Do you offer discounts to your customers? If you do, do you share those discounts with your affiliates? Do you have a solid, well-established strategy for discounts in affiliate marketing and across all your marketing channels? Your answers to these two questions greatly impact your affiliate program’s performance and your overall business. But before we dive into details, allow me to clarify that:
Offering discounts in affiliate marketing programs does not and should not mean focusing on or targeting coupon affiliates. It means leveraging more opportunities and not closing the door on potentially huge partnerships. In times when, according to stats,
- 90% of shoppers use coupons,
- 70% of those are open to subscribing to newsletters for a worthwhile discount,
- Some coupon websites and apps have millions of users,
- Big media websites have developed their own deals and coupons sections, and browser extensions,
it would be a pity not to try and reap at least some of the benefits.
10 Benefits of Offering Discounts
Engage wider audiences – Deals shared through discount apps, on social media, in ads, videos, newsletters, or by word of mouth are a great way to attract and engage new audiences.- Improve targeting for specific demographics – You can customize your promotional campaigns to target specific demographics by applying conditions like age (students or seniors), location, or profession (employees of big companies, students, teachers, military, business owners, etc.).
- Increase order value – Conditioning discounts by a minimum order value or providing tiered discounts correlated with the order value is a great way to get customers to buy and spend more.
- Convert more shoppers into buyers – Discounts, especially when timed, create a sense of urgency and can also be used to reduce shopping cart abandonment and improve your website’s conversion rate.
- Highlight certain products and better manage stock – Discounts and promos can help you draw attention to and increase sales for certain products that could be expiring, go out of season, incur large storage costs, etc.
- Foster loyalty – Over 70% of shoppers are willing to subscribe to newsletters, texts, or use apps if the discounts they can receive are worth it, and all these create opportunities to reengage those shoppers and turn them into return customers.
- Engage more affiliates and grow your affiliate program – Deals and promos can be a requirement for working with certain affiliates and a great selling point for engaging others.
- Improve affiliate program performance and affiliate satisfaction – Used right, discounts can help conversion and tracking, which translate to improved affiliate program stats and higher affiliate earnings. These, in turn, mean higher chances to optimize and scale with already active affiliates and engage and activate new and inactive affiliates.
- Create new opportunities – Great deals and promo campaigns increase brand awareness and create new opportunities to engage publishers and potential business partners.
- Keep up with your competitors – When 90% of U.S. shoppers use discounts and your competitors offer them, your only chance to grow and win over some of those shoppers is to do the same or better.
Types of Discounts
Now that you understand the benefits of offering discounts, let’s see what type of discounts you can offer and how they work:
As you can see, there are quite a few types of discounts available. All of them have their pros and cons. It’s up to each business owner and marketing team to analyze, test, and decide what works best for their needs and how they should be implemented. An important factor in that decision should be the affiliate program.
Guide to Offering Discounts in Affiliate Marketing and Beyond
1. Decide on the Number and Type of Discounts to Offer
Depending on the specific of your business, you may want to consider offering at least the following:
- A public discount, available to all customers, to support affiliate, email, paid, and social media marketing – It can focus on seasonal products, products you’re looking to clear stock on, or encourage higher order values. If you offer services, the discount can focus on the service that brings you the most money or on a new service you’d like to draw attention to, on longer-term contracts, etc. Its role is to convince the shoppers that see your team and affiliates’ ads to visit your website. Depending on the number of products, a sales page would help you highlight the products on sale to shoppers, explain discount terms, etc.
- An additional discount, to engage and convert shoppers – It can be a newsletter signup discount, a personalized discount on quiz-based recommended products, an exit intent popup discount, or a shopping cart recovery discount. To control costs and avoid confusing customers with different offers it may help to reinforce the same product for several purposes/occasions.
- Personalized discounts for key affiliates – These discounts open new doors, help consolidate relationships, improve conversion, and can help tracking, especially for social media, app-based, and newsletter promotions, where cookie and click-based tracking often fail. For public, long-term campaigns, you can use the same discounts as for your exit intent popups and shopping cart recovery. For promising, short-term campaigns likely to open more doors and move considerable stock, a more exclusive discount could take you a long way.
- Exclusive discounts for closed networks and limited-time campaigns – Some affiliates, be they employee benefits and loyalty networks or influencers, will only promote your products or services if you offer them a best-of-web discount. Many of them have the means and resources to introduce your brand to millions of consumers and drive hundreds or thousands of sales, so they’re definitely worth considering.
2. Figure Out the Maximum Discount, Commission, and Cost Per Sale
Now you have an idea of the discounts you can/should offer. However, their final amount should be one that you can afford, one that allows you to be competitive yet remain profitable. Before you implement anything, do the math and see what your margins for each product/category are and how various scenarios influence them. For example, when it comes to your affiliate program, those margins should cover both discounts and affiliate commissions.
Other Factors to Consider
- Top competitor discounts and commissions – It would be great to be able to match or even exceed some of you competitors’ offers.
- High-stock products – They often incur increased storage costs and long storage periods result in product damage and high rates of returns so they can be a great starting point for your discount strategy.
- Volume-based discounts – By tying discounts to the order value or the number of products purchased and by creating product bundles, you can encourage buyers to spend more money in your store and, possibly, save you some money on packaging and shipping.
- New products – Draw attention to new products by offering a generous discount.
- Buyer behavior – Offering a discount doesn’t necessarily mean all sales will be subject to it. Some customers will buy products that are not on sale. Others won’t bother to look for discount codes. Monitor discount usage and overall costs per sale and optimize your campaigns based on stats.
- Major holidays and exclusive campaigns – These may require slightly higher discounts than usual, so leave room for them.
While it helps to use your average discounts and commissions or marketing costs as a reference when planning campaigns, I recommend staying flexible and playing with margins as needed. Some affiliates don’t promote discounts but need higher commissions. Others need exclusive discounts but will accept lower commissions. New customers are usually worth spending a bit more on when you have a decent return rate and high customer lifetime value. Some key affiliates will probably require that you exceed your margins but the partnership with them will help you establish your brand as a market leader and open the door to many more partnerships and opportunities.
No matter what discounts you offer, remember to maintain a cohesive, unified strategy across your different marketing and communication channels. The buyer journey is never straight or streamlined and usually crosses several channels. Offering different discounts for different channels will only confuse shoppers, fragment their journey, and cannibalize your budget. Reinforcing the same discounts across various channels and sending coherent, cohesive marketing messages will ease things for everyone and help your branding efforts.
3. Choose Your Discount Implementation Method
Leaving aside bogo and free gift offers, there are two major ways to implement discounts:
- Compare Price / MSRP – The discount is implemented as a price drop. It allows the shopper to see the discounted price next to the initial price, as well as the saved amount and/or percentage. It is a bit more complex to implement than discount codes, as it requires updating the price of every product and variant, but it improves the shopper’s experience and also allows applying additional discounts, allowing for more flexibility.
- Coupons – You create a coupon code for the desired amount or percentage and customize it with settings like product categories, start and end date, number of orders, stackability, etc. While coupon codes give a sense of value to shoppers and allow for more personalized campaigns, especially with affiliates, they can be tricky to manage and result in conflicts and unwanted costs for larger businesses offering several types of discounts on a regular basis.
Consider combining these two methods. Use the price drop method for the public discount advertised on the website, and play with coupons for the rest of the discounts, including affiliate codes. This way, your public offer will be clear and easy to understand and promote (slashed prices, $ or % off discounts, etc.) and can easily work with any additional discounts you decide to offer without unnecessarily complicating the buyer journey and you and your affiliates’ work.
4. Plan and Announce Discounts in Affiliate Marketing Newsletters
Generally, the simpler and easier to implement, explain, and promote your discounts, the better. No one will bother to write (when promoting) and read (when shopping) endless terms and restrictions. Then, variety helps. Instead of keeping the same discount live for months in a row, plan weekly or bi-monthly campaigns. Change their name, test different discounts, and highlight different products.
Make sure to share the details with affiliates ahead of time and equip them with banners and everything else they may need to promote them. Each new campaign is a great opportunity to engage more affiliates and activate existing ones. Send newsletters, upload/update deals on the affiliate networks, or send individual emails, as needed. If you have self-managed accounts on employee benefits and loyalty platforms, update offer details so their members get access to your latest discounts.
5. Test, Optimize, and Police as Needed
Sometimes, no matter how much you try and how carefully you plan them things don’t turn out how you hoped they would. Perhaps the discounts you implemented didn’t work as planned, they weren’t clearly explained, or conflicted with other website settings. It’s not the end of the world. Just give yourself the chance to catch errors early and correct them. Collect feedback and continue to improve.
Once you’ve implemented the chosen discounts, put yourself in the buyers’ shoes and add products to cart, test discount codes to see if they work and stack up (or not) as intended. Always try to anticipate and avoid conflicts between different discounts and campaigns. The last thing you need is shoppers complaining to the affiliate who referred them about a discount code not working or higher discounts being available elsewhere.
Make sure your customer service representatives are always aware of your offers and collect feedback. Use the feedback you receive to improve your current and future campaigns. Affiliates can be an excellent source of feedback as well. Express your interest, keep communication lines open, and act on feedback. And, most importantly, police affiliates! Offering discounts in affiliate programs is just one step to success. Knowing where and how affiliates promote those discounts is even more important.
While some affiliates may not even bother to promote discounts, others will resort to anything to make money. That includes advertising inflated discounts, promoting expired or unauthorized coupon codes, bidding on branded keywords, or forcing certain actions that will negatively impact shoppers’ experience and harm your reputation.
To prevent and counteract such behavior, you need:
- The legal framework (affiliate program agreement)
- Day-to-day monitoring of your affiliates’ activity
- Action plan
Some of the affiliates who resort to these actions are too small and unscrupulous to bother with. You can give them a chance to come around and remove them from your affiliate program if they don’t. Others will be valuable and worth optimizing with. You can offer them their own coupon code in exchange for blocking user-submitted codes. Commission increases or flat fees could get you premium exposure in their newsletters, on their social media, or on different pages of their websites.
The Bottom Line About Discounts in Affiliate Marketing Programs
As explained above, there are numerous benefits to offering discounts in affiliate marketing programs. There are also a lot of aspects to keep in mind and things that could go wrong. Never rush things. Always try to see the big picture. Don’t lose sight of your goals and objectives. Put yourself in your shoppers’ and affiliates’ shoes. It’s OK to make mistakes as long as they don’t get too costly and you learn from them. And it’s OK to get help, especially when you’re only beginning and unsure what would work best for your company and affiliate program.
What type of discounts do you offer/recommend and what’s your experience with the above? Do you need help planning and implementing discounts in your affiliate marketing programs? Are some of your affiliates acting up and praying on your good name and intentions? Get in touch and let us help!