The Startup Chat with Steli and Hiten
361: How to Use Affiliate Programs to Fuel Growth
Nov 13, 2018
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In today’s episode of The Startup Chat, Steli and Hiten talk about affiliate programs and how to use it for your business when you want to acquire more customers.

Affiliate programs can be an effective way to get new customers and scale your startup. For it to be successful, it is important to know how to create a program that helps your customers and advocates do your marketing for you.

In this episode, Steli and Hiten talk about what an affiliate program is, why they don’t work for some startups, why some programs have failed in the past and much more.
Time Stamped Show Notes:
00:00 About today’s topic.

00:46 What are affiliate programs?

01:09 Why it’s a channel that works really well.

01:20 A key metric that you can use to determine if this is for you.

01:53 A mistake startups who want to use this channel make.

02:12 An interesting thing about affiliate programs.

03:52 Two reasons why affiliate programs work.

04:04 What a referral program is.

05:03 The reason affiliate programs don’t work.

05:59 Another reason why affiliate programs don’t work.

07:35 Examples of affiliate programs gone wrong
3 Key Points:

If my product already has a high word of mouth, it’s more likely an affiliate program will work for you.
When you sell to b2b companies, just offering them some amount of money might not work as well.
You having an affiliate program doesn’t really scale your business if a bunch of these factors are not in place.

[0:00:00]

Steli Efti: Hey, everybody, this is Steli Efti.

[0:00:03]

Hiten Shah: And this is Hiten Shah. And today on The Startup Chat, we're going to talk about affiliate programs, and how to use it for your business when you want to acquire more customers. I'm going to shoot this first, real quick, and then we'll get into it, Steli, 'cause this is one of those more rapid-fire ones, because it's just a topic and we haven't talked about it, but it's a super-important one, because it's affiliate partners, referrals, there's this whole category of, somebody is bringing me leads and/or sales for my business and I'm giving them some kind of commission. That's essentially what an affiliate is. Right?

[0:00:38]

Steli Efti: Right. Right.

[0:00:40]

Hiten Shah: I love the idea of having affiliates, or even partners that are bringing you customers for a commission. I think it's one of the key channels that, especially in B to B and SaaS, that works really well. It also works really well in e-commerce, and for me it has everything to do with one key metric, if this is going to work for you. And it's going to sound crazy, but it's pretty standard, but the key metric that I actually go for is, if my product already has high word-of-mouth, it is more likely that an affiliate program, or a referral in partnerships are going to work really well.

[0:01:19]

Steli Efti: Yeah, that makes so much sense it hurts. But I'm still sure that a lot of people-

[0:01:23]

Hiten Shah: Yeah, exactly, because not every product has that.

[0:01:24]

Steli Efti: Yeah, and I'm sure a lot of the startups that are considering or have chosen ... Let's invest in affiliate programs or referral programs to fuel our growth, have never stepped back to ask this very simple question, "Hmm. Do we get any word of mouth right now? Are our customers or people who know about us talking about us at all?" It seems like a very fundamental first step to answer before you go, "Let's pay them money, or give them incentives to do it." But-

[0:01:50]

Hiten Shah: Exactly.

[0:01:51]

Steli Efti: ... But I'm still, I would be surprised if a lot of people thought about that first. So one thing, one interesting thing about affiliate programs is that, or referral programs, is that I do think,

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