|BUSINESSWEEK ONLINE : JUNE 28, 1999 ISSUE|
|FRONTIER -- DIGITAL MANAGER
A Point-and-Click Sales Force
Want to extend your online reach? Enlist other sites to help you sell
Walter W. Fredrick Associates Inc., a Peabody (Mass.) architectural-equipment and computer supplier, used to depend on its little three-person sales team to hustle for new accounts along Boston's high-tech corridor, Route 128. Earlier this year, the company added the Web to its marketing strategy, investing $70,000 to sell its high-tech inkjet printers and other supplies online. But sales were disappointing.
Then, Treasurer Andy Fredrick borrowed a page from the experience of E-commerce giants like Amazon.com and mustered a virtual sales army, some 120 strong. How? By setting up a Web-affiliate program.
In practice, it means persuading other Web sites to display a link to Fredrick's home page. Every time a customer links to inkjetexpress.com from one of its affiliated Web sites and makes a purchase, that site owner gets a 5% commission, just like an in-the-flesh salesperson would. The result? In less than a month, Web affiliates helped bump Fredrick's site traffic from five visitors per day to an average of 182. Today, affiliates drive more than half of the site's traffic, which brings in $2,800 monthly. That amount is growing 25% every four weeks, but it is still far from the $3 million Fredrick grossed offline last year. ''I'm happy to pay them,'' says Fredrick. ''They're my sales force.''
Most small businesses don't realize that they can set up their own Web affiliate programs a la Amazon to boost their Internet sales. The good news is that it's getting easier to do. More than 30 companies now offer an array of affiliate-management systems and do-it-yourself software. (You can learn more about such offerings at sites such as www.adbility.com.)
As many as 2,000 affiliate programs float around cyberspace, says Declan Dunn, author of The Complete Insider's Guide to Associate & Affiliate Programs. That number should explode to 5,000 in the next 12 months. Still, according to Internet analysts Jupiter Communications, these programs generate an average of only 17% of site revenues--a reminder that affiliates aren't the only way to draw visitors. In fact, affiliate programs aren't for everybody. Depending on your goals, you may find promotional dollars are better spent on traditional advertising, E-mail newsletters, or strategic alliances.
Technology-wise, nearly all affiliate programs operate on the same premise: Affiliates place your graphics and code somewhere on their Web site. When visitors click that link and buy a product (or, in some cases, complete a questionnaire), the affiliate gets a percentage of the sale, or, in the case of the questionnaire, a flat fee. Some software programs track repeat customers and pay your affiliates accordingly.
Do-it-yourselfers can either buy the software or hire a local or Web-based programmer for as little as $500 to $2,500 to design a basic in-house affiliate system tailored to your existing software and data-reporting preferences. The downside: You're still responsible for recruiting your own affiliates and keeping track of payments.
Don't have that kind of time? Try a service bureau, which will manage your affiliate network--for a slice of the action. The bureaus' technology allows your affiliates to check their sales data independently. Those tools also allow merchants to log on to the Web site to sign up or drop affiliates, tinker with commission rates, and customize product offers. Bureau also maintains databases of thousands of affiliates from which to assemble your own network. You won't have to install or maintain any software, since it's all stored on the bureau's servers. But some companies may not want to entrust sensitive data to a third party.
Management services differ widely in their fee structures (table). The more expensive bureaus, such as Be Free and LinkShare, offer sophisticated tracking and merchandising that allow you to follow your sales activity by geographic regions or create campaigns around individual products.
But technology is the least of your worries. The hardest part is recruiting affiliates, keeping them happy, and turning them into productive sellers. To find your own affiliates, you can advertise your program on free sites such as refer-it.com. Such ads helped more than 750 sites find Richard Ackerberg's antiquegumball.com, which sells refurbished vending machines out of Marina Del Rey, Calif. Ackerberg, as do most affiliate program operators, screens out sites with objectionable content.
What attracts affiliates best? Not surprisingly, high commissions. In general, expect to fork over 10% to 25% bounties for low-cost items, with percentages decreasing as products grow pricier. Those eager to build a brand name can take a still more aggressive approach, as did Nashville's BellWether Group, a $3 million meeting and travel-planning firm. On top of a $5 bounty it pays for each qualified business lead over the Web, BellWether gives affiliates a 15% cut of its booking fees when a new client signs on. Some 700 affiliates have hauled in $70,000 in new bookings since Jan. 1, reports Chief Executive Michael D. Reader. Reader used to pay affiliates himself, but he now uses the services of Commission Junction. He has learned that just 20% of his affiliates refer 80% of his traffic.
For successful affiliate relationships, choose sites with a clear connection to your product or service. Reader, for instance, recruited some hotel reservation sites, while Marian Dieter, co-owner of Cleveland-based PrincetonWatches.com, hooked up with scuba-diving sites to sell her diving watches. Found a site that you think would make a good affiliate? Contact the Web site owner personally.
Prompt payments and a healthy relationship with your affiliates are a must. Keep them up-to-date with frequent E-mail newsletters, advises Dunn. Make personal telephone calls and offer higher commissions to your best producers.
The Web may change everything, but the basic rules of business still apply.
BY DENNIS BERMAN
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
BACK TO TOP
A Point-and-Click Sales Force
TABLE: Muster a Virtual Sales Force
E-Mail to Business Week Online