128: Affiliate Marketing for Your Subscription Box Business

Have you thought about adding affiliate marketing to your subscription box business? Not sure where to start or how to find a good affiliate or even how to manage it on the backend? Well, this episode is for you. Grab a notebook and take some notes. I've got some actionable steps for you. Come listen.

Welcome to the Launch Your Box podcast with weekly tips, tricks, and strategies to start, launch, and grow your subscription box. Now here's your host, Sarah Williams.

Welcome back to the Launch Your Box podcast. Today we're going to dive into affiliate marketing for your subscription box business and how it can significantly boost your revenue, expand your customer base, and strengthen your box brand. So whether you're new at being a subscription box entrepreneur or you're a seasoned pro, you'll have actionable takeaways from this episode. Thanks for joining me. So let's just start off with the basics, um, and then we're going to get into some of the action items that you can take. But really, the biggest question is, what is affiliate marketing? And affiliate marketing is a performance-based marketing strategy where brands can reward individuals— and these would be your affiliates— for marketing or driving traffic and sales to their subscriptions or other products you might have in your shop. It really creates a win-win situation for both the subscription box brand and the affiliate. So it works like this. A subscription box brand creates an incentive. This could be a one-time incentive or it could be a recurring incentive. Okay, then the subscription box brand would generate specific links or codes for each of their affiliate partners. Okay, so you're going to have a specific link that you would use to promote someone's subscription box, or you're going to give a specific link to an affiliate to promote your subscription box. Then the affiliate promotes your subscription box on their platforms to their audiences. So they're going to get in front of their people and they're going to promote your subscription box. And for every action that is taken based on the actions that you want, the results that you want, the affiliate is paid an incentive. Okay. And this is much different than like influencer marketing. And I don't want to get too far into that because I want to talk about affiliates. But affiliate is paid based on results. And an influencer marketing situation is they're paid upfront for an agreed-on project with— it usually involves a particular type of post, particular types of images. So they're paid a flat rate fee for the project where an affiliate is paid based on the results that they get. Okay. So I love using affiliates because it creates a low-risk marketing strategy for any subscription box brand. You only pay for what you get. So you're not paying upfront for things that you don't get, unlike the influencer marketing where you're just paying a, paying a flat fee and you're not really sure what you're going to get. When you pay for an affiliate, you're only paying them based on the results. So it's very cost effective. If you don't get any results that you've agreed upon, you're not having to pay them. Okay, you get in front of a wider audience. So when you're using an affiliate, they usually have an established audience. They've already established this know, like, and trust factor with their audience. So it's not like you're just putting your subscription box up on cold ads and running those into cold audiences, right? So it's different. It actually is more cost effective because the people in your affiliate's audience already know, like, and trust that person. So automatically you get know, like, and trust factor because they're promoting your subscription box. And with the right affiliates, you have the ability to increase your credibility and your know, like, and trust factor. If I'm associated with you, if you're out there promoting my subscription box and people love you, instantly people are going to be drawn to me too. So you want to align with the right person. And that's why it makes identifying, you know, a good affiliate really, really important. And I want to talk about that for just a few seconds. If you're a note-taker, pull out your notes and let's jot some things down. If you've been thinking about doing affiliate marketing, but you're not sure where to start or how to go about it, this episode is for you. And I'm going to give you some really good actionable steps here. So if you're a note-taker, grab your notes. If you're on your phone listening, pull out the notes tab on your phone. If you're walking or driving, just listen and you can come back to this as well and check out the show notes. But let's talk about what identifies as a good affiliate partner for you. So you need to clearly define your ideal customer and your niche. Hopefully at this point you already have done that because We should already be selling at this point. So make sure you're using affiliates that have the same person you're looking for in your audience. That's how this becomes a win-win. You don't want to have affiliates that don't have your ideal customer in their audience or their following. So we want to make sure that we've clearly defined who the person is that's going to be a great subscriber for us. Okay. The affiliate that you choose or the affiliate that you're looking for is someone that's going to align with your beliefs and morals. Okay, what do you stand for? What is your why? We need to be really clear on that and make sure that we're not misaligned with any of our affiliates, because if our affiliates show up and say something or do something that is misaligned with what we stand for as a person and a brand, it's going to hurt your brand credibility. So you— I want you to ask yourself, will this person represent me and my subscription box brand in a positive way? And you know what I'm talking about. There are people that get really political on their social media, and that's 100% fine. But if their political views don't align with your political views, that could be a problem. There are people that have prejudices or make comments or statements that don't align with who you are and what you stand for. So I want to make sure that you're really considering that and that you're just not letting anyone promote for you. Okay. It is— if someone says, hey, can I be an affiliate for your subscription box? The automatic answer is not yes. You need to be doing some research about who this person is. What kind of people are in their audience, and if they're a good fit. It's not whoever wants to can, because ultimately that could hurt your brand and your credibility. We've gone through the last several years of this cancel culture phenomenon, and it happened a lot in 2021, in late 2020. And if you were associated with people that got canceled, it directly affected you and your business too. And then people started to really pull back and say, who am I aligned with? And does that make sense for me? So I don't want you to get caught up in some drama, some misalignment that could hurt your brand in a negative way. So I want you to really think about it. Will they represent you and your brand in a positive way? Okay. Now, when you really understand who your ideal customer is and who the ideal affiliate is, how do you find them? I get that question a lot because people are like, okay, I want affiliates. I know I can, you know, create a structure around this. How do I find an affiliate? The first place that I want you to look is in your subscriber base. So do you have a subscriber or subscribers. Maybe they're new, maybe they're long-term subscribers that already have a following. And it doesn't have to be that they have a business. Maybe they run a small moms group in your local community. Maybe they're, you know, they work for the news or they work for some kind of community organization where they're in front of other people that are your ideal customer. They don't have to be someone that has their own business. I'm fortunate enough in my subscriber base that I actually do have several subscribers that have their own businesses. And so when I started to look into affiliate marketing, that's exactly what I looked for— someone that had their own following, that regularly engages with that following. That is an ideal affiliate. Number 1, they're paying for my subscription, so I know they love it. Okay, so they're already a subscriber. They've been getting the subscription for a little while and they love it. And so I started there and I started to identify people that were in my subscriber base that were already kind of sharing my subscription. You know, they're going to put their t-shirt on, they're going to post it on their pages, and then they're going to tag me in it. That's instantly how I started to identify these people that were already in my subscriber base. And I want you to look at that. Who is automatically sharing when they get a subscription box from you? I want you to start there and you can do some reach out on anyone there. The next place that I want you to look, and maybe you don't have anyone yet, maybe you're newer, maybe you only have 20 or 50 subscribers and there's not really anybody jumping out in your subscriber base. That seems like that's a good fit for you right there. I want you to go and look, look at influencers. And I told you in the beginning of this episode, influencer marketing and affiliate marketing are different, but influencers can be affiliates. Okay, so look for an influencer that has the same ideal customer in their audience based on what they promote regularly. This could be like bloggers. You know, when I think about my ideal customer, which is a Southern busy mom, I think about food blogs, travel blogs, those kinds of things. They're not necessarily anything related to monograms or anything related to, you know, t-shirts and accessories, but they're related to someone that would have my ideal customer in their audience. I'm my ideal customer, so what do I look for when I'm searching the web? I'm always on Pinterest looking for something to make for dinner. I'm always interested in travel things. So when I think about that, I want you to think about an influencer that would have the same ideal customer. They could be bloggers, they could be YouTubers, they could be TikTokers, they could be just other general content creators. So I want you to start to do some research on potential influencers that have an audience that you could reach out to. I wouldn't look for people that are in the same space as you. So I'm not going and looking for other monogrammers. I'm not going and looking for other graphic tee designers. I'm looking for someone that does something different with the same ideal customer. Now it's a little bit harder to reach out to someone that's not already in your world. That's why the first place I want you to look is people that are already subscribers, because hopefully they already know, like, and trust you. So when you reach out to them, it's a conversation because they already know who you are. When you're just looking for influencers, that's where it becomes a little bit different. And so I need you to build some form of relationship with them. Before you start cold calling on them. So I want you to follow them. You find a blogger or a YouTuber or a TikToker that you think, oh, this would be a great affiliate for me, follow them. I want you to start liking their content, commenting on their content. Come up, your name needs to come up in their world so that when you do reach out to them, they're like, oh, this person likes my content. This person is engaging with my content. Let me see what's going on before you just slide into the DMs like a cold call. Like a, like it's when someone calls you about their car warranty, you just automatically hang up on them. We don't want them to hang up on this, on us, right? So I need you to form some sort of relationship with them, and you can do that by engaging in their content. We love it when people engage in our content, right? So do the same thing. Do that for a little while before you do the ask. That's going to help you. And then once you start to identify some potential affiliates, whether they're in your subscriber base or they're just influencers, we've got to build an affiliate program that is a win-win for both parties. Okay. It needs to be a win for you. You still need to walk away profitable. and it needs to be a win-win for them. They have to have some skin in the game or they're not going to show up and promote for you. So you have to really consider the structure of your affiliate program so that it's not one-sided. It's not one-sided for you and it's not one-sided for them, but it's a win-win for both parties. And you first need to determine your commission structure. Okay, so how will you incentivize these affiliates? That's the first thing that I want to talk about with you. You can do it one of two ways. Well, really three ways. The first one would be just free product. You can ship out free product. They get to keep it. That's more of an influencer strategy. But if they like your things, I mean, that's value to them. You're going to get free product. Okay. I don't love that structure because there's not a lot of incentive. Yes, they might like their free stuff, but there's nothing to measure that. What I love is these next two ways to set up your commission structure. One, a one-time payment upfront, and two, a recurring revenue share. Okay, so let's break those down. Let's talk about the recurring revenue. So basically, you're going to set up a percentage or a dollar amount of your subscription box that when someone joins with the affiliate link or the affiliate code, for as long as that new subscriber is a subscriber, your affiliate will receive a monthly commission. Or if your box is bimonthly or quarterly, it will be bimonthly or quarterly commission. So it's a percentage or a dollar amount that they will get recurring. Okay, so this is recurring revenue share, and so we'll determine that. And the way that I want you to determine how much that is, I need you to be thinking it's got to be a win-win. Okay, so if someone asked you to show up and sell your things, how much does that take for you? What would make it worth it for you? How much skin in the game would you have? Obviously, the higher commission, the more beneficial it is for the affiliate. But I need you to understand your profit margins before we give away the farm here. Okay. So when we talk about profit margins, the goal is that you have a minimum of 30% profit and that you're working towards 50 to 60% profit. Okay. So I need you to be realistic with what your profit margin is for your business. We can't give a 30% commission if our profit margin is 30%. We're not profitable with that sale. And if it's recurring, we're never going to be profitable with that subscriber. So that does not make sense. If you have, say, a 40% profit margin, what makes sense for you? I give a 15% recurring revenue share. My profit margins range from 45 to 65% across the board with my 3 subscriptions. And so I know if I'm giving someone 15% of that subscription, I still have profit that I'm making every single month. Okay, so I don't want you giving up all your profit. You're still building this business. And if you're doing a recurring model, you still have to be profitable. You can't give all your profit away. I would give half or less. So if you tell me that you are 30%, you have a 30% profit margin, for me, this is what Sarah would do. I would give them a 10% recurring. That still leaves you the lion's share of profit. It still makes it incentivized for them. If your subscription box is $60 a month, they're getting $6 a month for every subscriber. They get 100 subscribers into your world, they're now making $600 a month for as long as those people stay. So that's a win. Okay, 5% is too low. I don't know a lot of people that are going to do anything for 5% of anything. So I'm going to tell you 10% minimum, or put a dollar amount on that. Maybe it's $5 for every— I like a percentage because as your price increases, so does the ability for their dollar amount to go up. Okay. Now, if you want to do a one-time payment, this is also a great option. This is just, hey, they— you got them, your affiliate gets them in the door one time, and then it's your job to retain them. And you give them a one-time payment upon that conversion of sign-up. So when you think about the dollar amount for this, it's going to look a little different. It needs to be a little higher than your recurring. Remember, the recurring revenue share happens all the time. The one-time payment is going to only happen once on your acquisition of that customer. So I want you to think about your customer acquisition cost, your CAC. What is your customer acquisition cost right now for your subscription box business? How much money does it take you to acquire a new customer, a new cold customer? It could be $20, it could be $30, it could be $40, it could be more than that, it could be $100. I don't know what your acquisition cost is right now. When I was in my last launch running ads, my acquisition cost was $28. So if I'm willing to pay a $28 acquisition cost to run ads to my cold audiences, why wouldn't I pay that to an affiliate to get in front of their audience? Yeah, I might not be profitable in month 1, but hopefully I'm profitable in month 2 or 3. And then as long as I can retain them, I'm going to be profitable going forward. And it's a one-time payment. Yes, you run the risk that they cancel after that first month, but you run the risk of that with anyone. So if you're running Facebook ads and your acquisition cost is $28, they could cancel the next month too, and you could never make a profit on them. It's the same here. So if you're willing to pay that for your ad strategy, why wouldn't you be willing to pay that for an affiliate? I want you to think about that. Whichever structure that you do, I need you to make it a win-win for both parties, for you and for them. What makes sense for you? What makes sense for your affiliate to show up and promote? Now the next piece of this puzzle is setting up an affiliate software. So we've got to have a way to capture and track all of this, and you don't want to be doing this manually. You need to automate this, especially as you grow. So we use affiliate tracking software in my subscription box business called Affiliatly. I have an affiliate link for Affiliatly in our show notes today, but you can get signed up. It will connect with both Shopify and WooCommerce and lots of other platforms if you need to integrate it. But basically you will set up an affiliate, they'll create an account on Affiliatly, you will connect which products that you want to have a commission and how much that commission. Again, whether that's a one-time commission or recurring commission. And then it will generate the links to track, and then they will use their links from Affiliately. They'll have a portal, they'll be able to see how they're doing, they'll be able to track their commissions and their sales right from that portal, and so will you. So that when you go do the payouts, you're going to want to pay them regularly. You don't have to pay them monthly, you can pay them quarterly, you can set up whatever payment schedule you want to. It just needs to be clear. I like to pay when it comes in. I don't want to pay quarterly and then I got the commission 2 months ago and now I have to pay them. I'd rather just pay it when it comes in. So pay them regularly, once a month is great for me. But your affiliate software will track all of this. You don't have to keep up with anything. It will know when someone clicks their link, it will know how much you owe them, and it will know what you've paid and what you owe every single month. So you need to automate it. Okay. The other actionable thing that I want you to do for this is to create assets for your affiliates. We need to make this easy for them to be able to promote. So we can't make it difficult for them to show up and promote. So we want to give them some email swipe files that all they have to do is copy and paste, change a few words and send that out. If we are relying on them to generate an email, write an email, they're busy. That might not happen. So how could we make it easy? Email swipe files. Create graphics for them to use so they're not having to create their own graphics. And I want you to do this in different formats like Facebook, Instagram Stories, Pinterest, YouTube, whatever platforms they're on. Can we create a graphic base that they can pull and use graphics at any time? Can we create social media captions so that they don't even have to think? They can just grab some captions, grab one of your graphics, and post it. We need to give them schedules and timelines. Here's our cutoff dates, here's our promotion dates. And then we need to send them this information regularly. I love to put this in a Google Drive. And let's talk a little bit about my last subscription box launch. I used affiliates in that last launch, and I created a Google Drive that had all these assets in it. So, and I gave everybody a Google Drive link. So in that Google Drive, it had graphics, it had email swipe files, it had social media captions, and it had a document with everyone's link. So they didn't have to go log into their affiliate account, figure out their password, get their link. I tried to make it as easy as possible for them. Everything was in that Google Drive, and then I was putting that Google Drive in front of them regularly throughout the launch. Hey, don't forget all your assets are in here. Here's the link for the Google Drive. So they didn't have to go find anything. And something else that you could do with your affiliates if you're running a launch, you can use affiliates in a launch, or you can use affiliates all the time if you have an open subscription. But during the launch, I created an affiliate group and I would send updates to them on how many people that each affiliate had converted each day. And I was creating some friendly competition. Oh, she has 14. I've only got 10. I've got to step up my game. And so it created some friendly competition, some friendly promotion. And that's also where I'm reminding them that, hey, there's this Google Drive. Don't forget all your assets are in this Google Drive. Or, hey, I've created a new email for the last day of the launch. It's in the Google Drive if you guys want to send it today. And in that launch, 22% of all my new subscribers came from affiliates. 22%. That's a big percentage. And I'm going to tell you something else that might shock you. I had my biggest launch ever for my subscription box, my last launch. 22% of the biggest launch ever came from affiliate, and I only had 5 affiliates promoting during that launch. You don't need a bunch of affiliates, and actually I don't recommend having a ton of affiliates that get you 1 or 2 subscribers. That's a lot to manage on the back end with payments and links and all of that stuff. You just need a select few that are the right affiliates. If you have to manage a whole bunch of affiliates, that's a lot of work. I had 5 affiliates produce 22% of my biggest launch ever. You just need a couple. Start with one, add another one, just find a handful. Start reaching out, start building relationships and engaging so that you can bring on some affiliates to help promote your subscription box. I hope you took notes and have enjoyed this actionable podcast episode. If so, I would love for you to leave me a review. It helps keep me in the top of the podcast charts every single week. And I'll be back next week for another episode of the Laundry Box Podcast.