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Does Affiliate Impact Your Retail Strategy? #48

Last week, we uncovered our recommended affiliate partner marketing mix.

The more we talk to clients, teammates, and partners about this mix, the more excited we get about it. It packs a lot of value to brands implementing it. It requires a long-term approach - something we have discussed extensively.

This week, we dive into retail for e-commerce brands and how affiliate can impact their approach to it.

How Affiliate Marketing Impacts Retail Strategy

The connection between retail and affiliate marketing is not often discussed or known. However, we think some areas that you might want to consider in your strategies can affect both.

• Brand Exposure and Reach: Affiliate marketing can expand your brand's visibility by leveraging affiliates' audiences. This broader reach can be essential for a retail strategy focused on acquiring new customers and entering new markets.

• Customer Acquisition Costs: By using affiliates who only get paid for actual sales or specific actions, you can manage your customer acquisition costs more effectively. This cost efficiency can influence your overall retail budgeting and resource allocation. In short, you can reinvest that into strategic initiatives across the org by adding an efficient paid marketing growth loop. Specific partners can drive in-store activity if aligned with web —> in-store pick-up, mobile app, or point-of-sale tracking.

• Product Promotion and Launches: Affiliate marketing can be crucial in promoting new products. Affiliates can create buzz and generate interest, affecting how you plan product launches within your retail strategy. This is particularly relevant with influencers, allowing you to tap into a vertical we have discussed extensively in this newsletter to secure trusted, authentic voices to promote your brand rather than relying on your brand to do all the heavy lifting.

• Customer Insights: The performance data from affiliate marketing campaigns can offer valuable insights into customer preferences and behavior. This information can inform your retail strategy, from product development to targeted promotions. Leading brands like Amazon and Glossier are trapping into consumer insight and community like never before, building slack groups offering perks and getting real-time feedback to inform decisions. Some of our existing customers can become evangelists, affiliates, and influencers, and influencers themselves can share valuable insights about trends and behavior with trusted brands that can inform how you think about other channels.

• Competitive Advantage: Successfully leveraging affiliate marketing can give you a competitive edge, especially if you can build a strong network of affiliates. This can influence your retail positioning and how you differentiate from competitors. Affiliates can and do impact all funnel stages, from awareness to consideration to conversion.

How Retail Strategy Impacts Affiliate Marketing

• Product Selection and Promotion: Your retail strategy—what products you sell and how you promote them—will directly affect your affiliate marketing. You'll need to communicate this strategy to your affiliates so they know what to focus on. Affiliates can be helpful advocates for your brand if you highlight the right mix, price them appropriately, utilize dynamic commissioning, and align your promotional and marketing strategy with your affiliate approach.

• Commission Structures: Your retail operations' profitability and pricing strategy will dictate how you set up affiliate commissions. Competitive commissions can attract more and better affiliates, but they must be sustainable for your business.

• Brand Messaging and Consistency: Your retail brand's messaging and values should be reflected in your affiliate marketing to ensure consistency. This requires clear communication and guidelines for your affiliates to ensure they represent your brand appropriately. Suppose the brand carries trust and weight with customers and differentiates at the foundation and retail levels. Those guidelines can be communicated to affiliates, who can adhere to them while maintaining their authentic voice.

• Customer Experience and Loyalty: The customer journey doesn't end with a purchase. Your retail strategy regarding customer service, loyalty programs, and overall shopping experience will influence the effectiveness of affiliate marketing. Happy customers are more likely to make repeat purchases, which benefits you and your affiliates. This can help partners closer to the point of sale or repurchase decision. Of course, as we have discussed, you will want to price and value partners accordingly to ensure you are not overpaying partners benefitting from other channels like retail. I would recommend a combination of lift tests, post-purchase surveys, hold-out tests, and MMM to get a clearer view once you tap retail and multiple mature performance marketing channels.

• Market Position and Target Audience: Your retail strategy's focus on specific markets or target demographics will shape your affiliate marketing approach. You'll seek mid-tier influencers, media house partners, Connected TV, and review affiliates whose audiences align with your target market, ensuring more relevant and effective promotions.

In summary, affiliate marketing and retail strategy are interconnected and influence each other more than you might think. A cohesive approach that aligns both strategies can enhance brand visibility, optimize costs, and drive sales.

I spoke with George Yuhba about this topic. Not only is he an affiliate marketing expert, but he also has deep experience in brands with a heavy retail presence. He is well-versed in how brand, retail, and affiliate marketing interact.

Bonus Material

Let's pivot from a retail store and retail approach to the rise of retail media networks!

Brook Schaaf does a great job of highlighting the rise of RMN in this article "RMN’s Morphed Meaning” (shout out to Jim Nichols), not the ole Retail Me, Not folks in the coupon category, but the Retail Media Networks on the rise. Macy's and Uber are now in the game of monetizing all those eyeballs.

As Eric Seifert has written, “Everything is an Ad Network,” retail and platforms like Walmart, Target, Lowes, Uber, Doordash, Zoom, and game developer Zynga are chasing ad revenue and building ad networks. Amazon is an excellent example on a large scale. This week, JP Morgan Chase announced they are rolling out an ad network capability.

Another shout-out to Jim for joining me on our podcast and sharing some always-appreciated insights.