Word of mouth – it’s the fastest way to spread awareness about your brand. I’m sure you’ve seen it happen quite a lot in different places: shoppers go for the same products their friends recommend, consumers buy a particular brand of the appliance because of several good experiences and reviews by other buyers in their community, and others choose to try new products endorsed by well-liked YouTubers. These kinds of marketing strategies are indeed powerful.
But marketing can become tricky and confusing, especially when you start diving into industry terms. Too often, we find that people mix up with their sales channels. That means they are not clear where their sales are coming from.
We want to be able to understand what parts of our store are performing, and what sales channels are performing. That way, we know what’s profitable, what’s working well, what’s growing, and where we should double down. But first, we need to know what the difference is between affiliates, influencers, and referrals.
Referral Traffic
If you look in your Google Analytics dashboard, you’ll know that all the people, customers, and traffic that come to your site are all considered ‘referral traffic’, and I completely understand why it’s confusing. I’m going to be referencing that affiliates and influencers are referring to your sales throughout the video, which is even more confusing. But first, let’s clear up referrals.
The referrals that we’re talking about in e-commerce land when it comes to this are customer referrals. These customer referrals are typically ones that you have after a successful purchase. You ask people to recommend your product or share their experience with their friends to generate more sales. Typically, you would be rewarding these people with a coupon code or a free product or a discount — something that’s tied to your product, your inventory, and getting them to purchase more. This is one of the easiest things to get out of the way because that takes care of the consumer. Activating your customers to refer more customers is fantastic. In fact, that’s one of the ways that brands have grown very quickly out of the gate because they have excellent word of mouth, and this is exactly how it happens.
Now let’s look at influencers and affiliates. These are business models, and these types of people are actually out there trying to be incentivized to sell products like yours, which is great.
Influencers
Let’s talk about influencers. Influencers are individuals who have built an audience and have authority within a specific area. This is very similar to what you see on TV when you’ve got a professional athlete endorsing an energy drink or a sports brand. They are in a place that influences sales activity.
Your goal as a brand is to get them to speak favorably about your product. Influencers are still people, after all, so don’t underestimate that. Don’t feel like they’re out of reach. Get in touch with them, meet with them one-on-one and see what works. Some influencers will only work with products that they already enjoy. They like to test products and review them, and that’s really all the compensation that they need.
Monetizing the channel, however, can get extremely expensive. When you’re paying for specific views, posts, or videos, those sponsorships can cost a lot of money. But if it’s a fixed fee, you can actually get a really great return. This is where you start seeing certain products everywhere. You start to see it on social media; it seems like everyone is talking about them, and everyone is reviewing them.
Influencer marketing can really be powerful. Keep in mind that if you have a very specific product or if you function within a specific niche, it might actually be easier for you to find influencers within your budget. Influencers with a smaller audience, usually between 1000 and 5000 followers, are much more closely associated with each other. While Influencers promoting your product to a smaller audience are likely to charge less as there are lesser impressions, it’s also likely that a large number of their followers will be interested in your product if the influencer is interested in your product.
Once you start getting into much larger audiences, you’re going to have a lot more customers as a percentage of that audience. Influencers who have over 10,000, 20,000, or even 100,000 or a million followers have a wider demographic reach. This is where it also becomes a little harder to target specifically. For instance, if you were selling a product like breakfast cereal that everyone consumes, you would have a wide audience. Or if you are selling makeup, and 60-80% of your influencers’ audience is women, then your product is in great shape.
If you are trying to market a niche product to an audience of a million followers, chances are, only 20,000 or 30,000 people will be interested. If that’s the case, then you are better off partnering with an influencer who has a smaller size of a following, allowing your brand to reach a large part of their audience.
You might be thinking of using Instagram. After all, Instagram is what made being an influencer famous. But remember, influencers are everywhere. There are influential Facebook groups, influential TikTok and Snapchat personalities, YouTubers, and across the board, all these people have an audience. Even having a Pinterest account that does extremely well will allow you to leverage influence on those channels.
I would really encourage you to look into it. Don’t dive right in – see if you can get your foot in the door or if there is a great fit for your product. If your competitors are doing it, or if customers are buying competitor brands, then they’re probably using influencer marketing, and that says your product has a chance of being a great fit.
There are other reasons to use influencer marketing, but the main reason is that advertising guidelines have fewer restrictions for content that is posted. Certain spaces, particularly health, wellness with marijuana, and CBD, cannot be advertised. Advertising a new supplement or any product designed to give you health benefits have a high chance of being flagged by Facebook, Instagram, and Google. In turn, these types of brands partner with influencers as their only option. As it is, the health and fitness genre group sells fast on Instagram with so many brand dollars sponsoring fitness models.
Affiliate Marketing
Lastly, affiliate marketing. This is one of my favorite channels, and it is completely underutilized as far as the general public can see. You’re probably not aware that affiliate marketing is as big as it is until you start seeing the disclaimer that’s out there. Affiliate marketing is regulated, marketers are required to have a disclaimer placed in an obvious place on any of the content they are referring a product to. The most common one you will see is something along the lines of, “If you click a link below and make a purchase, I may make a small commission.”
This prevents customers from being tricked into buying a product, and it lets them choose whether or not they will purchase that product. In the event of a successful purchase, compensation is given. Now, this is something that you may or may not see. Let’s take fashion bloggers or tech reviewers: they list the products they’re using in the description box of their YouTube video, including shopping links to each product. These affiliates are also disclosed as a legal requirement.
The reason that I bring up affiliates as a big opportunity is that it’s a really interesting win-win. A commission is paid when a successful sale is made, and in turn, the affiliate is incentivized to make better content, which will lead to more purchases. At the same time, the store does not have to have as much money up front in order to incentivize the marketer. The percentage for completing a sale is something that’s going to be incentive enough, and it allows you guys to scale together. The terms and conditions of how long the cookie is available for, how much the commission is going to be, first purchases only, second purchases, repeat customers — all of these details you could handle within the affiliate path itself. But yes, you are paying these people a bounty when you have a successful sale.
It can be extremely well in other spaces as well, in terms of what the expectations are. For example, In the travel industry, I’ve seen as short as a 5-minute cookie where an affiliate sends a link to Expedia or Hotels.com. If that transaction isn’t issued within 5 minutes, the cookie is gone and the affiliate won’t earn any commission from the sale if that person leaves the site and doesn’t come back. On the other hand, I’ve seen everything as long as a 365-day cookie for a larger purchase. I believe when I saw that one it was for an appliance company. They knew that there was going to be a due diligence period, and they still wanted to have that person rewarded.
There is a big opportunity here as a brand and an e-commerce company to be able to say that you want to build your affiliate channel. It’s a really great help in building your brand awareness by having many different websites review your product and being able to send you traffic. It’s a nice little boost, and it is a very reliable channel because there are no minimums or caps required on your campaign.
Unlike the influencer channel, where you’re making a purchase, essentially, for two or three posts, once those are done you need to spend more money to get more content. Instead, you could have affiliates say, “You know what, I am said you know what I’m going to make a new review,” or being able to say, “Oh, you’ve got more products? Let’s talk about those, too.” This is a channel that we should be utilizing more.
Key Takeaways
To summarize, influencers are people who have authority over an audience that can influence sales, and in order to take advantage of their audience, you need to pay them to create content, or you pay for content per piece that is created.
Your affiliates, on the other hand, are typically blogs, websites, YouTubers, and others who are creating reviews and incentivizing people to click through and purchase, where they receive a commission. You are paying for each time there is a successful sale that comes through the affiliate channel.
Third, customer referrals are where you are trying to get your customers to refer their friends and family, and in return instead of paying them in cash, you can give them products, points, or discounts.
How should you get started? Look into what your competitors are doing, see if you start noticing these things, and pay attention to the different platforms where you are seeing them pop up. Once you see this, start looking at the different platforms that are included. If you want to use affiliate marketing, I would start looking at Commission Junction and ShareASale, and some of the apps that are in the Shopify app store. For referrals, you can start looking at Referral Candy. When it comes to influencers, start finding the right fit for you.
If you’re ready to start your store, get started with Shopify or WooCommerce.