. Time is FINITE. He needs to build out some systems and invest in some software that can automate different processes.
Remember that it’s 10x easier to sell to an existing customer than to a new one. There will be situations when a client stops getting personal training. He needs to figure out the reason why they stopped, and come up with a possible solution.
His client Bob stops showing up one day. James needs to call him and figure out what the problem is. The workouts are too hardcore for Bob because he’s a pussy so James can promise to scale back the intensity.
Applying the 3 Laws to Affiliate Marketing
Most affiliates just have a collection of “tactics” they gathered without a higher level strategy involved. Lets see how you can apply these laws on your next affiliate marketing campaign.
1. How would I get more customers to a campaign?
I’ll separate this into two sections like before.
The first is the front end optimization (which is getting more clicks). Most affiliates would think of this as scaling. You can expand your campaign to more countries, more traffic sources, more ad sizes, more placements, testing out different bidding, etc.
Improving your ad click-through rate’s also important here. If you have a $500 budget, higher CTR means you get more clicks for the same costs.
Clicks are useless if they don’t turn into customers. Now it’s time for the back-end optimization. You can improve the conversion rate of your landing pages, ads, and your targeting.
2. Increase the average transaction value
We’re getting paid $5 a lead on this particular offer. Lets think of ways on how to increase the rate.
a) Get a higher payout on your offer by asking your affiliate manager, going to a competing network, or going direct.
b) Multiple Offers. Some people use the infamous combo where you promote two offers and claim they work best when used together. An old school landing page technique was to promote multiple offers and encourage people to sign up for each.
For example: Create a dating site that reviews 10+ different services. Highlight the difference and encourage the customer to sign up for multiple ones. Instead of getting paid $5, you could get paid $15 from the person.
3. Increase the frequency that the average client buys from you
Law #3 doesn’t apply as much to the affiliate marketing model. Being an affiliate means we don’t have that much data on the customers who buy.
There are some clever ways to work around the traditional affiliate model though. The first way is to collect their email address. Instead of selling them one product, you could sell to them many times.
Here’s a more advanced idea. You can re-target users who were interested in your offer, but for some reason didn’t buy. Simply sending ads again to those users is almost free money.
The more I study business, the more I can see recurring themes in different industries.
Jay Abraham provides a powerful way of looking at business and I wanted to share his concept by presenting it with some familiar examples.