Five Who Drive by Chris Trayhorn, Publisher of mThink Blue Book, October 1, 2004 It takes a special something to be among the best in your field, especially when the field is as competitive as affiliate marketing. We all know it takes more than commission checks and banner ads to rise above the crowd. Revenue decided to take a look at five strong programs and the people who run them. Of course, convincing program managers to talk about their success is rather like getting Grandma Virginia to share her famous cherry cobbler recipe. But there are some commonalities in these programs that deserve attention. The first thing we found is that each is led by a strong manager with a clear vision of how that company differs from its competitors. And all these managers demonstrate great respect for their affiliates, although they may show it in different ways. You’ll see other similarities, to which we’d like to offer one more: You don’t need to be one of the top 100 retailers to see a big increase in your affiliate sales. But it never hurts to think big, as did these five individuals. Mondera.com Name: Chris Sanderson Title: Affiliate Manager Business: Jewelry Mondera.com found its crown jewel in affiliate marketing, which generates 30 percent of the online jeweler’s income in an average month, according to program manager Chris Sanderson. During the holiday season, the percentage climbs even higher. Mondera sells a wide range of wedding and engagement jewelry, such as diamond engagement rings and wedding bands. It also sells a wide range of support jewelry for birthday and Christmas presents, with prices ranging from $30 to more than $500. The average sale at Mondera totals $1,250. Affiliates can earn from 5 to 20 percent per order. To help drive sales, Sanderson said the company began a modest affiliate program on BeFree in 2000, but “we left it to manage itself.” The company switched over to LinkShare in July 2002 and ramped up its efforts. The extra work has paid off smartly. Sales started rising about three months later and reached their peak after 18 months of Mondera’s continuous effort. Sanderson attributes the success of Mondera’s affiliate program to four important factors: constant, dedicated support, an easy-going, accessible approach to affiliate management, a firm stance against parasitic activities and, of course, commissions that most affiliates only dream about. “Who doesn’t dream of getting a commission on a $10,000 diamond sale?” he asks. Sanderson is quick to note the benefits of affiliate marketing and has lots of advice for other managers. “Affiliates put in the same amount of effort that you put in,” he says. “Providing affiliates with fast, friendly support is very important. When things go wrong, put your hand up. Affiliates respect trust and honesty – and a high conversion rate – above all other things.” He also notes affiliates can be a great source of feedback about a merchant’s site, and can even become a valuable pool of customers. “If they promote your products and like your products they will also buy from you. Ten thousand happy affiliates means 10,000 potential customers,” he says. “There are a number of affiliates who don’t add value, intercepting traffic before it arrives at your site and inserting tracking to make it look like they are driving sales. Merchants need to review their partners carefully to ensure they are adding value,” he says, adding one final piece of good advice: “Always pay on time.” Shoes.com Name: Brook Schaaf Title: Affiliate Manager Business: Shoes Shoes.com had an active affiliate program in place from the moment the site launched in 2001, and Affiliate Manager Brook Schaaf says the program started generating sales in the six figures after just half a year. The affiliate program has been a very comfortable fit for the shoe merchant, which doesn’t use traditional media. “We like programs we can measure. CPA and CPC are our big revenue generators,” says Schaaf, who is also delighted at how the program has given the business a good deal of trend reporting. “We see an increase in sales beginning with back-to-school and climaxing with the holiday season, then again in the spring – very strong in the spring,” Schaaf says. “Taking program growth into account, we did 40 percent more business in the last half of 2003 compared to the first half.” Schaaf gives affiliates most of the credit for Shoes.com’s affiliate marketing success. Affiliates earn 10 percent on each sale, but Shoes.com has been known to run promotions that increase the base commission rate for affiliates. “My favorite affiliates are mom-and-pop-type operations; often literally a husband and wife team working from home. They’ve got good control of their sites, are responsive and easy to work with,” Schaaf says. “With thousands of affiliate programs out there, part of the challenge is staying on top of people’s minds. Our network, Commission Junction, has also given us a lot of credibility and visibility.” His advice for other merchants just getting started with affiliate marketing? “Consider your tracking needs carefully,” Schaaf said. “I am partial to Commission Junction. Performics is good, too. Most important: Hire a full-time manager and empower him to make decisions for the program. Know how much you can afford to pay and what your competitive advantages are. Communication and consistency are important.” And Schaaf notes that it’s important to look out for your affiliates. “Remember that affiliates – real affiliates – are making a living off of sales, so you have to speak to their heads as well as their hearts,” he says. “Say, ‘You’ll earn more money with me’ and coordinate internally to make this a reality. Listen to everyone but listen closely to the people who are sending you big sales because they talk the least.” T-shirtking.com Name: Bill Broadbent Title President Business Retail Sales/T-shirts T-shirt King President Bill Broadbent isn’t new to the business of selling T-shirts. He’s been doing it – quite successfully – since the 1970s. T-Shirt King was recognized this year as one of the “Best of the Web Top 50 Retailing Sites” by Internet Retailer magazine. Broadbent continues to see consistent growth in his company’s online presence and brand recognition. That’s surprising when you consider that the company houses only 18 selftaught employees and is considered to be one of the largest employers of tiny Mountaineer, NM. Although he didn’t enter the affiliate marketing arena until 1998, affiliates already account for a third of the company’s sales. He now views his decision to start an affiliate program as a turning point for the company. “We saw results in six months, because that’s when we got serious about it,” Broadbent said. “Affiliate marketing can bring you results immediately if you take a serious approach and invest time into it,” he says. Ian Larson, who manages T-Shirt King’s program at PartnerCenter, says much of the success of this program lies in the product. “The T-shirts sold by T-Shirt King are marketable because they are officially licensed and represent such a broad range of interests, from music to favorite bands to politics. T-shirts are most people’s way of expressing who they are quickly and succinctly without having to even say a word.” During the holiday season, T-Shirt King rakes in 40 percent of its annual sales. So the company’s Web site offers publishing partners a 365-day cookie that allows affiliates to make the holiday season last all year long. Broadbent says the benefits to his company go beyond mere revenue. “Even if we were not making sales with our affiliate program, our message is out there,” he says. “People see us, they become familiar with us. The exposure is a great benefit. We are reaching an international audience from rural locations. “It’s amazing.” Broadbent has advice for other retailers who are considering an affiliate program: “Don’t do it unless you are serious about it. Be proactive and committed to the program.” Redenvelope.com Name: Myles Felsing Title: Director of Interactive Marketing Business: Luxury Gifts Although RedEnvelope didn’t launch its affiliate program until September 2002, the program now accounts for half of sales for this online retailer. But RedEnvelope’s quick success didn’t come without extensive pre-launch legwork, and they want to make sure other merchants realize this before diving into affiliate marketing. “Do research before beginning an affiliate program,” says Myles Felsing, director of interactive marketing. “Evaluate the marketing channels you currently have in play. Make sure it’s a good fit for your business.” RedEnvelope learned the importance of doing research the hard way. Originally known as 911Gifts.com, the company was launched in 1997 as a way for last-minute male shoppers to find the perfect gift. Two years later, it went through a high profile restructuring, with a new name and a new mission: to sell upscale, luxury gifts starting at $20. In addition to its affiliate program and online sales, the company is now planning to launch a catalog company backed by traditional marketing in the coming months. The company’s revenue was $79.3 million for its last full fiscal year. Per-order sales were $72 million in the first quarter of the current fiscal year, with a profit of $38 million. The company went public during 2003, trading under the ticker REDE. Affiliates earn between 8 to 12 percent per sale. RedEnvelope also offers incentive plans based on demand volume. This makes it possible for its best affiliates to have an overall effective revenue share of 20 percent. “Affiliate marketing appealed to us because of its performance-based structure and broad reach into areas where we did not have internal recourses to manage direct relationships. By introducing an affiliate program into the marketing mix that operated at a high efficiency, we were able to not only scale our online marketing efforts significantly and increase our overall ROI for online programs, we were also able to extend our direct marketing efforts as well while attaining our overall efficiency goals as a company,” says Felsing. What advice does Felsing have for other merchants? Start communicating. “We focus on fresh creative and keeping our affiliates up to date on promotions and new items,” he says. “We reward our top affiliates by giving them a higher commission during peak seasons, or establishing a revenue goal with the affiliate prior to a peak season, and if they meet that revenue threshold, a bonus is paid out. These arrangements encourage our top affiliates to promote us even more.” Urbanscooters.com Name: Frank Minero Title: CEO Business: Electronic and gas scooters Motorized scooters may not pop into your mind as a hot item for online sales, but Frank Minero has been in the business since 2001. He first heard about affiliate marketing about a year later. As it turns out, he stumbled across a forum on ABestWeb.com and liked what he read. “I dug in and learned all I could,” he says. He launched his affiliate program in the fall of 2002 and, within the first few months, started seeing steady sales of his gas and electric scooters, which go for $99 to $1,000 each. By Christmas 2003 he had doubled his sales from the previous year Affiliates earn 7 percent on Internet sales and 5 percent on telephone sales. “I believe the success of our program boils down to open and honest communication, good information and a bit of fun,” Minero says. “I simply ask myself, ‘Self, if you were an affiliate, how would you like to be treated and what information would you need to get the job done?'” That soul searching helped him understand that affiliates need incentives, but that they also have a lot to offer in return. “We offer an affiliate contest annually and reward our top affiliates with cash and prizes,” Minero says. “We have some pretty knowledgeable affiliate partners, and through the course of sharing information I’ve learned things that have greatly benefited our business.” In addition to an affiliate program, Urban Scooters also uses other measures of Internet marketing such as pay-per-click advertising and organic search engine optimization. “In the last two years we’ve tried other traditional methods of advertising and found these three methods to be the best,” says Minero. Minero says managers who are thinking about launching an affiliate program must be ready to make the kind of commitment it takes to be successful. “Give it a shot, but make sure you allow the time to provide your affiliates with the information they need to effectively sell your products,” he says. “It does take a good amount of time to effectively manage an affiliate program. Unlike Ronco’s Rotisserie, you can’t just ‘set it and forget it.'” LAURA SCHNEIDER is the marketing editor for About.com. Her articles have been published by more than 4,000 Web sites and magazines. She also serves as operations manager for PartnerCentric Inc. and owns a consulting firm, ZealSpin Inc. Filed under: Revenue Tagged under: 04 - Fall 2004, affiliate marketing, Affiliate Recruitment, Features, merchants, mtadmin, Program Management About the Author Chris Trayhorn, Publisher of mThink Blue Book Chris Trayhorn is the Chairman of the Performance Marketing Industry Blue Ribbon Panel and the CEO of mThink.com, a leading online and content marketing agency. He has founded four successful marketing companies in London and San Francisco in the last 15 years, and is currently the founder and publisher of Revenue+Performance magazine, the magazine of the performance marketing industry since 2002.