On the surface, referral marketing is pretty simple. You simply have your customers or others– known as affiliates– promote your products and when they make a sale, they get a commission. It’s a great way to add some extra cash in your pocket without extra effort.
Of course, there’s more to it… there are always is. That’s why Arlen Robinson is here to get into all the details about what’s working today in this niche, which can be very profitable for those selling online.
As a co-founder and sales manager of Omnistar Affiliate Software, which provides tools that facilitate referral marketing for all the big eCommerce platforms, Arlen has seen it up close and personal since its earliest days.
He talks about how you can attract the best affiliates to your program, including loyal customers and influencers, and the tools you can use to facilitate the process
Tune to find out…
- The best way to build buzz about your affiliate program when it first starts
- How a service-based business can get in on the action – and the commission structure to use
- The biggest mistakes people make when setting up referral programs
- Why quality of audience trumps quantity when bringing on new affiliates
- And more
Mentioned in this episode:
Adam Lean: Welcome to P is for Profit, a podcast that breaks down business concepts into simple and clear language. This season is dedicated to interviewing eCommerce experts that can help you improve your eCommerce business. I recently had the pleasure of interviewing the co-founder of software that helps you create and manage referral marketing campaigns.
So why does this matter? Well, referral marketing is one of the best types of marketing out there that has one of the best returns on investment. So let’s think about it. A friend tells their friend about a product or service and automatically that product or service is given way more weight than if the person saw an ad for it online. Why? Because people trust their friends. If you’re trying to decide between watching movie A or movie B, and you called your friend and they said definitely see movie A because it was better than movie B, you would probably go see a movie A.
Why? Because you trust your friend. Referral marketing is great because you’re leveraging the trust that people have with people in their world. That’s why celebrity endorsements work so well.
If Alex Trebek is endorsing an insurance company, I would assign the trust I have in Alex, to the insurance company, even if I’ve never heard of this insurance company before. I trust Alex Trebek. This is way more powerful than the insurance company simply buying a bunch of billboards or, or buying some Facebook ads. So let’s jump into the interview with Arlen and see how they help businesses create referral marketing campaigns. Arlen, welcome to the show.
Arlen Robinson: Thanks a lot Adam, a pleasure to be here.
Adam: Yeah, so you help eCommerce stores and other businesses who wants to market online and in-market through referral marketing, you help those people increase sales through your software, Omni Star, so I’m excited to dive in because referral marketing is is a very important piece of your marketing, or should be a move most businesses marketing. So how did you get started in this?
Arlen: Yeah, good. Good question. And you’re right about it. referral marketing these days is huge. And there’s so many eCommerce but taking advantage of it, those that aren’t we help those that are trying to get into it, referral and affiliate marketing. But you know, as far as how I got started is I’ll give you kind of the medium, to the long version, because it’s a long history. And I say that because we were founded on this that was founded in the year 2000. And we started off really like a full service, web development company, providing web development services, developing a website, custom web-based applications. And, you know, kind of the whole nine full-service web development in 2000. That’s where we started. And we did that for, you know, for several years.
But one of the things that we saw a few years into it was that our clients were consistently asking for certain websites features, such as you know, online shopping cart, mailing list system, a live chat, help this, all of these unique tools that they could use on their website. So what we decided to do is really just kind of take a step back a little because this was probably about four or five years into the business, we’ve been doing the full-service web development for, for quite a long time working with a variety of companies, a lot of startups, a lot of internet startups at the time.
And one of the things that we saw is that, as you may be aware of, you know, full lifecycle development, it is a time-insensitive process, and is it can be costly, an intensive on your internal resources, because you’re doing a lot of back and forth with clients, you’re you’re involved, involving your internal development teams, your back end developers graphic designer, so there’s a lot of kind of hands in the air pieces in the puzzle that make all of this work and make it fit together. But we were working with a lot of startup companies.
And what we found was a lot of these startup companies were, you know, wanted one of the moons and beyond in but they just didn’t want to pay for it, unfortunately. And so we get to the point where it just wasn’t profitable for us to just continue going down that road, doing the full lifecycle development. And so let me just go ahead and take a step back. And then based on the needs that we saw, create our own suite of solutions that we had our own shopping cart mailing list solution, live chat. And we also developed an affiliate software solution, which is, which, of course, are our main solutions today. So after several years of doing that, we saw that it would be best to really focus on hone in on one of the solutions. And we did see that our software was the one that really took off that year over year, it was continually growing and profits and revenue. And we decided it’s just time to go ahead and closet the other solutions and go full force with the Amazon affiliate software. And that’s, that’s really what we did. And it is a hosted Software as a Service solution. And that’s really where we are today. And that’s how we got there. That’s the kind of the quick and dirty I am the co-founder, my fellow co-founder Terry Jeter started things off. And we’re, we’re still in 19 years later.
Adam: So can you explain exactly what is affiliate marketing and referral-based marketing, especially for, say a service-based business, like Heating and Air roofing company that is not on the internet, may not be up to speed in the online marketing lingo.
Arlen: There is not a problem and there is a difference. And I’m glad you mentioned that there’s a difference between affiliate marketing. And the main difference is, affiliate marketing is where you would get an outside affiliate, this is somebody that has never used your product or services, you get them to refer business to you, from their outside from their own networks, or people that they have access to people. And these are typically people that they don’t know, and you get to refer business to you for an incentive you paying them a commission typically for this. Now, referral marketing is where you actually get your customers, your own customers, these are people that have used your products or services to refer typically other people that they know, you know, in some form or fashion people that they know, to your business in exchange for commission. And that’s really the main thing difference. And so the differences, like I said, is really just your in house customers referring people they know, versus outside affiliates, referring people that they typically don’t know or condition. And that’s kind of the easiest way to explain it.
Adam: So with an eCommerce business, and it sort of makes sense that if you either have a referral program or an affiliate program, you pay a commission based on the sale. But what if it’s a service-based business? Can you pay a commission based on a lead? Or a strong referral?
Arlen: You can definitely do that, and that’s a good question. because like you said, These days, word of mouth marketing is huge, and especially a month service-based businesses, they really thrive on referral. So what you can typically do and what these companies typically do is they’ll offer a referral program, and that could be even done with our software, because we do have a component where service-based businesses can use it, when in our case, what we do with we create a specific lead form for them to capture referred leads, and they give their customers, you know, access to sign up as a as an affiliate or referral partner, and they would refer their friends.
So for instance, if I am a customer of, let’s say, ABC roofing, and I’ve had a great experience, the roof was great. And I want to refer my neighbor down the block, I sign up for the program, and then I just give them a link. And the link would be to a lead page or a lead form, where my neighbor fills out the form saying that I’m interested in getting a quote. And now on the back end, that roofing company can decide how was how they want to handle it. Typically when a lead comes through. Most businesses don’t use the pages for an actual lead. But you know, you can do that.
Typically a company will pay for a converted lead. So that neighbor actually does get a roofing job, then they’ll pay. You know, in this case, I might in that example then they would pay me the commission because I referred my neighbor that. But it is possible to pay per lead I there are certain niches especially I think even in the financial industry, let’s say the mortgage industry I see paying for me done and certain other industries where the transactions are a higher volume. So if it actually does convert, there’s a higher chance that they’re you know, they’re going to get a really, you’re, you know, they’re getting a larger payment on that. And in those cases, I do see pay per lead. But typically, it’s a pay per performance or pay per conversion converted. Refer.
Adam: Yeah, that makes sense. So when, when a company wants to start an affiliate or referral program, what are the common mistakes that you see them making that hurts their efforts?
What Hurts Referral Efforts
Arlen: Well that’s a really great question. And what I see a lot of time, when a business will start an affiliate a referral program is they’ll set up a referral program, then they will get automatically and instantly just think that they’re going to get affiliates and influencers to just sign right up right away. And they’re going to just start making a huge amount of additional revenue based on this program. But you know, unfortunately, that’s not the case.
You know, just like anything, the program has to be promoted, nobody’s going to know about it unless you actively promote it. And it can be done in several ways. One of the ways is, of course, to reach out and engage your current customers. So what I always recommend a business to do when they start an affiliate, a referral program, is to let all the customers know by sending out an email, you know, newsletter or a mailing to all of their customers letting them know, it just launched the referral program, you can make X amount of commissions or this type of bonus, if you sign right up and give them all the details. So let everybody know. And then also let all new customers know about this referral program. And that can be done in a number of different ways. One way is to post-purchase, let all of the new customers know that you’ve got a referral program. So maybe sometimes a little blurb or graphic on the order confirmation page, just letting them know, you know, they can maybe get a maybe it’s a discount on a future purchase, or cast commission, whatever it is, if they refer others and let them know, then and then also letting new folks know and this is very important that a lot of people realize that, you know, when somebody orders that they a product could us consumer-based product or physical product.
There’s of course, those emails that go out the order notification email, the shipping notification emails, those are emails that have some of the highest open rates over any email out there. And that’s primarily because when somebody orders something, you know, they’re always going to make sure you know, they got the right product, they want to make sure that the timeframe specified on the shipping notification is correct, you know, they’re opening those, they’re checking those. But what you can do on these order or transaction transactional-based email is add a little blurb, just something small, because you don’t want to dissuade from the purchase of those emails in that same form. That’s a transactional-based email. But just add a link a small blurb thing, you don’t earn a 20% commission on any referred sale, sign up for a referral program today or something like that. And you can add just that little link on the bottom of all your transaction emails, and that’s a great way to do it. And so that’s what I always recommend for businesses that are launching a referral program now for promoting a an affiliate program, the main thing, of course, is to try to get affiliate.
Now, of course, every business let’s say you’re selling a consumer product, maybe it’s a fashion good or something like that, you know, every business would want to know when if the Kardashians to promote the brand, you know, an influencer like that, but fortunately, that’s going to happen, because, you know, unless you’ve got several hundred thousands of dollars, and that’s kind of what I heard the going rate is it for them? Did you just do one Instagram post, you know, you’re coming out of pocket with, you know, maybe two to $300,000. Just Yeah, that really is unless you get that kind of change their business, then, you know, you’re not going to go that route. But that doesn’t mean that you can’t get some in some type of influencer to promote your business.
Now an influencer basically is just someone that has a particular audience, with a following of people that follow what they’re doing, whether it’s social media, whether it’s you know, YouTube, Facebook, or any of those types of networks. And these days, we’re, we’re really in love because we’re at a point where you can find people from all types. So people that have maybe just, you know, two to 3000 followers, maybe they’re, let’s say, a personal trainer, and you’re trying to go after a particular personal trainer, and they only have 2000 followers, that could be, you know, a good enough influencer for you in order for you to get your product in front of their audience. And if you go to sites these days, there are many influencer network sites out there like influence calm is one of them. But there are several others where you can actually go on there, create an account, and kind of get matched up, look through their database of influencers, and form a relationship, let them know about your referral or your affiliate program rather, and, and try to find them that way. And so the main thing is, you know, once you get the affiliate or referral program, launch, you just can’t expect it to promote it. So you do have to go out there and do the promotion.
Adam: Yeah, and even if an influencer or somebody that has an audience of only says two to 3000, I mean, wouldn’t you say that quality, their audience trumps quantity? In many cases?
Arlen: It does. And I’m glad you mentioned that. And that’s what the statistics really show. Because those people that maybe have only just a few thousand followers on social media, they typically have a higher engagement with their followers, because, you know, those are people that they may have, they have the ability to dialogue with them back and forth, their engagement is higher, they may know a lot of their actual influencers on a personal basis, maybe they’ve met them at networking events, they’ve met them, you know, in just life in general. So they’re people that they have a stronger bond with. And those are people that are really going to take to whatever it is that they’re promoting. So yeah, you’re totally right, there is a higher level of engagement with even though smaller influencers.
Adam: Couple of questions on influencers and just finding affiliates in general, what are the best incentives to offer them? Is there a common commonality? Are you going to depend on the industry or?
Finding Affiliates & Using Influencers
Arlen: It really does depend on the industry, in the end, the particular niche that you’re in? One of the things that I think it is overall standard, of course, is kind of like a cash commission. And you probably want Okay, what type of cast commission Do you go with, typically, with influencers, that any type of influence, you’re probably going to higher commission, as opposed to just your customer referral program. So for instance, let’s say with your standard customer program, you’re offering a attend maybe 15%, Commission on any referred sale for an influencer, you’re probably going to have to go up to at least 20 to 30%, just because they have a built-in. And, you know, they’re, they’re going to give you almost really instant access to it. So if you go the route of cash, got to be a higher commission, like I said, 20, at least starting at 20 to 30%, then, depending on their performance, you can all they’ll probably also be in a position where they may want to renegotiate, especially if they start, you know, sending you more sales over time. Now, there are certain niches where a gift item or discounts or actually free product, maybe customary, so maybe you’ve got influencers in the fashion space. Maybe the influencer is a fashion model. A commission, in that case, maybe actual free product, products that they can where they can go out in events and things like that. So that’s something that could be appropriate in that case. Really it does vary.
Adam: Yeah, I actually have a client that does something very similar. They, they have a program where they give influencers product for free, essentially, anytime they asked for it, and in exchange for promoting it on there, on Instagram, social channels, things like that. Right, right. Especially when you have influencers that are maybe like teenage age, that are not professionals, but they love the fact that they can get free stuff from a major brand, just by promoting it. So definitely, what separates, you know, businesses that you’ve worked with that use your software that are trying to do an affiliate or referral program? What separates if anything, what separates those businesses that are doing great, using an affiliate and referral marketing strategy versus those that always seem to struggle? What’s the difference?
Arlen: Yeah, that’s a really good question, then, what I’ll do is I’ll kind of give you in what I see, in general, as far as eCommerce businesses in general, because I’ve dealt with so many businesses over the years. And one of the things that I typically see it with eCommerce success in general, regardless of whether they’re using an affiliate or referral program, which as I said, it’s something that I say these days, is something that really every eCommerce business definitely needs to do in some form or fashion.
But what I typically see across eCommerce, and what can kind of what I see across the board, as far as the success that eCommerce businesses have is the ones that are successful, I have what I call the three T’s in order. And what I say three T’s it is they utilize a solid team, they use the best technology that they can, and they implement the top training not only for their internal staff but they seek out top training to help empower their own business. So those are the three T’s that I actually see. And this is clearly evident with most successful eCommerce businesses and you know, for an example, you want to look at it just let’s say Amazon.com, you know, with them, look at their team, of course, as we see how successful they’ve been, really all the members of their team, really when together like a well oiled machine all the way down from the top executives, their founder, all the way down to the lower levels, their customer support staff, the people that you interact with, when your product doesn’t show up on time, people that you call the people that you interact with on their live chat, if you have an order problem, all the way down to the actual delivery person that delivers your packets the next day, you know, all of those things are in sync. So they have a really well oiled solid team.
And first technology is concerned, we all know that they’ve clearly invested billions and billions of dollars, to make sure that their whole site and their internal technology, technological infrastructure is, is top-notch, because it has to be in order to be able to, you know, offer next day shipping on so many products, you know, throughout the country, and they’re different. Well, you know, you really have to have the technology. So they’ve done that. And then when it comes down to training, they clearly have it set. So these are standard operating procedures in place for all aspects of all the way not only from the delivery professional delivery packages to the support to the higher-level executives that are making certain decisions. So they have clear procedures in place. And so that’s the but as far as their businesses that that struggle, it’s really clearly evident that they don’t have a grasp of it. And that’s why these three T’s the the the team, the technology, and the training is I think a parent across it, you know, so many different businesses, those businesses that don’t have these in place, it’s really clear to see as far as their team is in place, because you’ve probably been there before where you’re working with an eCommerce business, or you’ve ordered something, or you’re just trying to get some questions answered, and you can’t reach anyone, you don’t see a web site phone number, you know, the fella dress isn’t all set. So you know, there’s obviously a problem, they don’t have the right team in place to be able to manage that, you know, and then they’re the ones that technology is not the best.
Maybe it had a cumbersome experience, trying to check out, we’re even trying to locate what you’re trying to find. And then all the way down to just your overall support. If you do reach someone you could be reaching and communicating with somebody that just really totally isn’t up to speed on on your products and unable to provide the right services. So those are the things that I see that I think really make the difference it is those three to the team Technology and Training.
Adam: Now that makes sense. So if a business owner is listening, they want to start an affiliate program or referral-based program, what’s the first step or two that you’d recommend they take?
The First Step
Arlen: Yeah, good question. So I would say one of the first things that they want to do, if they’re looking to hope to start a referral program is believe I guess, decide what they want to do first, do they want to start a an in house referral program, or an affiliate program. So once they define that, they say, okay, we do have some loyal customers that I think, really would be great advocates of our brand. So if they already know that, then I think it would be clear that they can go ahead and start a referral program. So one of the things that they can do, before really kind of even starting it is, is just trying to get some initial feedback.
And this can be done or even looking for through the feedback that they already have, you know, like most eCommerce businesses, today, they are probably accepting reviews if you’re not on their website, but probably in some other third party platform. So what I would suggest doing is start looking through those reviews, if you’re thinking about reading referral programs, and seeing what people are saying, Look at those people that have really spoke highly of your brand, and a really good new raving reviews. And those are the people used to say, Okay, great, we’ve got some people that really are speaking highly of our brand, then you can kind of go back, look into your order system and say, Okay, wow, this person, he ordered our product several times this year, or you order products from us several times, it seems like he’d probably be a great advocate, then I think you have enough basis to say, yeah, we can start with a really good program, and, and reach out to these people. Both.
So that would be step number one is to find out if you have a foundation of valid and loyal customers. The next thing that you could also do if you’re not sure you don’t have any of the data available, it’s just send out a simple survey, or find out what’s the best way to get a survey out to your past customers? And then just ask them how satisfied are they with their products or services, you know, just a simple survey, maybe even you know, on a scale from one to 10. And those people that rate on the higher end the nine or the 10? Let them know, okay, great. Either we’re going to be starting a referral program, do you want us to add you to the lead, or if you’ve already started it, then just go ahead and sign them up. So I would say that would be the real kind of the best way to get started before really getting into creating the affiliate program.
Adam: Do you have a recommendation as to whether somebody should start with referrals with existing customers or try to find these outside influencers or affiliate partners?
Where To Start With Referrals
Arlen: I always say definitely start off with your customers, because with any business, every business have some set of a loyal customer is some people that are going to be at it. So I would definitely say start there. And then at the same time, then start thinking about outside affiliates. Before even going into the influencer route. One of the things that I suggest doing for eCommerce business is just looking at those current relationships that you have business relationships that you have already. So for instance, I’ll give you an example. Let’s say you’re selling with fashions online, maybe you so primarily women’s dresses, for instance. But you know, of course, if you’re in that fashion space, nine times out of 10 you have relationships with other fashion people, you may have friends that are selling other types of women fashion. So let’s say you have a friend that sells women’s accessories or jewelry, they would be excellent affiliate of your particular brand, because obviously they’re in a similar space as a complementary product.
They sell a complimentary product, we’re not competing. And so that’s a natural affiliate there. And then most businesses, if you kind of think about it, and and and all the relationships you have, there’s a lot of companies that you’re probably dealing with already, that would make a great natural affiliate. And you know, they may you can have their own affiliate program. So you can it can be kind of a mutually beneficial relationship, you can have them be an affiliate of your company. And likewise, you can do the same become an affiliate of their brand.
Adam: Yeah, that’s a great way to get in front of their audience as well.
Arlen: Right, definitely.
Adam: So Arlen, this has been great information. And I think it completely makes sense that anybody who has a business needs to somehow incorporate referral or affiliate marketing into their, into their business. So where can people learn more about your software and about you and your company?
Arlen: Yeah not a problem, I would say the best way to really get all the information about me, including a site, all of my social channels, just going actually to my website, I actually have a kind of a central site, which is just ArlenRobinson.com. And from there, you can get to all of our website, link, as well as all of my social media handles.That is is the best way to get in touch with me and get access to all of our, our social platforms and our website platforms.
Adam: Excellent. And we’ll put that in the show notes as well. Yeah, so if anybody who’s remotely interested in this, I definitely encourage you to go check out Arlen’s website and learn more, because this is an excellent way to increase your marketing and grow sales. So Arlen thank you so much for coming on.
Arlen: Yeah not a problem, Adam. It’s definitely been a pleasure and I appreciate the opportunity.