Customer affiliate programs: how they work

You have probably seen websites inviting you to join their affiliate program and earn a reward for every customer you send their way. That is affiliate marketing, and when you recruit your own loyal clients as affiliates it is one of the most rewarding ways to grow. This guide brings together our older posts on customer affiliate programs: how they work, their benefits and two myths that put businesses off.

How an affiliate program works

An affiliate program is a structured form of referral. Clients, partners or other supporters promote your products or services to their own networks, and you reward them for the business they bring in. Three parties are involved:

• The business. You, the company selling a product or service. You set the offer, supply the material affiliates use and pay the rewards.
• The affiliate. The person who promotes your brand. You give them what they need to do it: links, banners, a landing page, a short description or a case study they can share.
• The customer. The person who acts on the affiliate’s recommendation, whether that means clicking through, sending an enquiry or buying.

All three benefit. The business gains new clients, the affiliate earns a reward and the customer finds a product or service that suits them. Your best affiliates are usually your loyal clients, because they already know and like what you offer.

Rewards are based on results. Cash is common, but it is not the only option: points, gift cards and other valuable rewards can mean more to the people you ask, and they keep the relationship about appreciation rather than commission.

Benefits of an affiliate program

• Word of mouth at scale. Affiliates promote you through the channel people trust most: a recommendation from someone they know, in person or online. Each affiliate brings their own network.
• You pay for results. Rewards follow the business affiliates bring in, so your spend is tied to outcomes rather than to advertising that may not work.
• More trusted sales. A recommendation from a client carries more weight than an advertisement, so referred customers often arrive ready to buy.
• Stronger client relationships. Clients who promote you become partners in your growth. Recognising and rewarding them deepens the relationship.

Two myths about affiliate programs

Some affiliate programs have been run badly, and their reputation has rubbed off on the idea. Two myths come up most often.

Myth 1: customers dislike affiliate marketing

People are wary of aggressive advertising, not of honest recommendations. Most of us are happy to buy something a friend, colleague or family member suggests, and that is exactly what a well run affiliate program encourages. The key is transparency: affiliates should say that they are part of a program, and the product should live up to the recommendation.

Myth 2: affiliate programs are expensive

Because rewards follow results, affiliates are not paid unless they bring in business. There is an upfront investment: setting up the program, choosing rewards, preparing material and managing affiliates. Done well, that cost is easier to plan than most marketing spend, and the return depends on how well you run the program.

Making an affiliate program work

Like any program, an affiliate program needs looking after. Choose affiliates who know and believe in your product. Make it easy for them to promote you, with clear rules and good material. Offer rewards they value, pay them when you said you would and thank your best affiliates in public. And keep improving the product: people keep recommending a business that keeps delivering.

Affiliate and referral programs overlap a great deal. For planning a program, the dos and don’ts and the common reasons programs fail, read customer referral programs: how to plan one.

Running an affiliate program on RewardCo

RewardCo runs referral and affiliate programs in your brand. Customers, partners and staff refer new business, you approve each referral, and they earn points, a gift card or a cash reward when it meets your rules.

Thinking about an affiliate program for your clients or partners? Book a demo.