Affiliates: Turn Customers Into Your Sales Team
With Guest Frank Chen
A well-designed affiliate program can transform satisfied customers into brand ambassadors, driving sales with personal experiences and peer influence.
The How To Sell More Podcast
November 29, 2023
In the latest episode of "How To Sell More," expert Frank Chen guides us as we head into the strategic world of affiliate marketing. He reveals the importance of referral marketing and how it can transform your customer base into a dynamic sales force.
Key takeaways from our discussion include:
- The power of customer referrals in outperforming traditional advertising, and the process of leveraging this for your brand.
- Customization of affiliate resources is crucial; understanding the varied abilities and networks of your affiliates allows for more effective promotion.
- The advantage of fostering meaningful connections with a select group of high-performing affiliates rather than a widespread, unfocused network.
Frank Chen brings his substantial e-commerce and entrepreneurial experience to the forefront, offering practical advice on creating valuable online customer relationships. Tune in for insights into how a well-crafted affiliate program can lead to greater sales and a stronger brand presence.
Links to This Episode
- Referral Marketing as a Core Strategy - Building an effective affiliate program relies heavily on leveraging existing customers who are already advocates for your product.
- Tailored Affiliate Assets - Rather than providing generic marketing materials, it's important to create affiliate assets that resonate with the specific profiles of your buyers.
- Value of Quality Over Quantity in Affiliate Relationships - A focus on nurturing these relationships can result in a committed group of affiliates who not only promote your product but also contribute to its improvement and market fit.
Top 3 Reasons to Listen
Cost-Effective Strategies: For businesses looking to maximize their marketing budget, the episode highlights how to leverage affiliate marketing for high ROI.
Latest Trends: The conversation includes discussions on the latest trends in affiliate marketing and how they can be applied to current business models.
Networking Knowledge: Learn how to identify and nurture relationships with the right affiliates to enhance your business's reach and reputation.
Follow Frank Chen on Social
More About Today's Guest, Frank Chen
The Affiliate Incubator, Your one-stop-shop for all things affiliate marketing, management, training and consulting.
Frank Chen, a multifaceted professional, combines roles as a father, investor, consultant, and serial entrepreneur. He has earned recognition for collaborating with leading real estate investors, educators, and software experts, many of whom manage 7-8 figure online businesses. With significant e-commerce and entrepreneurial expertise, Chen focuses on fostering valuable online customer relationships and shares insights on how effectively designed affiliate programs can enhance sales and strengthen brand presence.
A Transcription of The Talk
Mark Drager: Frank Chen from the affiliate incubator, you and I are part of the same private mastermind group. A few months ago, I saw you on stage give a one-hour breakdown on next-level affiliate strategies. And I was like, "This is amazing," one because I've never done anything with affiliates. Right. And, two, I think like most people, and I don't want to get too entry-level here, I want to get into the real tactics of affiliate marketing. But I think like most people who come from a sales and marketing background, an agency background, or maybe more of a traditional kind of corporate 100, corporate 500 type approach, affiliates seem like resellers. It seems like, I don't know, it seems like scammy internet stuff. It could be that way. But it's not. So help me understand what affiliate marketing is like in 2024.
Frank Chen: Love that. Yeah, so I was just, just before we got on this call, Mark. And first of all, thanks for having me. I was researching affiliate marketing, right? If you go to YouTube, you go anywhere. Usually, the top things people think about are drop shipping, becoming an affiliate of Amazon, you know, the big players, which is littered with competition. But, just to kind of simplify it for you. And we're, we're kind of shifting more into its referral-based marketing, right? Anybody who has bought your products, anybody who knows about your products, and is talking about them within their spheres of influence? That, to me, is affiliate marketing 101. You don't need to create a blog site. No need to create all these articles and do all these crazy amounts of work. It's focusing on the people who already love your product. You could really build your first successful affiliate program out of the gate, with very little work, doing it that way.
Mark Drager: Okay, well, then I'm already touching on the first question I have. And I want to just lay this groundwork. So, on the affiliate side, there's always going to be two sides to things. There's like me, the business owner, who wants to reach out to you or work with you. And are people like you to help me figure out how to sell more of my product through affiliates? Yep. Then on the other side, there's the business opportunity of the affiliates themselves, making money selling third-party people's products. When you're breaking this down for me, which side of this are you speaking about?
Frank Chen: I would like to assume that your audience is mainly on the business side, the entrepreneur owning the products, owning, you know, high-ticket offers, things like that. I know you're not specifically in the REI niche, I know you're not used to being across everything. That's where I live. But what's cool about what we'll talk about today spans across any industry. Okay, perfect.
Mark Drager: So, I'm the business owner. I'm looking for more sales for my products, and for my services, and I'm going to reach out to affiliates and get them to sell my stuff for me.
Frank Chen: Let's get tactical, baby. Here we go. So, in most cases, anytime someone talks about an affiliate or creates an affiliate program, we're only thinking about one specific avatar. I don't care if you're doing fitness or if you're in personal development, it doesn't matter what it is. When you launch a product, in most cases, you're sending out marketing assets that are usually in the form of an affiliate link. And then some type of copy, it could be email copy, it could be a banner. But the number one mistake I see in this, how I position it with anybody and all my clients is, how many people in here have an affiliate program where you have hundreds of people have signed up, but you only have a fraction of the percent doing anything. Everybody raises their hand. And they're like, "Well, Frank, how do we get everybody else to engage? How do we get more people excited about our products?" Start creating assets that fit your avatar, okay, and I'm talking about your buyer avatars, people who have entered your ecosystem. These are not marketers; these are business owners, these are your mom-and-pop shops. These are the people who are in the weeds doing the actual business. That's why they came to you in the first place. They wanted to buy something from you to help them in their business. They're not marketers unless you're selling marketing products. And then you're creating marketers, okay? But start thinking about your assets with them in mind. Okay, they may not all have websites; they may not all have Facebook communities. So if you're creating an email copy, they may not even have an email list. So start thinking about other assets you can start putting in front of them that they'll be happy to use or be more willing to use in their ecosystem, right? So I always think about, you know, Sally Jo, she's a 50-year-old, she's coming late to the game, she's not deep in social media, what can I put in front of her or train her on that gets her affiliate link out to more people. And a lot of times, all we have to do is provide simple training. And that's what I've noticed with a lot of platforms is that we don't provide the training, we say sign up to be an affiliate, here's your link. Good luck.
Mark Drager: So what I hear you saying is, mistake number one is assuming that whoever I have as my partner selling my products as my affiliate, they might know what they're doing. But like that, they understand my products or my services, my target audience or my benefits or my features as well as I do. And I'm going to give them something loose and assume, 'Well, you're the expert, go ahead and sell it.' When, frankly, in many cases, they may have the gateway to an audience or the gateway to an email or community or like an email list or community or something. But frankly, they may not even know how to sell my product or service.
Frank Chen: That's something that's so evident. And when you think about affiliates, if you have no idea of anything about like, how to get started, think about your buyers. What are we doing to deliver to them? How do we over-deliver for them, and make sure they succeed? That same logic needs to be applied when you start an affiliate program. We can't assume that our student buyers know exactly how to dive into this business, they're going to go through your 52-course module and come out of this thing an expert, just like you, right? They need hand-holding, they need that, you know, guidance from step to step. Affiliates are no different than our buyers, right? And a lot of the time...
Mark Drager: Can I ask—and I'm going to keep interrupting—I think people often struggle to get referrals or they struggle to get repeat business, even from past clients. I'm wondering if you've cracked the code on referrals, or you've cracked the code on repeat business. Is affiliate marketing perhaps just the next ring out in this approach? And if you haven't cracked referrals, and if you haven't cracked repeat business, then affiliate marketing might be a challenge.
Frank Chen: Yes. It's like the chicken or the egg. A lot of the times, you will try to skip to the end and think, 'Okay, now that I have a product, I just need to get a whole bunch of people to promote it.' If you're not creating success with your products—that's step one. If you can't create testimonials, successful students, or proof of concept—don't even think about referral business because you're referring people into a black hole, right? So, you have to have proof of concept, a converting offer, a converting product, getting people results, and then really kind of launching their results into more referral business. I always tell people this: In real estate, specifically, when people do a deal using your course, they go on their Facebook, 'Oh, I just cashed my 15k check,' or 'I just did this with Amazon FBA,' whatever the thing is. When they post about their success on social media, what do you typically see in the comment section? People DM them, 'Hey, Steven, where'd you learn how to do that? Where can I go to get more information?' And no one knows your product better than someone who has made money with it. A lot of the time, we ignore those people and focus on people who have no idea how to sell our product. That's where I'm trying to educate a lot of business owners: Ignore the people who don't know your product; focus on the people who do and pour into them to build out your processes, build your programs. Then at that point, all you have to focus on is getting people to use your product, make money with your product, and build out your affiliate army that way. You're going to have a lot fewer headaches, a lot higher quality affiliates, and people who are consistently referring your business because now they're double-dipping. They're making money with your product, and they're making money referring your business. It's a very beautiful relationship. Stop chasing the person who has a huge email list, a huge ecosystem that may have no idea how to market your offer. Right? That's kind of where I want to reposition people's mindsets when they first think about launching an affiliate program.
Mark Drager: Do you think that most people who are aware of affiliates think of it as a scam? Or do they simply think of it as another channel of marketing? For example, I could go to an email, a very popular one—let's say the Morning Brew, or what's the one that HubSpot bought, the Daily Hustle—and you know, I could go to them and I could ask, 'How much would it cost for a paid placement?' And I could pay that money. They would drop my ad and my links, and they would probably have an affiliate on the back end. Yet, if I approached it that way, from a marketing point of view, a sales point of view, I might think, 'Well, that's totally legit.' And on the other side, I might go out to a group of affiliates, or I might go to business partners, or I might do a joint venture with someone, or I might say, 'Frank, you know, like, your clients totally need my services. I'm going to go ahead and give you a link. So that way, every time you refer me business, you're going to get a commission on the back end for that introduction.' That's affiliate marketing. Yet, am I wrong in assuming that most people think of this as kind of a little bit shady? Or is this? Or am I bringing to the conversation here a preconceived notion that's not there?
Frank Chen: I haven't heard too often of it being a scam. I think the only way it can be is if people are selling as an affiliate marketer, right? Like, 'This is not my product, I'm creating the audience and selling your product.' It's a scam if they're selling a product that doesn't do any type of fulfillment, right? It's pretty shiny.
Mark Drager: Real businesses. We're real business owners, we're assessing affiliate marketing, and there's no reason for us to assume that this is a scam in any way. Okay, so then the next thing I've also heard from business owners is that the challenge with affiliate marketing is you end up competing against your affiliates for the leads, and it ends up actually driving up your cost of acquisition because you may be going to the same lead sources as them, competing against your very affiliates for the exact same lead. Is that a real problem?
Frank Chen: I had that happen one time with a client. Yes, they're in the SMS space and they had an affiliate. They noticed they weren't spending money on ads yet, so he just dominated Google ads and was number one there, essentially generating sales off of like two or three-dollar leads, which is pretty crazy. And these are selling like a thousand-dollar offer. So they ended up having to put a stop to that. So in your sense, if you're doing paid advertising, and you have marketers who are taking the advertising route, correct, it's going to drive up your cost, you're competing for the same customers. But the idea here, I also think of a more abundant mindset is they're also getting new clients that you didn't touch, or they've built an ad set that sold your product better than you would. So it's time to be humble a little bit and kind of like explore what are our affiliates doing. Borrow their messaging, and you know, become more competitive in that sense. But at the end of the day, it's good when you have people out there spending their own money driving leads to your business, it's kind of the cost of doing business. And the sexier part of that is when you ascend them, and this is a very important thing, having an ascension model that you don't pay out commissions, in most cases, when you're selling them a high-ticket coaching program or your next high-ticket offer, right? They're just giving you initial buyers, which I can't see as a bad thing.
Mark Drager: Yeah, you're making the point of contact for you. You might be competing, but I like that shift to the more abundant mindset. Okay, so if we look at the different platforms, from an affiliate point of view, if we look at, let's say, someone who has a great email list, versus someone who maybe has an active community online, let's say Facebook, versus someone who might be really, really great at the paid side of things, and then driving to a landing page and converting, I don't know what other options there might be. Those are just off the top of my head. But do you find that today, there are certain areas that we might want to focus on? Or someone in our group talks a lot about the shoutout strategy on Instagram, paying people to give you shoutouts to a landing page. There are all these different strategies or ways. Where should we be looking right now? What's the most effective?
Frank Chen: I love that question, and it comes down to one simple word: engagement. I work with a lot of people who say I have 400,000 people on my list, but the engagement is equal to someone who has a very highly engaged 50k list. So I always tell people, that size doesn't matter. It isn't applied across all things. But in this case, it's true. Facebook communities, email lists, it doesn't matter where it is, if the engagement is there, that's what I would prioritize. Right. And that's why, like when I go into a Facebook community, and I ask, okay, this is where you're selling at, on average, how much engagement do you get per post? And I got to specify, like, if it's a, like driving attention to a virtual event, or to a special promotion, you're running inside the community? What kind of engagement do you get? Because I can't tell you sometimes I've gotten into a community of 20,000 people, and we do a post and it's like four comments, you know, 23 likes, but you have 20,000 people in there. Why would you even consider that? Do you have an email list with 20,000, we're getting a lot more engagement. Let's start with that, even though it's smaller than your 20k community. That's where I would kind of challenge you to ask better questions. Ultimately, each of these are opportunity coming back to our original point is having assets that fit within each of these unique email copies, it is great if your email list, or a Facebook group here, here's some sample posts that you can use, that drives your affiliate link, and then teaching them just to put your affiliate link in the comment section. I know that's like, probably 101 for people, but believe it or not, people still just take their affiliates, drop it in the post, and get very low engagement that way. So start thinking about creating more assets that fit within each of these categories that you just mentioned.
Mark Drager: So, drop the affiliate link in the comments, and then pin that at the top.
Frank Chen: Yeah, so short description, hey, here's how you know, it's the post. And then the important links in that's why you see like anybody doing any type of social media marketing, it's always the important links are in the comments. I mean, it's on purpose for like the algorithms and to make sure it's not seen as spam or things like that within the original post. But, yeah, that would be my answer to that question just where's the most engagement happening? Okay.
Mark Drager: And so if I'm considering, if I'm considering jumping into this, it sounds like I have to have an offer that I know will sell or a service that I know will sell, I have to understand my target audience, I have to develop the assets. So the emails or the social posts or the ads, I have to have a landing page that can convert I have to have an affiliate link, which means I need, I guess, some kind of back-end system to be able to give my affiliate code so they can actually track commissions back to them. Is there a certain point in my business my marketing plan or my marketing mix, where now is the right time, like, what do I have to have done to make sure that it's right for affiliate marketing and not too early?
Frank Chen: I love that. Yeah. So the easiest metric is five to ten successful buyers. That's it because you can leverage that so early. If you could have just five buyers right, I just totally launched my entire affiliate consulting business back in the day, 14 years ago, when we did an affiliate promotion, and we both made money. I asked a simple question, hey, you know, do you know the referral in the traditional world? Is there anybody that you know, within your networks? Based on what you saw from this one or two people that I could, you could introduce me to, right? Same thing with your five buyers, they've made a check using your stuff. Hey, would you like to make an extra 20% referring us people? Most people don't say no to money. Pretty standard, right? Like, would you like to make more money with us while you continue to make money doing the business? Yeah. And within their spheres, you know, what I've noticed about entrepreneurs, as they begin to grow, your buyers begin to grow, they start joining bigger networks, because they're trying to level up, they're joining masterminds, they're networking within their, you know, spheres of influence, these are all opportunities for you, right, if your five people just refer one person each, that's five new buyers. And then you take those ten buyers and take one person each and now you have ten referrals. And what you'll end up noticing is you're going to build an affiliate machine that will help you streamline affiliate revenue month after month, anytime you go outwardly to these larger lists these larger communities, that's icing on the cake. But what I've noticed with a lot of businesses is that you're ignoring this money that's just sitting on the table right in front of you, these people love you, and they love your products, it's the easiest pivot into creating a program that's designed for them that you can push out within two to four weeks, it's pretty quick. There's primitive software, I always say use the Excel spreadsheet, if you do not have a lot of referral business, you don't have complicated accounting, meaning you have 42 payment plans, then you can use a simple spreadsheet, just stay on top of your payments. That's very important. We're working with affiliates who never pay people late, don't take their profits and drive it into another promotion, and then be like, hey, I'll pay you and you know, Ponzi it out, don't do any of that crap. That's where the scam stuff comes in. Pay your affiliates on time. These are going to be what creates longevity in your business. And what's really cool about affiliate dollars is that, like, what I like to do is put it right back into the business on the paid advertising side. Right. So it helps fund your advertising and helps drive extra revenue off the efforts of other people. That's really powerful.
Mark Drager: Now, I heard you throw out 20%. Commission, I have to imagine that it depends on the price point the complexity of the sale sell or sale sale or the or the cost of acquisition. Yeah, words. What are typical high-low commissions? And I often find that the reason why a lot of people miss out on business is because we're cheap. And that's great. I mean, being cheap is great. It's a great way to be able to be able to control expenses and get the most out of things. But sometimes you missed opportunities over a few percentage points, or frankly, a few $100 that in the grand scheme of things don't matter. So what are the appropriate ways for us to be looking at commission so it's not too low, but it's also we're not getting kind of robbed here?
Frank Chen: Sure yeah. And just so you know, guys, it's not cheap. You're being frugal. Alright, you're being frugal. Let's go back to that one word. Do we have sensitive egos? Are these I'm not cheap. You know, I'm just a good business owner. No, that's true. I think frugality is very, very important. So let's let me give you a breakdown and I think this applies across all industries, you know your margins better than anybody, you know, overhead then have you have sales commissions if you have a salesperson that touches the buyer, so on most like courses education, let's call it sub $2,000 offers in most cases we do 50% Commission's right because ideally, the fulfillment is all digital, pretty simple to push out. Not a lot of male resources are needed to do fulfillment. So 50% is a good starting point. Typically, I'd go above or below 10%, meaning if you want to keep 60% and pay-out 40 You can, but taking 40 and paying 60 can open more doors for you.
Mark Drager: Okay so this would apply to info products or SAS products, or anything with a fixed cost of delivery or ideally where you're going to be able to really scale out these things.
Frank Chen: So for SAS, it's a bit different, right margins are a bit smaller because there's a lot more fulfillment needed there, I would say SAS is typically around 15 to 30% of the monthly, right, that helps you kind of stay afloat as you begin to scale up.
Mark Drager: The amount of monthly recurring revenue forever?
Frank Chen: So that's another thing we're talking about lifetime cookie versus six months, three months. My analogy behind that is if you were an affiliate of mine, and you only promoted me once and you sent me buyers and I ended up closing 689 months from now and I sent you a commission check after 30 days and then I sent you a commission check nine months later. Would you be mad at me if I sent you a check nine months later?
Mark Drager: No, but it would depend for me as the business owner would depend on on churn and quality like I would want to actually measure You're out the the lifetime value of this class of client.
Frank Chen: So what we're also what's also happening during this time of life, what I've noticed that a lot of SaaS products is there's a lot of monetization that happens within the software, these are not necessarily split with your affiliate. So lifetime value, based on say me paying 30% for 12 months, but if this buyer in here is constantly buying stuff within my software, I'm more than happy to pay out that 30% on the $97 a month forever, because that keeps them sending me buyers of that quality forever. And that's the dealership I want to maintain on the front end.
Mark Drager: I don't want to stop on the other side, you find that people are turning over after four months, or after our 60-day trial, or something like that. You would just you would just cut that affiliate.
Frank Chen: It's no skin off my back. Because I only pay you on retention, right? So if your person turns out in four months, I won't pay you anymore, right? I only pay you for the cash collected from your leads. So say you stopped promoting four months later and your people start churning out slowly guess what is that happening? Hey, Frank, why is my commission check in-store? Man, you stopped promoting? Your people are turning out right. And it's very important because it's we're going to finger pointing games like Well, no, my leads are great. Maybe it's your software that sucks. That's why they're churning out maybe it's your onboarding and your fulfillment, your support. Like there's a lot of variety. There's a lot of information there. But the idea here is it allows you to reengage in that conversation. So when their Commission goes down, they reach back out to you and ask why. If you send them a check six or eight months later, they're going to be like, Oh, I didn't know they were still paying me out on my leads, I should run this promotion again, Hey, I just got a check from you. I have an opening next week, I love to promote your offer. Again, the idea here was that affiliates are just constantly being front of mind. That's how you maintain these relationships too often do we just again at the beginning, so that'll link, and then just everybody tells me this out of 100 affiliates, I have five people that are constantly refer us business, and it's on their own accord. It's not that we're teaching them or encouraging them or reaching back out. It's a great product that fits into their ecosystem. And then we just kind of keep praying and hoping they keep doing it. And then one day when they stop, because we're not pouring into that relationship. We're like, Oh, crap, that thing that's been driving five figures a month and revenue to my company is now just drying up. That's the most common outcome when I see people launched, or when they neglect their affiliates.
Mark Drager: So my kind of takeaway from this conversation is if you're in the type of business, where you have figured out and cracked the code on referrals, on repeat business, on joint ventures, on partnerships, on networking opportunities on doing commission splits with people, if you are in that type of industry, that type of business, this seems like the most natural thing for you to move into. Sure. If you are not, it still is something that you can jump into you can test and you can try with relatively low risk other than the cost of producing some assets because you only pay commissions when people send you clients.
Frank Chen: Correct? I like it. Correct? Yeah. And to your approach from before there are affiliate relationships and white-labeled relationships, we don't dive into the details of that. Basically, you can bring on affiliates that essentially drive continued traffic into your ecosystem by whether it's paid advertising, whether that's baking you into their sales process, and pay for that attention, right? Some people that I know will do, like we all paid, paid email drops, I'll pay 5k 10k, I want 15 2000 clicks a month, and then you don't pay any Commissions on the sales that are generated. And that's all you do. That's becoming an advertising cost for you. So, the only time that would cost you something is if you wanted to go that route. But that's how you get your foot in the door with people who aren't willing to promote your offer without any type of proof, right? It's how you prove your offer. By paying for it. Otherwise, the freeway is just having, you know, successful students, successful clients customers, and using that as a launching pad to generate referral business. That's what most people care about. But we're working with you as does your product work. And what will my community do? I know it blows your mind, right? It's like they ask that one question is, well, if I do put this in front, right will like what are they going to get out of it? Right? I don't care about just the dollar. I want people to be successful with what we're selling. Yeah.
Mark Drager: All right. Frank Chen from the affiliate incubator. Final question for you. I end every podcast by asking this question. I think it's always the most revealing. What is your number one tip or strategy to help us sell more?
Frank Chen: I would say don't get stuck in perfecting and creating. A lot of the time if you feel there's value provided You're an expert in your field, put it out there, sell it first, then build it. Because a lot of the time most of us care about our reputation, or at least I hope most of you guys do. Therefore, you're given an opportunity to over-deliver on that promise. At that point, you'll be able to build your product with the effort of your buyers, too often, people Failure to Launch because they're just so stuck in the minutiae of creating. And then what ends up happening is, it looks great, it's beautiful, and, you know, price perfectly, and then no one buys it. And you're stuck there with all this resource poured into a product and you're like, Well, what do I do now? And that's where the headache begins. So sell the idea and get people excited about and if people buy then you have the resources to make it freakin awesome. So don't wait. Put it out there, put your expertise out there, over-deliver, Channel your inner Alex or Mozi, and then just really, really pour into your affiliates and your buyers. I think you're going to get a lot of cool, really good outcomes from when you focus on those two things.