April 4, 2020
Ep. 17 –  Affiliate Marketing 101 with Shibo Xu from Refersion

Ep. 17 – Affiliate Marketing 101 with Shibo Xu from Refersion


I think the biggest difference between influencers
today and affiliates from the 90s was that affiliates had a blog and they didn’t really
know their readers so they didn’t really care as much. Whereas influencers on social media, they
engage very actively in the comments. They read those comments all day long. So for them,
the audience is really important. Welcome to Honest eCommerce where we are dedicated
to cutting through the BS and finding actionable advice for online store owners. I’m your host, Chase Clymer. And I’m your host, Annette Grant. And we believe running an online business
does not have to be complicated or a guessing game. If you’re struggling to scale your sales,
Electric Eye is here to help. To apply to work with us, visit electriceye.io/connect
to learn more. And let’s get on with the show. On today’s episode of Honest eCommerce, we
welcome Shibo from Refersion as he discusses Influencer Marketing and how to build that
program within your business. Welcome back. This is take two. (laughs) I lost the original of this podcast. I’m being
completely honest. Way to go, Chase. (laughs) So I’m sitting next to third chair trumpeter,
Annette Grant. (laughs) And today we welcome back but you’ve never
heard it, (laughs) Shibo from Refersion. I lost the first recording into cyberspace.
I don’t know where it is. But Shibo, welcome back. Hi, Shibo. I actually deleted it because I
wanted to talk to you again. So… (laughs) I really love to talk to you guys,
so thanks for inviting me back. It’s exciting. Yeah. So they actually had me out in New York
speaking at their event and I let Shibo know in front of only 150 people, that I lost the
podcast. (laughs) That was fun. That was a good message
delivery and I couldn’t get angry about it. Yeah, you can’t get angry when I do it on
stage. So that’s great. So all right, let’s get into it. Shibo is second in command at
Refersion. Refersion is a sponsor of our meetup here in Columbus. They’re a fantastic application
that helps with your affiliate marketing. But this isn’t going to be salesy, about their
app, it’s actually going to be all about affiliate marketing, and how to best set yourself up
for success with something like that. That’s a great strategy to have within your
business. And people ask us all the time about it. And before I say, “Let’s use these apps.”
It’s like, “All right. What system? What’s your process? How are you going to best utilize
affiliate marketing within your business?” So with that being said, let’s take it back,
though. What makes you such an expert at Affiliate Marketing? And even before you ended up at
Refersion, what were you doing and what’s your history in marketing and sales and in
this tech space? Sure. Yeah. So,I actually started my tech
career in college. I ran a startup in college and got an investor. And this is way before
the time of like VC capital. And Facebook was like my main competitor at the time because
they were still so small. And it was like a social media thing. And through that investor,
I jumped into tech. So after college, my app and my company wasn’t making any money. So I joined the investor’s boutique consulting
firm called Huge. And so from Huge, I walked around and did projects in New York, LA, some
in Europe and Asia as well. And I was really helping merchants and companies build digital
products and figure out like, “Okay, how do we kinda translate, let’s say, CNN.com or
Target into a new modern brand that can help boost their sales and make them more relevant?”
So through Huge, I got a lot of good experience building websites, digital products. After
that, I wanted to start building things on my own. I wanted to work on a product and
work on the same thing every day instead of jumping between clients. So what I ended up doing was meeting Alex
very randomly at a meetup. And he told me about this Refersion app. And the first thing
we did was build out an onboarding guide and onboarding experience so that it’s easier
to integrate our software. And we saw our integrations rise by like, 3x within like
a month or two. And we thought, “Okay, there’s something here.” And we started thinking a
little further. So I come into the space with a lot of experience
in building products, building great products and looking at the data and making sure that
we solve some of the core issues that this space needs. And then I fell into the affiliate
space. So, we look at things a little differently here at Refersion. Let’s talk to our audience, though. Let’s
peel it back a little bit and just define Affiliate Marketing. Because I do think affiliate
marketing has been on the rise with social media and social media influencers. So let’s define what affiliate marketing is
and then walk through the process of how people become affiliates. Let’s just start at base
zero with Affiliate Marketing. Sure, sure. So, affiliate marketing is essentially
like word-of-mouth marketing on the internet. It’s whenever you see something on a blog
that you follow or a YouTube channel, and they mentioned, “Hey, go to Skillshare and
use our coupon to learn something new.” Anytime that happens, that kind of referral marketing,
that’s pretty much in essence affiliate marketing. From the technical perspective, essentially
what we’re doing is that we’re embedding artifacts and data artifacts into the users’ browser
or storing coupon codes on our site, and then we’re matching all the data back. Let’s say, “Okay. Of the thousands and millions
of orders, you get every day or every month or every year, which of these orders came
back from a referral?” So a YouTube person, an influencer, or like a blogger. And how
much commission do you give them? And this comission might be variable. Based on what
their size of the audience is, how much you really want to work with them. So, for example, a YouTuber with millions
of subscribers might command a higher commission rate on your brand than say a lot of micro-influencers
who just want to be brand ambassadors and want to work with your brand and get a sense
of it, feel closer to your product or company. You said quite a few terms there that I want
to highlight. So you were saying referrals, brand ambassadors, affiliate marketing, influencers… Micro-influencers… Yeah. So all these words getting thrown around,
probably confused everyone then they’re like, “I need an influencer program. I need to do
a brand ambassador program.” It’s all the same thing. But they do have different, I
guess, titles for what the programs are called. But that’s definitely more specific to your
industry. But at the end of the day, it is the exact
same thing. You’re having someone else use their presence, their clout, to drive traffic
back to your website and you can call it whatever you want. Some people think “affiliate marketing”
is a dirty term, but it’s the same exact thing as a brand ambassador. It’s the same exact
thing as… When you get close to this Multilevel Marketing stuff. It’s like the same stuff, use your friends
to sell your stuff. It’s not as dirty as that. But like it’s… Brand ambassadors, referrals.
It’s affiliate marketing. Yeah, I’m glad you brought up Multilevel Marketing
because we actually have a very strong litmus test at Refersion for when we look at a network
and what the merchants trying to do to see if it’s an MLM system or a pure referral/affiliate
system. MLM systems will get you in hot water with
some of the regulations. So we try really hard not to do those things and we don’t.
So the litmus test we have internally is, “Are the people who are promoting your things
–what they’re promoting– is it a product or an opportunity? If it’s a product like something solid, you
can buy it, that’s great. If it’s an opportunity, the opportunity to sell a product, the opportunity
to buy into a product, the opportunity to know, get more people underneath you, that’s
when we draw a line and say no, that’s not a network that we want to support. And that’s fantastic to show that you guys
are fitting the bill here at honest eCommerce you. You like things to be above board and
you like it to be a real business as opposed to, you know, not. (laughs) (laughs) So historically, how would businesses
track affiliate marketing before apps like Refersion? Would it be coupon codes, and then
they manually have to see how many times it was used that year? Obviously, you guys are
solving a huge pain point. I’m just trying to think of historically, how would people
track this prior to an app? Yeah, yeah. So historically this tracking
happened in many different ways, but most common was through a referral link. And the
best way to think about it is a unique Google Analytics tag that is assigned to an affiliate
or referrer or promoter, whoever that person is. And then anytime somebody clicks that
link, there’s a little bit of data that gets embedded in the browser. And then on the checkout,
the app basically checks again if this data exists. If it does, it creates what’s called a conversion
or a referral order, and creates that credit for the affiliate. So this is largely how
it’s been happening since the 90s. You know, since then we’ve had new technologies. And
we’ve moved away from like, sometimes using cookies. Now we’re using local storage, which
is a more standardized way of storing data within the user’s browser. But largely those technology changes, the
fundamentals of embedding and a little bit of data and then reading that data back to
create credit, is like the fundamental of the technology. Hey, if you’re in the product making business
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first three months of a paid subscription, Check out Katana today. Can you talk to us and our listeners about
the businesses that you’ve seen the most success with affiliate programs, like what type of
product you’ve seen? That’s, t on the rise, or just, they’ve had the most success historically.
Let’s talk to our listeners, what store they might have that should be interested in affiliate
marketing. And maybe why they had the success? If it
isn’t like a product or industry, just the “why”. The implementation of their affiliate program
or something like that if they had a diehard brand crowd? Sure. Yeah. I mean, that’s a good question.
Like, we get that question a lot. What works in our industry, what makes sense for us,
what kind of progression we run? I don’t know if it’s good or bad. I have to say that looking
at the data, we really look at this data, we try to figure it out because we try to
figure out how do we target this person, have we built a good plan for this industry and
vertical? What we find is that there’s actually very
little consistency. We have jewelry companies that have very low-cost jewelry and very high
margins run affiliate programs completely different ways. Some of them would run a very
big brand ambassador program with hundreds of thousands of affiliates or brand ambassadors.
And their goal is to almost boil the ocean with these influencers who are interested.
Just try to promote them and get them to start promoting that first sale or motivating that
first sale to their friends. Whereas others have this very, very small
curated network of bloggers or influencers and they don’t let anybody else know about
the program. They are very secretive and these are very exclusive high commission deals with
some of these bloggers and YouTube influencers. And I’ve seen everything in between as well.
And so it really depends on what you think makes sense for your brand and your audience.
Especially if it’s a visual product. Let’s say clothing, shoes, even makeup. Makeup
works very well on YouTube because it’s instructional. But clothing works very well on Instagram.
And those are some of the overall high-level data guides we’ve seen. And then aside from
that, how you want to build that network of Instagram influencers, whether you want to
work with a lot of small ones or very few big ones or something in between. It’s up
to you and based on the opportunities given to your brand. One of the things I always tell merchants
is if you want to start with affiliate marketing or start working through this referral marketing
process, look at your customer list. You might actually have a few big influencers already
buying from you. And all you need to do is just offer them, “Hey, would you like to do
a post about my product? Would you like to get a free sample? To do a review for it and
I will give you a little commission on that for every order that your post drives for
us. So that’s a good way to start like seeing
what opportunities are already open to a brand to start with referral and affiliate marketing. Awesome. So let’s talk about that. Starting
your affiliate/referral/brand/ambassador, whatever you want to call it, starting that
program within your business. So what are the top things you need to get locked and
loaded before you have those conversations before you even start reaching out to influencers
or whatever you want to call them? What do I need to have written down and had? What’s
my plan? What do I need to have? Yeah. Because I’m gonna be honest, from a
store owner’s perspective. I’m sitting here I know I have diehard customers that they
love our gym, they love our product but I’m like, “Oh, this sounds like, I know I should
be in the affiliate/referral, doing that for the business.” And honestly, I’m sitting here overwhelmed.
I’m like, “I just don’t even know where I should start. And now I’m going to have to
be dealing with these affiliates.” And I’m just like, “Ugh. Do I want to do it?” So that’s…
I’m very interested in this answer because it feels extremely overwhelming, to be honest.
Because it seems like a whole new arm of the business that could be extremely profitable.
But also I’m bringing in people. (laughs) So that’s what makes me nervous. People are scary. (laughs) (laughs) Exactly. Yeah. Especially when it comes to money. I’m like,
“Oh my gosh. How am I gonna do this? How am I gonna make sure everyone’s getting paid?
And is it going to be worth it? How are they going to represent the brand? Are they going
to represent the brand the way that I want them to?” Yeah, yeah. And those are all very, very valid
concerns. It’s just a step-by-step process to try to alleviate each of those risks. So
in terms of like a checklist, the first thing I would try to figure out is I like… Personally,
I always like to start with the numbers. I like to know, what is the maximum conversion
I can offer, I can give to them… What’s the maximum commission I can give to them?
And what’s the minimum that I think will be enticing for them? And then I try to find
somewhere in between. Or if I’m just starting, I would just start
with a minimum and then try to build my way up. And you how you find your margin is like,
“Okay, what’s the percentage and what’s the offer I can give to the affiliate.” That’s
going to be the main incentive. So some things that you might want to think about in this
during this step is, “Are some of your products higher commission than others? Are some of
your products lower commissions and others because of margins?” Like a bracelet might
not be quite… It might not get a commission, same commission as like a sticker, for example. So once you have your numbers and you have
a sense of what that gap is and what you can offer to the affiliate, the next thing I would
do is start researching some of the profiles of your customers and figuring out what their
influencers are, or who their influencers are. And that can happen in many different
ways. One of the ways I suggested is by just looking
at your customer list and seeing if any of them are influencers themselves already, and
that was a pretty good guide to say, “Okay, this influencer is probably a good target
customer because he’s already a customer.” So we’re just gonna find more people like
him or people want his audience. Just to start and give it a try. Another way is just to see people who are
popular in your community. For example, one case study I can show… I can talk about
is a pet company. In order to start building affiliates and influencers, they actually
went and reached out to all the animal shelters and made each animal shelter an affiliate
inside their program so that they have these affiliations and that the animal shelter can
promote their products and get some money back. And so it was a very virtuous cycle
of the brands. So any sort of local establishments, –and
they don’t have to be people they can be trainers, they can be people have another small business,
they can be another business in your vertical– just figuring out who would be possible affiliates
in your vertical, or who influences customers in your vertical is the next step and profiling
who you want to target. And then finally, I would just say write the
email. Get that email written. “Hey, my name is X. I’m here to do Y. Maybe you’ve heard
of my brand. Maybe you’ve heard my product. I’m very interested in working with you. And
I’m willing to offer you, (whatever number you figured out on the first step is). So make it a very friendly direct email, reach
out to them on Instagram, DMs, reach out to them on Twitter, any sort of personal way
to get that message across. Because the first affiliates you work with
are going to be very personal. They’re going to need some support, They’re gonna need to
learn how to sell your product. They aim to get some marketing messages from you. And
the best way to do that is just engaging with you, as the brand owner. So the first thing to do is just get those
numbers, then figure out who you’re targeting, and then just send out the emails and start
that relationship. That’s fantastic. So when talking with these
new influencers that I’m trying to bring into the fold for my business… I guess I’m going
to just answer this question myself. Because I see a lot of people doing influencer marketing
and they’re saying, “Hey, I want you to be an influencer. Here’s a big code for you to
buy something from me. And then you can use that thing to then promote for me.” And the
statement is all asked, you’re not giving anything away. So I feel like, if you’re trying to go to
somebody for a favor, you’re trying to have someone help you, you need to go and give
them something first. And I do this all the time. When I’m trying to meet new people get
people on the podcast, I go to them with value straight off the rip and I don’t ask for anything
in return. And that’s how you should do it for influencers. You should go to somebody with your hand out
and be like, “Hey, I want to give you this product. No, there are no questions about
it. I want to give you this product. That’s that. If you like it, I would like to talk
to you about doing some influencer stuff with me.” Because when you go the other way around,
it’s like, “Hey, here’s a coupon code and buy something from me.” You’re asking for
them to give you money before you… That’s just setting it up on the wrong foot.
And it’s going to be a terrible engagement. You have to be willing to invest in this person,
to have that person invest in their audience that they’ve curated. You need to make sure
that you’re not like being… I don’t know, saturating that market is not the right term.
What am I trying to say here, Annette? You want me to read your mind? Yeah, it’s probably a bad idea. It’s a big problem. (laughs) (laughs) These people have worked hard to build up
their networks. That’s why you’re approaching them as an influencer. And if you go to them
and ask them to do something for you without giving them anything in return, they’re not
gonna want to work with you, and they’re not going to promote your brand to the audience
that they’ve worked so hard to build. This is a really good point just because I
think the biggest difference between influencers today and affiliates from the 90s, was that
affiliates had a blog and they didn’t really know their readers so they don’t really care
as much. Whereas influencers on social media, they
engage very actively in the comments, they read those comments all day long. So for them,
the audience is really important. So respecting them and respecting their audience, really
can get your ahead when working with influencers. Was dilute the word that you were looking
for? Yeah. (laughs) No. I think, especially what Chase is saying,
they have their own personal brands so they don’t want to dilute it by bringing on brands
that don’t mesh with what their message is. I think one of the things, too. When I’m just thinking about this influencer
or affiliate program for myself, is I would probably start very small with micro-influencers.
And not even… I hate even using these terms but someone that’s very… If I do this, I
want to start with someone that I almost personally know because they’re that close to the brand
and I think getting their feedback before trying to like conquer someone that has more
followers. And honestly, I think everybody knows right
now that like there’s a lot of vanity numbers out there that it might be worthwhile to go
with someone that has a smaller following. They’re much more engaged and their audience
isn’t used to them promoting lots of products post after post because I know myself now
that I’m looking at social media and someone has something in their post, I know they’re
making money off of it. So I don’t know how genuine it is anymore. It’s it is getting
very diluted, Chase. Awesome. So, now that we’ve gone down that
rabbit hole, it’s essentially just if you’re going to ask for something from somebody make
sure that you give them something first. That’s what we’re trying to say. But moving beyond
that, getting back to affiliate marketing and Refersion itself. So what are some of
the perks of using an app such as Refersion? Yeah. So Refersion is really good at helping
you organize and segment your affiliate network. So I mentioned having different offers or
having different commission rates per your affiliates or having different rates based
on who you’re working with. So Refersion helps make that very simple. We have a concept of
offers that can… They can keep the house off a registration page and have unlimited
offers and affiliates per offer. So that way, you can really segment your affiliate
network into different groups of high commission, low commission, medium commission. And then
also see which offer and which commission rates are performing very well, communicate
directly with the top guys to figure out what they’re doing, and then try to move some of
those strategies across the network. So we try to make everything very simple. Starting from setting up and integrating our
software with your store all the way to getting your affiliate registration page up and launching
that first affiliate program and giving the affiliates dashboard that they can use to
promote and track their progress. Do you help with the payment processing for
the affiliates? Because that’s the other thing that is scary to me is making sure that everybody
is paid and paid what’s due to them? Yeah, so we calculate all of that. And we
tell you, “Okay, this conversion came in.” And you can set that conversion to be approved/denied
because sometimes products get returned. Affiliates are used to getting paid maybe 30 days or
45 days after the initial purchase. So that’s okay. That’s normal in the industry.
Once you have those conversions approved, we then schedule them for payment into the
system. And you can payout via PayPal, which is a pretty valid and safe way to pay out
because PayPal is the payee. PayPal, I think you can tax for more than $20,000. PayPal
will automatically send the affiliate, a 1099 (form). So that tax portion is covered as
well. So for merchants just getting started, PayPal
is great. You can also create gift cards into your store and then send them to affiliates
as a store credit system. And finally, we also have Refersion Pay. So we’ve just launched
a feature where we can help pay affiliates on behalf of the merchant for a service fee.
So we’ll give you an invoice, you pay the invoice and the fees associated, and then
we’ll route the money to the affiliates directly. Okay. Support for today’s podcast comes from our
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trial at simplr.ai/honest. You just brought up an interesting point that
I’ve never even thought of. (That) is the payment via your own product back to the influencer.
That’s a really genius idea. If you don’t feel like you can warrant paying them directly
yet, that’s a way to weave them in even tighter into your brand. Do you see that being used
often? Yeah, yeah. I’ve seen a few merchants use
it. Actually, there was one merchant who did it in a very smart way. I’m going to share
this case study. So basically, what they do is that they only pay out in $25 gift cards.
And that’s really strange. Instead of giving you like a $500 gift card, they’ll give you
20 $25 gift cards. And it’s weird. Why would you do that? And the reason is that, on checkout, only
one gift card can be applied. So basically, they’re saying you can have $25 off of anything,
any total order in the store, but you can’t use more than one gift card at a time. Mm-hmm. So this way, they actually spread the gift
cards around to more people. People share in and actually help grow their affiliate
network a lot. That’s some interesting tactics in my eyes.
It’s smart. It’s smart because then people can give those away as gifts and it’s still
payment. So… Well. Just to say with getting store credit
type situation with selling your products. When you go to an influencer, they (will be)
more than likely are going to be a fan of your product. Especially when you’re younger,
a younger (brand) getting started with this program, anyone that’s going to talk about
you obviously likes what you guys are doing. So offering them, maybe a higher commission
with store credit versus a lower commission and a cashback reward, and let them choose
their own ending. That’s a way to navigate those offers by trying to build out your first
couple of affiliates. Yeah, yeah, that’s a very good point. I think
different audience types, different personalities, different personas of your affiliate network
are going to require different commission payment types. Sometimes if you get a big deal with an influencer
that’s very well established, there’s no way they would accept store credit because it’s
just how they pay their bills. They can’t pay their bills with store credit. So I think it really has to do with the level
of an affiliate or the level of professionalism the influencer has. But yes, I’ve seen a lot
of micro-influencers, brand ambassadors getting paid by either with a product or store credit. Absolutely. I mean, there’s a million ways
to build this program and to build the commission structures and that’s what we’re trying to
make you think about before you go down and build this for yourself. You got to have all
the answers before you start the system. Refersion isn’t going to build that for you.
You need to have all that in place beforehand. And then you can use apps like Refersion,
and there are others in the marketplaces that do similar stuff. There are strengths with
every app that’s out there. But just know that before you can use an app, you gotta
have a plan. And I think also you can start really, really
small. You don’t even need the app in the beginning. You can just start with the people
that you know (who) already support the brand and do smaller level stuff for them. But having some sort of affiliate program
in place is very smart. Don’t get overwhelmed. Like I was getting overwhelmed myself, but
just listening to it to our conversation, I think everyone should have a program in
place whatever that is, including myself, even if it starts at a really small level,
and then build upon that. So… Yeah, some of the most successful small affiliate
programs I’ve seen are starting to run on Google Sheets. Just tracking a few coupon
codes, looking up which coupon codes lead to which orders and then just manually paying
out the affiliate by PayPal. Awesome. I think that’s a great place for
us to wrap up. Letting everybody know, just to get started on it. But are there any resources
that you have, that our listeners –either maybe your site with some blog posts– that
they could take a look at if they’re interested in getting started with an affiliate program?
Some resources? Yeah, for sure. On our blog post… Our blog,
we have a lot of blog articles about how to find influencers, how to work with influencers
on Facebook, and how to work with influencers on Instagram. So you can check that out at
blog.refersion.com and then on refersion.com we also have a Learn page. So on that page,
we feature articles as well as videos about our software so you can learn a little more
about what our software does and how to get into affiliate marketing. Cool. And then I know this, because you guys
have been a sponsor for so long. If you go to refersion.com and sign up for an account,
there’s a coupon code. We’re not an affiliate, but we actually pass the discount on to you.
I think it’s either ELECTRICEYE or HONESTECOMMERCE. I think they both work. But I’ll make sure
to put that in the show notes. I have one last comment. And we just like
jumped over it really quickly here. I know that you met your partner at a meetup. Correct? Yep. And Chase and I, we host a meetup. And I just
want to encourage all of our listeners, find some sort of meetup in your town, the face-to-face
still works. You can find rad people to work with, whether it’s starting a business, starting
a store, letting them help you with your store. So really look at the Meetup app and take
a look at it. You can build some really strong bonds, if not careers and businesses. Like
you, correct? Yeah. (laughs) You never went back to that meetup, right?
It was one and done. You found your partner. Yeah, exactly. Me and him actually, we talked
about it. Neither of us ever went back to that meetup. But we kept talking. Yeah, it’s awesome. So please listeners, find
a meetup in our town and hit it up. You can find some cool connections there, for sure. Awesome. We’ll Shibo, I promise not to delete
this one. And I can’t wait to see you when I’m back in New York. You guys as well. Awesome. Thanks for having me guys. Thank you. Alright, buh-bye. Buh-bye. Have a good one. Bye. We can’t thank our guests enough for coming
on the show and sharing the truth. Links and more will be available in the show notes.
If you found any actionable advice in this podcast that you’d like to apply to your business,
please reach out at electriceye.io/connect. Please make sure to subscribe to Apple Podcasts,
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