For software and consumer technology companies, working with affiliates and resellers can quickly become a cross-channel tug-o-war if there’s not a clear multi-channel marketing strategy for both channel partner programs.
Having a game plan for both channels will ensure partners are participating in the program best suited for their business while minimizing cannibalization and channel conflict.
To create an effective multi-channel marketing strategy, it’s important to have well-defined channel partner programs so you can evaluate prospective partners efficiently and on-board them in the appropriate partner program.
Defining Affiliates & Reseller Programs
Defining your affiliate and reseller program is the first step in creating a multi-channel strategy. By “defining” the program, I’m referring to having criteria and requirements for each partner program and ultimately figuring out who’s an affiliate partner vs. who’s a reseller partner. To do this effectively, you need to understand each channel’s business model and how they add value.
Many times, affiliates are going to be a lower-cost partnerships because of the pay-for-performance and scaleable nature of the channel. Think of affiliate partners as your virtual sales force advertising products on their website, blog, and social network, referring customers to the merchant to complete the actual transaction and earning a commission for referring the customer. They are not processing actual transactions on their website, but referring the consumer to the merchant to complete the purchase.
Some affiliates, such as loyalty and cash back, may have their own members that they bring to the table — people that joined the loyalty program for cash back or other incentivized rewards. Most affiliates will drive traffic through a variety of different methods including search engine marketing/paid search; social media campaigns; newsletters and email; mobile; or by ranking organically for keywords of the products they are advertising. What is most important is that your affiliate program has clearly defined guidelines on acceptable marketing methods that affiliates must agree to when joining the affiliate program.
On the legal end of things, affiliate partnerships are typically managed contractually with a simple click-through agreement that affiliates “sign” electronically when they apply to the program. While some affiliate networks will have standard terms that affiliates need to agree to, merchants within the network may also have special terms and conditions that affiliates must agree to that could include paid search guidelines, branding requirements and types of affiliates allowed into the program.
Resellers are just that — reselling products that they purchase from the manufacturer at a discounted rate. They both resell and take care of product fulfillment. While affiliates are primarily a new customer-acquisition channel, resellers bring a blend of new customers to the table, but also maintain their own customer lists and may provide value-add services post-transaction. Resellers will often have a storefront e-commerce website that their customers can purchase through, or they may have sales people in the field that are responsible for managing geographical territories or specific customers.
As such, resellers may be more involved in the actual sales process and may offer exclusive product bundles.
Marketing methods of resellers vary greatly depending on the size of the reseller and how established their business is. While smaller resellers that do not have strong brand recognition may run paid search and social campaigns around specific products, larger resellers may leverage their brand strength in their marketing campaigns as well. Larger resellers may also be up-selling their existing customers with value-add services, such as implementation and integration services, training, and offering support.
Contractually, reseller agreements tend to be much more complex. While companies may have thousands of affiliates in their affiliate program, they may only have a handful of resellers, each having unique and complex terms associated with their contract. Contracts may include exclusivity to specific geographic regions, products, or value-add services the reseller provides.
Evaluating Affiliates & Resellers
While creating affiliate and reseller partner programs may be a daunting task, if you’ve done a good job defining each partner program, the actual vetting process to figure out “who-goes-where” should be relatively simple.
While resellers may have previously been considered to be more “established” businesses than affiliates, this no longer holds true. Some of the largest affiliates on the Web employ hundreds of people to run the business and can be part of larger media conglomerates. As such, it’s best to simplify the process of identifying which partner program is appropriate by asking a few simple questions of each partner and their business model
1. Will this partner be processing the actual transaction and managing fulfillment?
For the most part, affiliates are not going to be processing transactions and managing fulfillment onsite. Affiliates will refer the customer to the merchant to handle the actual transaction, while resellers likely have a point-of-sale system or e-commerce storefront so customers can purchase the product directly from them. There are exceptions to this where a reseller prefers to act as more of an affiliate by purchasing through their affiliate link instead of purchasing and managing inventory; but in most cases, these “resellers” are better managed as an affiliate
2. Who “owns” the customer information for the customer the partner refers?
Resellers are typically more interested in owning the customer data once the transaction occurs. There are instances where affiliates, particularly cash back or loyalty websites, will require the consumer to register and create a user account, but that is to ensure they receive their cash back or rewards for purchases completed through the affiliate site.
3. How is the partner going to be promoting and advertising your products?
Resellers typically have an established customer base that they’ll be selling your products into, while affiliates will aggressively advertise your products through different promotional methods. As such, resellers tend to do more relationship selling than affiliates, which are relying on Web traffic volume.
4. Are there any value-add services that the partner will provide before, during, or after the transaction occurs?
When resellers are capable of offering services like first-line customer support, installation and implementation services, they become value-add resellers and truly differentiate themselves from affiliate partners. Whether or not the partner has these capabilities should weigh heavily in determining which partner program is best for their business and yours.
Multi-Channel Marketing Strategies
Not sure where to start or what the best multi-channel marketing strategy is for your business? Start small. Test different strategies that enable you to measure the overall effectiveness of affiliates and resellers.
1. Segment the products that are available to partners in each channel
If you have a broad product catalog that is easily categorized, this is a great multi-channel strategy. B2B or enterprise-type products that have longer sales cycles or are complex products will be better sold through resellers, as they can offer more support throughout the sales process than affiliate partners can. Transactional consumer products that require little to no pre-selling will likely be more cost-effective when sold through the affiliate channel.
2. Create Tiered Partner Programs
Instead of just having an affiliate program and a reseller program, create tiers within each channel partner program that have special perks and incentives for your partners.
On the affiliate side, you can have an affiliate program that is available to anyone interested in applying. But you can also easily create a private “invite-only” affiliate program that has perks like: increased commission, approval to do paid search on branded keywords, and early access to deals or new product releases.
The same concept holds true with resellers. Create different tiers (Silver, Gold, Platinum, etc.) that offer benefits and perks to resellers when these statuses are attained. These tiers can be based on overall sales volume, number of customer support inquiries attributed to the reseller, or other profitability metrics that incentivize your resellers to become better partners and add more value to your business.
3. Test promotions and offers by channel
Try running different promotions by channel and see what types of offers perform best. For affiliates, this could be simple coupons or allowing them to promote refurbished or “open box” items. For resellers, you may test different product bundles and cross-promotions.