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Using Affiliate Marketing to Grow Your Business

As an entrepreneur or a marketer, the risk for you to use affiliate marketing is extremely low and the reward is high. You only need to pay affiliates when a customer converts, not when they drive people to your website.

In the webinar, KISSmetrics Founder Neil Patel and Dan McGaw discuss how to increase your revenue with affiliate marketing. Besides KISSmetrics, Neil also co-founded Crazy Egg and has spoken at over 100 marketing conferences. He has tons of experience with affiliate marketing, both from being an affiliate and driving the revenue of other companies, as well as through an affiliate program trying to recruit affiliates.

Among all of the companies Neil has created, he has had to deal with affiliates, whether that was running affiliate programs or driving affiliate traffic or potential revenue to other companies. For example, at KISSmetrics, Optimizely is often recommended.

Foundation of Affiliate Marketing
Affiliate marketing can be thought of as outsourced marketing, in which you’re hiring affiliates who are paid to bring you customers. If they drive visitors to your website, you don’t have to pay them. You only pay them if they convert visitors into customers. While you are trying to generate traffic as a marketer, the main goal is to increase the number of customers. If you generate a million visitors a month, but the visitors don’t equate to more leads or revenue, it’s almost useless. This is why the affiliate marketing space is so popular, especially in the web hosting industry, where most of their business is from affiliates.

affiliate markets your company

How affiliate marketing works:

  1. Affiliate is assigned a tracking URL:
    This is to track which affiliates are driving your traffic.
  2. Affiliate markets your company:
    Affiliates can promote your company through several different ways: paid traffic (like AdWords), a YouTube video of the product and link to it with the affiliate ID, email blast, blog post, reviewing products, etc. The possibilities are endless. When you sign up affiliates, you should also limit how they can promote it.
  3. Customers or leads are acquired:
    This is when the visitor purchases the product or signs up.
  4. Affiliate receives a commission:
    When the affiliate drives you a customer or lead, you pay them out.

Something to know is that affiliate marketing and referral programs are different. Referral programs are great for people who are already customers. For example, if KISSmetrics had a referral program, and a current customer tells his or her friend about KISSmetrics, the customer can receive some sort of reward through the referral program. With affiliates, they don’t even need to be customers. Anyone can be an affiliate. You can recruit them in any fashion:, LinkShare, blog posts, etc.

Advantages of Affiliate Marketing
There are a number of advantages to use affiliate marketing, especially for startups:

  • Pay only for results.
  • Can be more cost effective:
    Neil says he hasn’t seen any other marketing form more effective than this.
  • Affiliates may be better at creating copy and reaching segments:
    Why would someone sign up to be an affiliate and spend time and money if they think they won’t be able to drive you customers?
  • You know your cost per acquisition:
    This will help you determine if you’re actually losing or making money.
  • You almost never lose money:
    Sometimes affiliates are a bit shady and unethical, and you’d want to drive them out as soon as possible.

Drawbacks of Affiliate Marketing
There are also drawbacks:

  • You don’t control the message:
    You want to be careful of this, because you don’t want them to lie or poorly represent your brand. They’re just looking to make money, so they aren’t seeing if they are driving good or bad leads.
  • Lead quality may not be as good:
    Chances are, the quality of the people are going to be as good as the ones going directly to your website.
  • If mismanaged your traffic may come from an unreputable source. This could make your brand look bad.

To learn tips on how to turn advocates into markets, affiliate marketing for SaaS companies and how to effectively measure your performance, watch the webinar:

  1. Nice information about growing affiliate marketing for marketers. I am also internet marketer & blogger. I am learning & sharing my information’s with internet users.

    Your website helping me too much for getting for thoughts for writing articles.

  2. I think affiliate marketing is a great way for internet marketers to make money online. The more you make sales, the more you will get pay for.

  3. Leslie Denning Jul 31, 2014 at 8:34 am

    I love the information in this post. I’m just adding affiliate marketing to my business model, and this will be very helpful to me along the way. Thanks.

    All the best,

  4. Rohan Bhardwaj Aug 03, 2014 at 12:58 pm


    Affiliate marketing is the best thing to drive enormous sales and one can enjoy the results with minimum cost. The main thing to consider is to pay only for conversions and not for leads, this way one can eliminate the possibility of getting poor leads.

    There will be shady affiliates always, but one needs to identify them and move on. The best thing about affiliate sales is that we know the cost and the results. It goes side by side.

    P.S. I found this post on Kingged.

  5. Leslie Denning Aug 11, 2014 at 7:36 am

    This is a very good overview of affiliate marketing. Also very much enjoyed your SEO series of emails. I am learning more about both areas and appreciate this information.

    All the best,

  6. Vineet Saxena Aug 31, 2014 at 11:19 pm


    Affiliate marketing is more like creating a win-win situation for the vendor or the seller and the affiliate. What’s crucial here is to understand that affiliate marketing’ basic motive is to generate profits for the shareholders.

    The buyer should get the desired product. The affiliate should make profits by earning commissions on the products sold and the ROI should be good. Further, the seller or the vendor should make profits after processing the commissions, costs involved and other overheads. The seller should also gain leads so as to retain customers.

    Now if even one of these remains unsatisfied, we say that the entire campaign has failed. This is so because a dissatisfied buyer would issue a refund and would never buy from that particular affiliate and seller. An unhappy affiliate would refrain from promoting a seller’s products. And a seller going in loss would stop selling ultimately.

    Thanks for sharing these tips. It will help us improve the marketing strategy.
    Vineet Saxena

  7. Hi,
    Rightly information about affiliate marketing, there some pro and cons on everything, if you find targeted customers to your blog then getting succeed in affiliate marketing is a cake walk. thanks for sharing the information on affiliate marketing.

  8. Hey Neil Patel
    Thanks for posting this article.

  9. Vashishtha Kapoor Jul 04, 2015 at 12:39 am

    Wow Neil!
    I am very happy to read yet another booming article from you.
    After SEO copyrighting, i am learning affiliate marketing on kissmetricks.
    Thanks a lot for this info.
    Love you brother.. Have a nice day

  10. Thanks a lot that you writing about affiliate marting and how to grow your own business. I will definitely use your methods in the future.

    And i will definitely use some of your advantages in the future in my own business.

    Best regards

  11. I like to concept of affiliate marketing, but am unsure how it would work for us. We are a software company, and our sales cycles can easily exceed a year from the first contact we have with a prospect. What kinds of organizations would make good affiliates, and how to we posture the message so that year-long sales cycles look remotely attractive to potential affiliates?

  12. Morten Hemmer Sep 07, 2016 at 7:25 am

    This is a great article. Affiliate Marketing is wonderful because you don’t have problems with: shipping, customers and money. You simply just need your Affiliate link and then start to promote it.

    There are of course LOTS of ways out there on the net to earn money with Affiliate Marketing, but all the big money are in creating Ads that generate a great ROI

  13. Anyone got any suggestions on the best service to use for SaaS businesses? Using braintree for payments and have found grow sumo but want to know if there are any others.

  14. Cool article. But “you almost never loose money” is only valid if you’re doing back to back business model – you pay a % of what you make. However, if you pay for leads and you’re supposed to convert those leads into paying customers, you have to gear up with the right tools and a well built marketing funnel / email sequence system and reporting tool, that can give you near realtime analytics about your activity.

    @jack there are plenty of services for SaaS businesses, bu i reckon you need to be a bit more precise on what you need done to get some relevant feedback.


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