affiliate_sales_rules_customer_retentionIf you’re new to affiliate marketing, the affiliate sales process may be a complete mystery. It’s an extremely important part of affiliate marketing, however, and having a firm grasp of what happens before a user buys a product is essential to developing a site geared towards affiliate success.

The answer lies in the customer lifecycle, which, contrary to what many people think, is actually fairly standard across most categories of products. In this post I’ll provide a beginner’s guide to the affiliate sales process, so that you can better design your site to fit into make customer sales.

Two Types of Purchases

The first thing to understand is that virtually all consumer purchases fall into two categories:

  1. Habitual Purchases: grocery shopping, more shampoo, your morning Starbucks run, etc, and
  2. New Purchases: that trip to Mexico, a new winter coat, a professional training program, etc.

Which category do you think affiliate sites target?

The new purchases category.

Why? Let’s look at what these two categories actually imply: customer acquisition vs. customer retention.

Customer Acquisition vs. Customer Retention

To understand why affiliates target the new purchase category above, you first need to understand the difference between customer acquisition and customer retention.

Customer acquisition is the act of getting a new customer to buy a product for the first time, or to buy a product that’s an infrequent purchase a second or third time.

Customer retention is the act of engaging a customer continually over time. New customers are not necessarily repeat customers until they’ve made several purchases from a brand.

Almost all affiliate businesses are targeting the customer acquisition side of the sales cycle. Thus, I say “new” customer above (and when most marketers refer to “new” customers) the term doesn’t necessarily refer to an individual who has never purchased a product from the company before, but rather an individual who rarely purchases that product.

Let me use an example to clarify. If you’re buying a new pair of dress shoes, you are usually a potential, new customer. You’ve bought shoes before, and you may even have a brand you specifically like, but when you’re making your new shoe purchase, it is not a foregone conclusion that you’ll buy from that brand. You’ll still try on other pairs of shoes, and even if you’ve liked a specific brand previously, it doesn’t mean you’ll select their shoes again.

When you go to buy groceries, on the other hand, you’ve gotten into a routine action. You may shop at multiple grocery stores, but chances are there’s only a small number of grocery stores you go to, and you visit those same stores frequently.

This leads to affiliate sales rule number 1. Continue reading to learn more.