The Breakdown of Affiliate Marketing: Protect Your Business and Profits
Affiliate marketing has long been hailed as a lucrative avenue for influencers and businesses alike. However, as the landscape evolves, it's essential for health and wellness professionals to understand the underlying dynamics and how they can impact your business long term. This blog breaks down the current state of affiliate marketing, the potential pitfalls, and how you can protect and grow your business in this changing environment.
The Hidden Truth About Influencer Marketing
While being an influencer for a product company might seem lucrative initially, it often results in a net loss in the long term. Influencer marketing can be attractive as it provides immediate revenue and leverages existing audiences. However, it is ultimately counterproductive to long-term growth since it doesn’t drive recurring revenue and in effect, you give your audience to the product company with each offer. Companies use your influence to capture leads, but you are left with no control over the buying experience of the customer relationship. This dynamic undermines your influence and income potential, as the company eventually sidelines you to maximize its profits.
The Benefits and Hidden Costs
As a health and wellness professional, you know that every interaction with your patients or clients is an opportunity to deepen the relationship and improve outcomes. Affiliate marketing, where you share a unique code or link with your audience and earn a commission for every sale made through that code or link, can seem like a win-win. This model has been beneficial for many, offering a relatively easy way to monetize your influence and drive sales for brands. For businesses, having influencers in their network can significantly boost sales and brand visibility, leveraging the influencers' established audiences to reach new customers.
However, the downside is significant: you lose access to valuable customer data, which is handed over to the product company. When your audience makes a purchase using your affiliate code or link, the customer's IP (computer) address and purchasing data are captured by the company, not by you. This means you miss out on critical insights into your audience’s health behaviors and preferences—insights that could be used to tailor your offerings, improve patient outcomes, and strengthen your business. Additionally, the product company can now contact your customer directly, bypassing your relationship with them.
The Data Dilemma and Customer Acquisition Costs
In health and wellness understanding your clients' needs is essential. Companies leverage the data gathered through affiliate sales to build their customer databases, allowing them to market directly to your clients. Over time, as these companies strengthen their relationships with your clients, your role becomes less critical, potentially leaving you with reduced influence and income.
One critical aspect of affiliate marketing is the cookie window, the timeframe within which a purchase must be made for you to earn a commission. If a customer clicks your affiliate link but returns to make the purchase later on their own, you could miss out on the commission if the cookie window expires before the purchase is completed, even if your promotion sparked the initial interest. The window typically lasts 30 days but can be as short as 7 hours. If your referral buys after that timeframe, you do NOT get paid, yet you’ve given away your client.
Additionally, companies often use IP addresses collected during these interactions for retargeting campaigns, allowing them to market directly to your audience with offers that may be even more enticing than those promoted through your affiliate links. Affiliate offers from product companies work with what is called a Last Click Attribution model. If a buyer clicks on the retargeting ad, the product company captures the sale from their retargeting ad and therefore doesn’t compensate the originating affiliate. In last click attribution, the sale is ‘attributed’ to the retargeting ad that the product company paid for so the originating affiliate (you) doesn’t get paid a commission and you’ve given your client directly to them. For example, after you've promoted what seems to be a 'Great Sale,' the company may retarget that same audience with an even better offer through a Facebook or Instagram ad. If a customer clicks on that ad—even though you initially generated the lead—you won't receive any compensation.
Moreover, the commissions paid to influencers are booked as the company's Customer Acquisition Cost (CAC). Think about this, their goal is to pay you once to acquire your customer if they buy within the cookie timeframe and they don’t click a retargeting ad! They can then market directly to them to drive sales without paying commissions long term. Therefore, companies are willing to pay these initial commissions because they know that acquiring a customer through an influencer is a worthwhile investment. However, once they've acquired the customer, they no longer pay you commissions. This illustrates how an affiliate commission from a product company that you refer to is NOT a recurring revenue stream but is a one-time commission. To drive new affiliate revenue and keep this stream of revenue going, you would either need to have 1) new offers from existing affiliates, or 2) new affiliate product companies.
The True Cost of Being an Influencer
While being an influencer for a company might seem lucrative initially, it often results in a net loss in the long term. Companies leverage your influence to capture leads and convert your customers, increasing the lifetime value of each customer for their business, while leaving you with no control over the customer relationship. This dynamic undermines your influence and income potential as the company eventually sidelines you to maximize its profits.
“Affiliate marketing seemed like an easy way to generate one-time revenue, but over time, I realized that directing my clients to third-party affiliates was diluting my long-term sales and hurting my brand value and connection with my clients. It took us two years to unwind all our affiliate relationships and start seeing recurring revenue that we keep within our own ecosystem”
Expanding Your Business with Get Healthy
To mitigate the risks associated with affiliate marketing consider building your own brand, store, and even products. By creating your own ecosystem, you maintain control over your sales and customer data. Platforms like GetHealthy offer the tools and support needed to establish and grow your own online store. With GetHealthy, you can create a branded online presence, sell a wide range of products, and retain valuable customer data, ensuring that you are not sidelined by the very companies you help to grow.
Get Healthy provides a turnkey integrated solution for health and wellness professionals to create and manage their own online stores:
Create Your Own Branded Store: Establish a unique online presence with a customizable storefront that reflects your brand's identity.
Enhanced Patient Engagement: Provide a seamless shopping experience and offer bundled products, digital content, and courses tailored to improve compliance and patient outcomes.
Customize Your Product Offerings: Choose from over 350 brands and create your own private label products to meet the specific needs of your clients.
Dedicated Support for Health Professionals: Benefit from personalized support and guidance from an Account Manager who understands the unique needs of health and wellness professionals, ensuring the success of your online store and business growth.
Increase Your Revenue: Build a loyal customer base while maintaining full control over your customer data, enhancing customer relationships and maximizing profitability.
Leverage Advanced Marketing Tools and Educational Content: Utilize cutting-edge marketing tools and access comprehensive educational resources to engage and inform your clients.
In the health and wellness industry, your relationship with your patient and clients is paramount. By owning your sales ecosystem, you can build a sustainable and profitable business that isn't dependent on the whims of external companies. Instead, you create a direct relationship with your customers, fostering loyalty and long-term growth. While affiliate marketing models may offer short-term benefits, they are not sustainable in the long run. Building your own brand and leveraging platforms like Get Healthy is the key to maintaining control, maximizing profits, and ensuring long-term success.
Ready to take control of your customer data and build lasting patient relationships? Book a demo with us today!