Last year John Chow spoke at Internet Masterminds Meetup here in Vancouver, and taught us in the audience a whole lot of super practical, ready-to-apply techniques for successful affiliate marketing.
I totally procrastinated getting this blog post up, but hey, late is better than never.
Here are the notes!
There is more than one method of affiliate marketing. Most people go the “Hit and run” style. But that’s not the way to go.
What is the “hit and run” style of affiliate marketing?
Basically this: setting up a landing page, putting up an affiliate link, buying Google ads to drive traffic to the landing page, hoping a small percentage buys, and then never seeing them again.
But the “hit and run” affiliate marketing model is actually a model where an affiliate marketer is spending 7 times more money to get a customer for someone else. If that affiliate marketer were to stop spending money (on PPC ads for instance), or if Google slams them, they’re gone.
Here are other bad things that can happen with the “hit and run” model:
Competition can drive up the PPC bid on a keyword until you start to lose money. This WILL happen.
An advertiser can pull their offer because you’re sending too many leads to them, or for some other reason.
But how much could you make if the traffic you spent money trying to drive to your site turned into repeat customers? That is the question to ask.
The better method is to treat affiliate marketing like a real business. And what business could survive without repeat customers?
That’s why affiliate marketing should FIRST focus on retaining customers.
This is what John Chow calls the “sales funnel” model of affiliate marketing
In short, the “sales funnel” model is this: Create your own customer base with a blog and mailing list. You don’t need to make money on the first sale. For example, a bank often gives prizes like free iPads to new customers. They do this because they know you are worth more than the price of an iPad, and they just want to retain you as a customer first.
Also, the “sales funnel” model has a much higher conversion rate because the people who have signed up for your list get to know you – you’re not a stranger to them anymore, and you build a reputation and track record with them.
For John Chow, the money is in the ‘backend,’ meaning that two-thirds of his income comes NOT from his blog, but through the sales funnel he puts people through after they become e-mail leads.
So how does one go about working on the “sales funnel” affiliate model?
Send traffic to a blog or squeeze page
Capture the lead. Get their email first – Twitter, Facebook and the other methods of communication are secondary. You have to start your mailing list from day 1. John Chow said once of his biggest mistakes was that he didn’t start his e-mail list at the start of his business.
Build a relationship with your leads by offering valuable advice and good content. Do this with an auto responder (John Chow uses Aweber, an e-mail marketing software which is an Internet marketer’s dream to analyzing and segmenting data).
That auto responder you set up becomes your sales funnel.
But wait, how do we get e-mail leads?
The incentive offer
There are many ways to get e-mail addresses, but they all come down to offering an incentive. John Chow experienced a huge surge in e-mail sign ups when he started offering a free e-book. He went from 10 to 50 sign ups per day!
The annoying light box
You will notice on johnchow.com that when you first arrive there, a light box appears asking you to sign up for his e-newsletter. It is powered by Aweber and, although he admits it is soooo annoying, he also admits that it works. His sign up rate went up 10 per cent because of it. The good thing is that it only appears to a user once, and then remembers they’ve been there before the next time they visit the blog.
The squeeze page
Another way to get e-mail sign ups is by setting up a squeeze page. John Chow says that on a blog, the information overload is so high, his e-mail sign up rate is only 2 to 3%. But on a squeeze page, he has a 50% opt-in rate.
Here’s an idea for a squeeze page that John Chow actually uses on his Facebook page: https://www.facebook.com/johnchowdotcom/app_4949752878
John Chow says Facebook is great source of getting email sign ups. He uses an Aweber sign up form on his Facebook fan page.
How to do the auto responder RIGHT
The first e-mail should be a thank you for signing up, which is non-threatening to the user. Remember you don’t have to make a sale on the first contact!
After you’ve thanked them, recommend products, don’t sell.
An auto responder should set up a series of emails that are tied to your initial free incentive. Establish trust, be an authority and recommend products that will solve your customer’s problems. This is called relationship selling.
Finally, test, test and always test. Tweak the sales funnel. Affiliate marketing is a tweaking process until you make more than what you’re spending.
What is an e-mail address worth?
John Chow did some research, and figured out that each person on your e-mail list is worth $10 to you. Of course, this is an average, and some e-mail users buy more than others.
Other tools to keep in mind
Content delivery run by CDN – duplicate data all over world to make it fast. Charged by usage.
VaultPress backups, cost $15 a month for real time backup of your WordPress site. You can restore your site with one click if anything happens (such as it being hacked into). I personally ask all my clients to use this when I build their WordPress web sites, because it is easy to use and you don’t have to find hosting space for your backup files elsewhere, like you do with BackupBuddy. That being said, BackupBuddy can be cheaper to use if you have multiple sites, but is more for the technically inclined person.
Aweber e-mail marketing software – starts at $19 per month, goes up if you have more subscribers.
GoToWebinar, costing $99 a month – John Chow believes the future is the webinar.
Linktrackr, starts at $9 per month (John Chow pays $27) and used to see how links perform. Allows you to do split testing, and can divide traffic among different landing pages. This is a tool for testing, which is important!
Linkcontrol.com – This takes Linktrackr to another level because it can direct traffic based on hours of the day, or where they coming from (for example, from Facebook or Google). It can also split test by geographic region. Costs $250 for 50000 clicks.
A Pro Dedicated Server from HostGator, costs $374 a month.
In total John Chow pays $1394 to run his blog. At first that seems like a lot, but you have to ask, what kind of business that makes $40K a month costs only $1397 to run?
Business model # 3 – start your own affiliate network
Now we come to the third business model John Chow describes. And this involves not just selling other people’s stuff for a commission, but now selling your OWN stuff and paying out a commission to others.
His point is this: why make 100% off something yearly when u can make 1% on 100 or 1000 units of that thing?
This Internet marketing model works great for informational products because they are cheap to create.
Once you have an e-book or some kind of download, you can use any of the following program to set up your affiliate marketing software:
Clickbank.com – the world’s largest informational product marketplace. 49.95 + a transaction fee
Handles the sales transaction and collects the money
Clickbank pays you & the affiliates. Since it’s branded, you know you will get paid.
Ejunkir.com – no set up or transaction fees. Instead, it’s based on a monthly subscription starting at $5 for unlimited downloads. But it’s also based on storage space. The drawback is that you handle the sales and have to pay the affiliates.
IDevaffiliate – a software that costs between $99 to $299 that you have to host yourself (which is cheaper) or as another option, they can host it for you.
This software has a two-tier affiliate model
Hasoffers.com – John Chow says this is the best service ever made. It is every bit as powerful as NeverBlue, with a full back end, CPM , CPC, employee etc. SEO MOZ uses this.
(Here I will insert that I myself have found success using the WP Affiliate Program by Tips and Tricks. It hooks into the WordPress e-commerce software I use for my clients, which is Shopp, but it also hooks into other WordPress-based e-commerce platforms.)
Final tips from John Chow:
Always deliver value
The affiliate manager at a company you are doing affiliate marketing with is your best friend – get to know them for special coupon codes, landing pages, etc.
Treat affiliate marketing like a real business – it’s not hit and run.
Don’t do it all yourself; “success really is a team sport” (for example, John Chow can’t design or code, so he gets others to do that for him).
Don’t be a duck liner – don’t wait, the best time to start is now.
Don’t take things so seriously, have fun with this.
Disclosure – be transparent, or have a blanket disclosure on your ‘about’ page.
A good E-book is all your best blog posts in single document.
A question from the audience that should encourage anyone wanting to get into e-marketing:
At the end, John Chow opened up his affiliate marketing talk for questions. A lady asked what “outbidding” is in relation to AdWords. At first I thought, ‘what?! She doesn’t even know what outbidding is?! How did she sit through this entire presentation and understand what is going on here?’ But then I realized, this is really something that anyone can do. Even if you’re someone who has never used Adwords, and doesn’t know what it means to outbid a keyword for ad space, you can still start with this. It starts with step one, and it’s all learn-able. And I appreciate so much that the way John Chow teaches you how to do it is simple, and step-by-step. He takes a lot of the guesswork and learn-by-mistakes out of the puzzle for you. I strongly would recommend people learn more from him at his blog, www.johnchow.com