Author: Chris Badgett
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Learn about how course creators can improve their affiliate marketing programs with Dustin Howes in this episode of LMScast with Chris Badgett of LifterLMS. Dustin and Chris talk about the different types of affiliate platforms, and dive into some insider tips for running a successful affiliate program for your course or membership site.
Developing an affiliate program is a topic that comes up a lot in the LifterLMS and course creation space. Dustin is an expert in developing strong affiliate programs, and he has worked with companies like WP Engine to build affiliate armies. In this episode, Dustin shares his knowledge and best practices for building affiliate partnerships.
At LifterLMS, we see a lot of people who try to launch their affiliate program before they have their course validated and launched. Affiliate programs can be a great way to scale your business, but good affiliates will not sign up to programs unless that program is optimized.
Dustin started out working for an agency that worked with WP Engine. But once that agency shut down, he took a position as the affiliate manager for WP Engine. When he started they had around 4,000 affiliates, and when he left 3 years later he had a four person team managing around 30,000 affiliates.
Creating a resource center for your affiliates with banners, images, and copy they can use on their site to promote your business is key to a successful program. You can also create a short video showing affiliates how they can get their first link and some ideas for promoting your courses or memberships.
The commission structure for your affiliate program is another aspect you will need to figure out for your online course or membership website. The industry standard is around 25%, but checking out your competitors and your profit margins for your products can provide some insights for how much in commissions you can give out and still be profitable while incentivizing affiliates to promote your products.
At Coalition.Marketing Dustin offers a variety of services to help business owners get their affiliate programs off the ground or improve their existing programs. He offers a free 20 minute consultation call to anyone who wants to learn more about affiliate marketing to see if his business is a good fit for you, or he will point you in the right direction for your program.
Dustin also has a course that teaches people how to be an affiliate manager. He covers how to build a proper program, how to recruit, etc.
You can find Dustin on LinkedIn and by email. At LifterLMS.com you can learn more about new developments and how you can use LifterLMS to build online courses and membership sites. If you like this episode of LMScast, you can browse more episodes here. Subscribe to our newsletter for updates, developments, and future episodes of LMScast. Thank you for joining us!
Chris Badgett: You’ve come to the right place if you’re a course creator looking to build more impact, income, and freedom. LMScast is the number one podcast for course creators just like you. I’m your guide, Chris Badgett. I’m the co-founder of the most powerful tool for building, selling, and protecting engaging online courses called LifterLMS. Enjoy the show.
Chris Badgett: Hello, and welcome back to another episode of LMScast. Today we’ve got a special guest, Dustin Howes. He’s an expert in developing affiliate programs. Welcome to the show, Dustin.
Dustin Howes: Hey, thanks for having me. Do you call everybody a special guest, or am I actually special?
Chris Badgett: I actually do call everybody a special guest. So thank you for calling me out on that. But we only have special guests, so I guess that’s in defense of what’s going on here, because everybody that comes on this show has something of value to add to the people building courses, or training-based membership programs. The affiliate question comes up a lot. We have a thriving Facebook community. We have masterminds with our top level customers, and people are always asking about affiliate programs. I’ve done some affiliate marketing myself, we have an affiliate program for our software that we run through ShareASale. We’ve seen some of our users create affiliate programs with varying levels of success.
Chris Badgett: But you mentioned a phrase in what you do, called affiliate manager, how is an affiliate manager different from an affiliate marketer, different from a website owner? Like what does the manager do?
Dustin Howes: Oh, yeah. So, I like to describe a management position for affiliate program as a full time job. The affiliate manager is basically running those relationships with all the affiliate partners. So that can get really tedious if you have a thousand plus people in your program. Especially if those affiliates are driving sales, driving clicks, you’re always trying to get them to promote more. So it is absolutely a full time job. So you can be a website owner and be an affiliate manager, but you’re not going to have a lot of time for it.
Dustin Howes: I like to say affiliate manager should probably be or maybe fifth higher on the marketing team, because you’re going to have lots of digital stuff that you’re going to have to do. You’re going to have your email campaigns, you don’t want to touch affiliate marketing until your company is actually ready for it, and when you can actually drive a lot more traffic to your site from using an army of salesmen from affiliates.
Chris Badgett: That’s a really good point that I want to kind of park on for a second. I see a lot of people trying to launch their first course, and before they even have it out of the gate they want an army of affiliates. But my advice is always like, that’s too early. Affiliates is scaling opportunity it’s not a launching thing. First of all, you don’t want to get affiliates in there, when your offers aren’t proving, right? That’s not good.
Dustin Howes: Well, affiliates won’t sign up to programs and won’t promote programs unless that website is optimized and they have all the right things digitally going in for them. Because they know the conversion rate isn’t going to be there. A good affiliate will sniff that out immediately if the checkout cart process isn’t smooth, they’re not going to join that program. They’re not going to promote a product that’s not converting well because it’s not worth their time.
Chris Badgett: Yeah. That’s really good point and you have a background at WP Engine you helped with their affiliate program. Our company as an affiliate for WP Engine. We’ve made some sales there, but we also use it ourselves. We love the product-
Dustin Howes: Beautiful.
Chris Badgett: … and we weren’t really going after to make money, this is while we’re here I want to keep mentioning WP Engine, WP Engine for hosting your WordPress on this website. There’s some other ones out there as time goes on, but what do you do at WP engine? Like, how do you help them grow?
Dustin Howes: Yeah, I joined there … I was working for an agency that was doing affiliate management for WP Engine, and then that agency shut down, and I immediately took a job as their affiliate manager. We started with probably about 4,000 affiliates, and by the time I left, three years later, we had a four-man team and the program had 30,000 affiliates in it. So, that’s a lot of management to do.
Dustin Howes: The way that program grow so rapidly is … WP Engine’s amazing product they give away $200 commission which when you got to love. The product basically sells itself from people that are evangelists for it, like you use the product, you know the power. The biggest hurdle of course is you know the price point starting at $35 it’s hard for people to swallow, but once you spend enough time in WordPress and understand all the intricate troubles that you may have, and you see the value in managed services, then that becomes a much easier sell for affiliates.
Chris Badgett: Yeah. That’s awesome, and that’s great. You have that history there with WP engine. That company’s has seen incredible growth over the years. As a WP Engine affiliate myself, I know that that is ShareASale to manage the affiliate program.
Dustin Howes: Correct.
Chris Badgett: We also use ShareASale at LifterLMS to manage our affiliate platform which essentially is kind of a middle man between the affiliate and the company. As soon as a sale happens, ShareASale reap money out of our bank account holding it, or it’s already there because we have to keep so much on in stock with them but if it goes below a certain threshold they suck more money out of my bank account. It’s protecting affiliates, it’s also protecting us like the affiliates have to wait till we get through the refund window and all that kind of stuff.
Chris Badgett: Also in WordPress, there’s affiliate platforms, you can put on your website but they’re not like a third party entity that kind of helps manage the money, and make sure everybody gets paid, and make sure the tax forms are filled out and everything what wins is the right point to like go for ShareASale or what are some of the other hosted ones, affiliate programs? What are some of the other ones out there?
Dustin Howes: Oh, I mean, there’s tons of outsourced platforms. There’s Commission Junction, ShareASale, Impact. It all depends on what kind of program you’re trying to build. So with a small program like your website today, can start what I like to call a referral program. So you can start that immediately to where you have partners, you have evangelist of your product, and they can go and promote that very easily. You can build that program pretty quickly. I actually specialize in doing this, and can turn those kinds of programs around in two weeks from scratch. But to build out a real affiliate program on ShareASale, ShareASale is actually my go to platform because I love it so much. The ease of it, the recruiting affiliates aspects it makes it pretty simple.
Dustin Howes: But you want to be at a certain point in your sales to be starting out with the with ShareASale. Now it is hard to go from a tracking platform that’s doing a referral program and push them all over into ShareASale, which is a giant encompassing platform. They’re basically the facilitators of all those relationships. But there are plugins out there that work in just the same fashion like AffiliateWP great plugin out there. There’s quite a few more Affiliate Royale, I’ve used it before.
Dustin Howes: But there are plugins out there that you could use today. Go and buy, and for like $50 a month, you can run your referral program.
Chris Badgett: That’s awesome. The question we get a lot at LifterLMS is how do I go find affiliates. I know with ShareASale, there’s already affiliates registered on side perhaps. Like for us, there’s people that WordPress products or write articles in the WordPress space or write articles in the E-learning space, and they can kind of naturally find us just by typing in keywords for looking for programs in there. But instead of just like crossing the fingers and hoping people find us like how does an affiliate manager recruit affiliates?
Dustin Howes: It’s a million dollar question. That’s certainly I’ve gone through a lot of growing pains perfecting essentially. There’s tons of free tools out there and Chrome extensions that helped me in this process. But if I can ever suggest anything that anybody it’s always getting a CRM that you can manage these relationships with because you can do all the outreach you want out there. You can construct a perfect email and send it out to a thousand potential affiliates, and you’re never going to beat that 10% response rate or join rate. It’s just not going to happen. But if you have a CRM in place, you can track the position of sending that first email all through, and sending that fifth email that you send to that potential affiliate.
Dustin Howes: You can increase your conversion rates to them joining that program dramatically. So CRM I always suggest to do programs very small, BuzzStream. BuzzStream is my always my go to, you can get that for $25 a month, and you can manage all of your marketing campaigns, not your campaigns, but your relationships in the marketing realm through that very cool tool. That actually helps scrape email addresses from websites that you might have as potential partners. I love-
Chris Badgett: This is different from like an email marketing CRM, like Active Campaign or MailChimp or Convert Kit or Infusionsoft we’re talking about like a sales CRM kind of touchpoint tool?
Dustin Howes: Yeah.
Chris Badgett: We’re not necessarily an opt in, right?
Dustin Howes: Yes.
Chris Badgett: It’s more of like a database of contacts or prospects that you’re building out, right?
Dustin Howes: Right. Right. You’re just looking for, like contact forms and email addresses that might be visual on the website, and that’s how you would contact them. But instead of you going out individually, finding a website and hunting down that information, a tool like BuzzStream can hunt that down for you, and put it in much easier format so that you can reach out on an easier basis. So it’s doing some of that legwork for you.
Chris Badgett: How do you make it easy for an affiliate to say yes?[inaudible 00:11:53] to try to even join your program and check out your product, and maybe send an email or do a social media post or whatever.
Dustin Howes: I mean, you got to make a compelling offer. What I like to do is work a little bit backwards. So I create a wish list of affiliates that would be amazing for this program to build my program up, or my company to bring in sales. Who would be my top 10 guys, if I could just wave a wand? Then I look at those sites and then they put them into a Chrome extension called SimilarWeb, I don’t know how familiar you are with that but-
Chris Badgett: No, no.
Dustin Howes: … that will take that awesome website, and it will pound out 20 more that are just like it. Then you can go out and say that one wish list guy is pure gold, but there’s a million traffic a month coming through their site, and they’re just too busy for you to join your affiliate program. You’ve got 20 other opportunities or just like him with on a smaller scale that you can reach out to. But I make that giant wish list first, and these are the guys that I really want to get ahold of.
Chris Badgett: So in sales we’re prospecting, we’re not creating content and trying to attract people, we’re doing the work, we’re heading out to the internet, and we’re looking around building our wish list?
Dustin Howes: Yes, Yeah, yeah. Essentially, as partners, in the partner perspective it’s a lot different than, “Hey this would be a good client but this would be a great partner.” Some services have double edged sword in that asset. Like WP engine was easy to sell in some cases because I tried to get them join as affiliate, but they have a WordPress site that’s not optimized, and they’d end up becoming a client instead. So[crosstalk 00:13:55]
Chris Badgett: .. also a cross sale.
Dustin Howes: Yeah.
Chris Badgett: Yeah, that’s cool. That’s cool. Well, in my experience with affiliates, I feel like you have to … This is just me speaking from my experience, that you have to make it really, really, really easy for them to [inaudible 00:14:14] This is like high quality images, your logos, your brand guide potentially, some swipe copy that they can use. Even I’m thinking of WP Engine, they even made us like landing page for our company to make it really easy to promote them. So how can we make it easy for … What are the table stakes for giving our affiliates what they need as a starting point besides just the link?
Dustin Howes: A resource center is fantastic. Make a resource center for your partner specifically and that should be your first email when they join the program. “Hey, we have this resource center and get all your stuff here. Here’s all the banners you can use. Here’s the links, you can make a deep link using this program tool. This is how you do it.” Make them like a three minute video of explaining your platform and how they get their first link. How they go and get a banner, and they put it on their website.
Dustin Howes: Make this super dumb and easy because not everybody is going to be a veteran affiliate that is going to promote your program, but they may have a lot of long tail value, which means they might just bring in one sale a month or maybe one sale a year. But if you get a thousand of those guys that are doing that, that’s your army that I was talking about. That’s your army of salesman that’s in the bushes hunting down sales for you working on your behalf without even doing much. So that resource center is really key to give them all those tools that you’re talking about.
Chris Badgett: I have some questions about that? So as of this recording in early 2019, I have about 400 affiliates, and there’s about like, 10 at the top in ShareASale that are like, but producers. There’s this giant long tail that you’re talking about. Some of them have never sold anything. Is that normal in the affiliate?
Dustin Howes: Absolutely, yeah.
Chris Badgett: Can you help me understand why that is? Or I guess what that’s all about.
Dustin Howes: It’s an old 80-20 rule, like 80% of your program is going to come from your top 20% of … I don’t even remember that the old adage.
Chris Badgett: I think is the Pareto Principle. Like 20% of effort gives you 80% of the results.
Dustin Howes: Yeah, those numbers are so skewed. I hear so many and read so many of these days. Now, I’ve even lost track of what I’m talking about. So yeah, but you’re always going to have … your top 10 partners are going to produce way more than everybody else in your program. That can suck. Because if you lose one of those guys, if they go out of business, or they focus on something else, like all of that production could drop off tomorrow, you don’t know.
Dustin Howes: So it’s always good to diversify, and that’s why an affiliate manager’s job is never done. Because you can’t just rely on those guys that are producing you have to actively go out and recruit more, because the more you recruit today, say you send out a hundred emails this week, and you bring in five new affiliates this week. Those five affiliates are going to take a month before they produce the sale or they are at least two weeks before they produce some kind of content. So you have to look down the road a long ways, because those guys are might produce a piece of content in a month that ranks on Google’s for SAP in a year. Those guys are exactly who you want in your program. But unless you go and recruit them today, you’re never going to have them rank on Google in the year.
Chris Badgett: That’s awesome. What else can we do? Or even think about besides having a resource center, and a welcome video, and some good just materials for them to get started? What can we do to maintain the relationship? Like, is it just about sending communication whenever there’s a new product launch or some new benefit, or is there more to it than that?
Dustin Howes: Sure. I always preach two newsletters a month. So you’ll want to do one newsletter describing all the coupons that are going to be coming out or promotions that you’re doing in the coming month, and you want to give those affiliates the heads up before anybody else really. Because they can produce content and get ready for that. The second newsletter is always going to be about education. So educating on either building their business as an affiliate, or something about your business that is new and they should know about. Or here’s some content that you can use in your articles to building new content, stuff like that.
Chris Badgett: I’ve used the ShareASale has a built in newsletter feature, talking to you I imagine I might be doing it wrong. I really need a separate like BuzzStream type CRM. Like I had the newsletter feature and ShareASale it’s pretty light. It’s like you send a message, and you can embed like their merging their affiliate link or something like that into the content of the email, but it’s not like a proper CRM where you can see like open rates are they can [crosstalk 00:19:59] it’s pretty light.
Dustin Howes: Yeah, that’s something that’s kind of new in our industry is the usage of your internal emailing system to your affiliates because traditionally, it goes through ShareASale, that you would send those newsletter through the ShareASale system. But nowadays, it’s getting better practice to actually do it through your own. But you have to capture those email addresses somehow and bring them into that group essentially for email purposes. That may be hard to do unless you have an API between the two. So ShareASale innately it will not capture email addresses, you have to ask ShareASale to turn that feature on so that you can see everybody’s email address that comes into the program, because they won’t give you that email address. They’ll let you email them through the platform, but they will give you the email address as a visual unless you ask them to.
Chris Badgett: I’ll put that on my to do list for later because [inaudible 00:21:07] So there’s different kinds of affiliates out there. There’s like traditional like blogger media content affiliates and then there’s this whole concept of like influencer marketing, I’m thinking like a YouTube star or an Instagram celebrity in your industry, how do we approach influencers who may or may not be … Like there are people that are like, “I am an affiliate marketer, that’s what I do,” and then there’s other people that are there like they kind of do double in affiliate but it’s not their main thing. How do you work with somebody like that, who may be not a professional affiliate marketer but has a lot of influence?
Dustin Howes: Yeah, some of it is training them, like talking them into it. Having that conversation with these micro influencers. If you get a … Let’s just take for example a YouTuber. If they get over a certain number of subscribers, they’re hard to get ahold of because there’s a lot of people reaching out to them. Let’s just say it’s 20,000 subscribers. If you get them under that point, you can present to them the concept of, “Hey, I could buy a sponsorship from you, but I think you’d made a lot more money if you actually put an affiliate link and join my program and here’s why.”
Dustin Howes: Present those numbers to them in some kind of capacity that they’re going to understand they might do it. You can always do hybrid deals to like, “Hey, I’m going to send you $1,000 up front but I’m going to let you keep this much in commissions that possibly if that works for you. Let’s try to work something out where both parties makes sense, but I can’t buy a $10,000 sponsorship from you today, I’m sorry.” Because you’re going to have that conversation. The YouTubers that have a certain amount of subscribers, they recognize their value or they overvalue it a lot of times. So talking them down out of those conversations is a little bit of a tough uphill battle for you.
Dustin Howes: But again, it’s that wish list scenario like YouTubers are really hot right now, and if you find the right guys that are going step by step through process, and they include your product and that step by step process that can be monstrous. The conversion rates on those YouTube videos are huge. So talking them into adding you into that will take some time because you’re going to have to watch their videos of the past and like give them ideas like, “Hey, you can have me in right here and here and here.” So tossing those ideas to them saying, “Hey, this is how you’re going to make more money. This is what I’m bringing to the table, our product would fit great with you.”
Dustin Howes: So, wrapping it all up, my point is you have to bring value to the table that they can actually see and visualize immediately so that you can capture their attention.
Chris Badgett: And make it easy for them, right?
Dustin Howes: Yeah.
Chris Badgett: Like, I’ll help you figure out, let me help me you make more money. I’ll show you how.
Dustin Howes: Yes, yes, absolutely.
Chris Badgett: What do you think about contests? Like affiliate contests. Like where there’s a prize for the top affiliate for like a certain promotion or certain time window. Do those help or hurt you?
Dustin Howes: Two schools of thought. One is yes, competition breeds more sales and everybody wants to compete against each other. I think it’s a really good fit for some niches and especially in the digital SAS product space, Click Funnels made a killing off of these kinds of contests. But when it comes to like an eCommerce product, I wouldn’t really suggest it necessarily. The biggest reason is I don’t want to give away who my biggest affiliates are. You don’t want your competition sniffing out every affiliate that’s producing for your program. So those are best kept secrets as I like to call them so I’ve never actually run a contest of that kind of capability just for that reason.
Chris Badgett: You mentioned Click Funnels. It’s just an observation as somebody who surveys the landscape of online business, internet marketing, membership sites, sales and marketing, I run into Click Funnels affiliates everywhere I turn on YouTube, or like people are cold emailing me or other social media. Why in your opinion do you think Click Funnels affiliate program has been so successful for that company? I mean there is an army of an affiliate [inaudible 00:26:08] out there.
Dustin Howes: Yeah. They’ve done something really great. They can turn every person that owns their product into an affiliate pretty quickly and they explain the benefit proposal very well in the early goings of, you sign up for Click Funnels as a customer, you build your stuff out. But they vary they’re not delicate about it whatsoever, it’s pretty aggressive and they’re telling you how much more money you can be making by promoting us as a platform.
Dustin Howes: So I think their the biggest strength there is just that they keep on pounding it in, in various different ways. They’ve got so many email campaigns and nurture campaigns throughout the years they’ve been building. The army is just massive at this point. So yeah, there’s very few products that actually optimize that in that kind of fashion where you become a client and you become an affiliate soon thereafter. I think that’s a really good practice but just not as aggressive as they really present it to their affiliates, and the people that are clients of theirs.
Chris Badgett: Well, I was wondering if you can speak to that. But I’m curious as a software guy myself, I have core software for people and also my customers have their customers. Is the customer somebody you can look to as potentially becoming an affiliate and obviously if they’re most of them have never even heard of affiliate marketing … I don’t know you don’t want to put bad taste in their mouth like you’re trying to double dip or something like that. Are customers a channel worth looking at in terms of recruiting affiliates or should we kind of steer clear of it?
Dustin Howes: It should be your first channel to be recruiting for.
Chris Badgett: Really, when you say it like that, word of mouth referrals outside of the internet, when people go to a business, they get the product and then they tell their friends how much they like it. So I guess it just makes sense. When you said it that way, it just made sense.
Dustin Howes: Yeah, 100%. I always go back and forth on whether you should be sending out a, please give us a review or please join us our affiliate program which email should come first either two weeks or a month down the line. Because you want them to get familiar with your product and then give you a glowing review but you also want them to become an evangelist of your product. So which one comes first? Or do you send them at the same time? Or you never send it at the same time because you want them to focus on one thing at a time. But you also don’t want to inundate them with emails that are beneficial to you rather than them.
Dustin Howes: So, I don’t know what’s your thoughts on that? When do you send out a review of your product like, please give me a review.
Chris Badgett: I have a pretty long like … I mean, I don’t see a funnel that’s stopping with the sale I see then it expands out into like onboarding and then ultimately referral and becoming a super fan which includes a separate email like maybe a month later asking for review, another one six weeks later, asking for a testimonial. Then another one later asking, inviting and explaining the affiliate program. I just spread it all out over a long period of time. But my main concern is that they’re getting resources to help them get set up and be successful before I start asking them for a recommendation or [inaudible 00:30:07]
Chris Badgett: Another question that I see a lot of people asking about or in general confused about is the difference between an affiliate relationship and a joint venture partner or JV relationship. Can you speak to that at all and how that kind of overlaps with affiliate? I can elaborate more if you want me to on this.
Dustin Howes: Yeah. JV is not a spot I delve into very hardly. So, we call it two tier in the affiliate realm where you can recruit other affiliates and then you get a certain commission of that. Industry standards, usually about 25%, which is also huge at WP Engine they have a two tier system where you recruit affiliate A, Affiliate A generates that sale, affiliate A, gets $200, and you get $50 for every single sale that moves forward.
Dustin Howes: So you just have to recruit somebody a big dog into that program, and you could be sitting pretty for a long time. So getting those guys are very hard to come by. There’s not a whole lot of websites out there that are dedicated to recruiting other affiliates for you, and it takes a special person that would take a deal where they’re only getting paid on performance in that kind of capacity. I’m really good at recruiting affiliates, but I wouldn’t even do that. It wouldn’t be worth my time to go recruit for somebody else’s program unless I’m getting an actual upfront fee for an agency.
Dustin Howes: Then on top, I usually bake that in to my recruitment process if I am recruiting on somebody’s behalf, I bake in a percentage like that in perpetuity. Like I’m going to be the two tier affiliate forever for everybody that I bring in, but I still need X amount of dollars up front to be doing this for you. So, yeah, as it comes through JV brokers, I just don’t know enough about what they do, and how much skin they actually need in the game to get really active.
Chris Badgett: That make sense. Can you tell us a little more about what you do at coalition.marketing?
Dustin Howes: Yeah, absolutely. So I run a little bit different than all other affiliate marketing agencies out there. A lot of them like to manage the programs for a certain retainer per month and I want nothing to do with that. Like I don’t like managing programs, I think it’s a lot of work, and my expertise can be used in a lot of other different fashions. So I do consulting, I do program launches where I can get programs launched on a platform like ShareASale or any WordPress plugin, I can get that done in like two weeks. So I do that. I do program audits, if you have an existing affiliate program, I audit it and tell you what you’re doing wrong, what you’re doing right, and give you a whole game plan of what to do next.
Dustin Howes: I also do a mild bit of recruitment, where I can give you a list of 20 affiliates that I think would be really good for your program. Here’s an email sequence template that you can utilize to go and recruit those guys so that you know how to talk to affiliates better.
Chris Badgett: Wow, that’s incredible. So that’s a coalition.marketing?
Dustin Howes: Correct.
Chris Badgett: I have some more questions for you. In general, people ask course creators, membership site owners, and really any online business owner wants to know what percentage should I expect of my revenue to be sourced from affiliates? Do you have any kind of averages or what you see? Is it like 10% or 20% comes from affiliates in a business in general? Or maybe a company like Click Funnels is much higher, but like on average, you should expect 10 to 20 what do you think?
Dustin Howes: Yeah, yeah. An industry standard is 20%, but you have to understand what that means first. One of my hardest jobs with every client that are potential clients that I take on, is managing expectations of the affiliate program. So what I mean by that it’s not going to work tomorrow. Tomorrow you can put PPC campaigns in place that’s going to drive your traffic and it’s going to start converting. You can do that with Facebook ads, everybody loves those Facebook ads, right?
Chris Badgett: Yeah.
Dustin Howes: They just expect this kind of turnaround from those kinds of campaigns, and that’s not what affiliate marketing is about. You have to build your program, start very slowly recruiting into that program, and convincing others that this is a good idea. Then after you convince them to join, then they have to produce content. Then after they produce that content, they have to start ranking on Google for their content to be exposed. That whole process you’re looking at six months until you’re actually ROI positive on the affiliate program. You’re going to invest some time and some effort to get those partners in place. But if you can, that you can be patient about it in a year and especially in two years, you’re going to be looking at 20% of your revenue coming through the affiliate channel.
Dustin Howes: I’ve run programs where I’ve had 60% of touch points coming through the affiliate channel. Affiliate doesn’t necessarily bucket into who gets credit for that sale necessarily, but they would have touch points and they would get those affiliates paid for bringing in that certain traffic.
Chris Badgett: Affiliates typically are rewarded on the last cookie, not the first cookie. Is that right?
Dustin Howes: The last click of the affiliates, out of the affiliates that are joined into the program. So-
Chris Badgett: It’s the credit the last that happened before the sale.
Dustin Howes: Correct. That is the industry standard. There are platforms that can change that for you. There are quite a different … I don’t know if you want me to go into that. But there are split attribution where you can split it between as many as three affiliates. You can do coupon attribution, where you only give the coupon site 10% of the commission and the previous click gets 90% of it.
Chris Badgett: Interesting.
Dustin Howes: Yeah, there’s a lot, you can go first click if you want to. It’s just depending on how you want to build your program. But the industry standard default is always last click attribution.
Chris Badgett: Well, you brought it up, so we’re going to dive into it. One of the issues that I struggle with is coupon sites. So, if somebody is shopping online, and they fall in love with your product on your website, the next thing they do is they open up a new tab in their browser, they type in the name of your product, and then the word coupon code. Then they end up on an affiliate website who has a coupon that perhaps is like way beyond any real coupon, maybe it’s like 50%, 80%.
Chris Badgett: Even though like in your terms and conditions of the affiliate program, they’re allowed to use authorized coupons. There’s a lot of coupon fraud out there or just … I know some people just don’t do it they’re like, “We don’t do coupons.” But the reality is it’s human nature when you’re doing online shopping to go see if you can get a better deal and find a coupon regardless of where you’re getting it from if it’s a legit affiliate or not, or whatever. Can you speak to some best practices around coupon in the affiliate world?
Dustin Howes: Yeah, I’d love to. This is one of those topics I’m most passionate about in this world. Coupon sites there almost a … What’s the word I’m looking for? Necessary evil in some cases. So they will make your affiliate program look really good because when they get clicks, they convert at like 20% a lot of the times. Normal affiliates are going to convert at like 5%. But these affiliates convert at 20, and they grow the number what we call EPC Earnings Per Click in the affiliate program. When affiliate see a really high EPC, they like to join that program. So when you have coupon affiliates in your program, it makes the program look really good and appealing to other affiliates.
Dustin Howes: But then you’re dancing with the devil because you’ve got all these coupon sites standing in front of registers, just handing out coupons before people check out. We’re going to check out anyway. So one way I go about this, it’s a little bit different than most, I like to create a branded coupon site for my clients. So let’s take for example, you, LifterLMS, I would create lifterlmscoupons.com. You’re going to allow me to own that URL-
Chris Badgett: And be an affiliate?
Dustin Howes: Yes, and I’m going to take 1% commissions. The rest of your guys are like 10%. I don’t know exactly your program standard, I’m just going to take 1% and you’re going to update me every time you’ve got a new coupon and I only keep that coupon list updated to what your coupons are. Now I’m only taking 1% and I need that 1% because I need to update this website and I need to keep it alive. But I’m not charging you 10% for doing that, and that’s how I like to do it. That keeps me at the top of Google rankings for that that term, right?
Chris Badgett: Yeah.
Dustin Howes: Because you’re going to give me a link back and I’m going to rank at the top there. It’s a good relationship, and I also preach that people should be taking up that first fold of the Google SAP with those terms, with those branded terms. You can make your own site and do this yourself. This is just how I do it because I have a template that can create some quick WordPress install to go and do this, but you can make your own and do the same kind of thing.
Chris Badgett: That’s really cool. I actually did something similar. When we first launched our affiliate program I used to have … when I was a freelancer I had a website called Badgett Web Design, where I started working online a long time ago. But I created a blog post called Lifter LMS coupon code. I put a bunch because I just wanted to be at the top for that search, and people still go there and they get it there. The other thing I did was … I’m not trying to fight human nature, because I know people open that new tab, and I do coupons sometimes and I give my affiliate special coupons to use, and I can’t keep track of all the affiliates maybe I need affiliate manager. But at the bottom of my pricing page, I almost always have a 10% off coupon.
Chris Badgett: The reason for that is just because I know it’s human nature they’re there, they’re at the cash register, I’ll just give them this, and that way, they’re not going to go leave and come back.
Dustin Howes: So yeah, that’s another way to combat it. No doubt.
Chris Badgett: Yeah.
Dustin Howes: Speaking of which, you need an affiliate manager. That’s what my course is. My online course teaches people how to be an affiliate manager, so that’s one of the things I teach. It’s a 697 product that I sell, and I can teach your team how to build a proper program, how to run it properly, how to recruit, et cetera, and keep fraud out of your program, but[crosstalk 00:42:37]
Chris Badgett: I have a question about that.
Dustin Howes: Okay.
Chris Badgett: I’m a big fan, if you offer a service that you have a course is either a down sale or cross sale or a value add to the customer. How did you decide to create the course was it to like, just sharpen your own song, curate you’re thinking, or you just you’re looking for another revenue stream for people that couldn’t afford your services? Where did the course come from?
Dustin Howes: This is all like super fresh to me. I was at WP Engine maybe, I don’t know, nine months ago, I left my job there. While I was there, I was looking for information on how to become a better affiliate manager. How to get certified as an affiliate manager. The only materials that were out there were really old, outdated stuff that was all reading and super boring. I was like, “Well, why don’t I just put all my thoughts into a PDF and figure this out myself,” and that’s how I built basically 10 hours of online material of me talking and doing this.
Dustin Howes: So I went about it completely naive and the wrong way that you usually teach people to do things, but that’s the only way I knew about it. That’s how I started getting into and I sold a few and then quit my job. So, I wish I would have done it a little bit differently, probably going through Danny’s course or something would have been much easier path for me, but yeah, I sell this course, and then I upgrade people usually to the one on one training or the consistent one on one training that I give for X amount of dollars per month after they take the course. So they get the baseline understanding of what affiliate programs are and how it is to management and then I can do one on one training, do strategy calls, help them build their program the way it needs to be because every program is absolutely different than the next.
Dustin Howes: Like even your competitors, your program is going to be much different than theirs because you’re going to have different selling points for what you’re doing.
Chris Badgett: Yeah, that’s that’s awesome. Well, one more question before we go and this is another one I get asked all the time from course creators, new online business people. What should my commission be? At LifterLMS we do 25% commission and for people who go above and beyond we bump them up to 30 and that’s what we can afford and like, still cover our costs. But I see some people doing 50%, I see some people doing 10% it really depends on if you’re an information product or software or if you’re like a physical product maybe you have less margins to work with. How do you figure out your affiliate commission number because I think a lot of people just pull it out of their hat?
Dustin Howes: No no. No kidding, everybody … I’d say a large majority just pull it out on their head on whatever the industry is, right?
Chris Badgett: Yeah.
Dustin Howes: First thing I like to do is doing a competitive analysis, take your top three competitors against you, figure out what they’re doing. They probably already done a lot of legwork on what that commission means, what it means to them as a company, what they can afford and still make good margins paying out an affiliate. So they’ve already done the legwork for you most likely. So look at those competitors, check out their offerings, see if you can beat that. Like that should be your first vision is, “Hey, we can beat out their payouts and still make a really good margin.”
Dustin Howes: That should be what you’re looking at, and if you can’t, figure out what are the selling points that are better than their product, than what their program is offering. Really highlight those special things that you guys do much better than them when those affiliates are signing up, and deciding which program that they need to be promoted. If your landing page is top-notch, and they know that you mean business and that you’re going to convert better than the other programs. So whatever you can do to capture the attention of those affiliates that you’re trying to bring in over that other program, that’s how you’re going to beat them in the end.
Chris Badgett: Awesome. Well, Dustin Howes you can find him at coalition.marketing. Thanks for coming on the show and sharing your wealth of knowledge around affiliate marketing and building a proper affiliate program. We really appreciate it. Any more tips on how people can best connect with you surviving with affiliate marketing and want to explore this working with you?
Dustin Howes: Oh, absolutely. So on Coalition Marketing or hunt me down on LinkedIn very easy to find me at dustinhouse.com for my email address. I give away 20-minute consultations to anybody that needs help with their affiliate program, just wants to pick my brain and this kind of sense, happy to do that and see if it turns into a partnership that we can further explore. But if I’m not the right guy for the job, I usually turn away 90% of the people that I talked to on those phone calls, but I’ll point them in the right direction to wherever I know would be beneficial to their company. So just please hit me up and let’s talk.
Chris Badgett: Awesome. Well, thanks for coming on the show, Dustin.
Dustin Howes: You got it man. Happy to be here. Thanks for having me.
Chris Badgett: That’s a wrap for this episode of LMScast. I’m your guide Chris Badgett. I hope you enjoyed the show. This show was brought to you by LifterLMS, the number one tool for creating, selling and protecting engaging online courses to help you get more revenue, freedom, and impact in your life. Head on over to lifterlms.com and get the best gear for your course creator journey. Let’s build the most engaging, results getting courses on the internet.
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