Dush Ramachandran is Business Tranformation Coach for The Net Momentum. He has built, grown and sold two of his own companies and most recently served at Vice President of Sales and Business Development at ClickBank where he was instrumental in growing the company’s revenues nearly 500% in five years. Dush is the host of the ‘Entrepreneur Effect’ radio show and is the author of an upcoming book on entrepreneurial success.
Narrator: Speakers, publishers, consultants, coaches, and info marketers unite. The Speaking of Wealth show is your road map to success and significance. Learn the latest tools, technologies and tactics to get more bookings, sell more products and attract more clients. If you’re looking to increase your direct response sales, create a big time personal brand, and become the go to guru, the Speaking of Wealth show is for you. Here is your host, Jason Hartman.
Jason Hartman: Welcome to the Speaking of Wealth show. This is your host Jason Hartman, where we discuss profit strategies for speakers, publishers, authors, consultants, coaches, info marketers, and just go over a whole bunch of exciting things that you can use to increase your business, to make your business more successful and more and more passive and more and more automated and more and more scalable. So we will be back with a great interview. Be sure to visit us at SpeakingofWealth.com. You can take advantage of our blog, subscribe to the RSS feed, and many other resources for free and SpeakingofWealth.com and we will be back with a great interview for you in less than 60 seconds.
Start of Interview with Dush Ramachandran
Jason Hartman: It’s my pleasure to welcome my friend Dush Ramachandran to the show. He is founder of Net Momentum, and he was with Clickbank for years in their formative time, where he took the company from 95 million dollars in revenue to 550 million dollars in revenue. So he knows a thing or two about affiliate marketing. And that’s what we’ll talk about today. This is one of the very exciting opportunities for marketers, publishers, authors, etc. And it’s a pleasure to have him coming to us from beautiful Boulder, Colorado. Dush, how are you?
Dush Ramachandran: Doing great, Jason. Thank you so much for that very kind introduction. It’s a delight to be on you show.
Jason Hartman: It’s an understatement, my friend.
Dush Ramachandran: It’s an absolute pleasure.
Jason Hartman: So tell us, maybe for those who may not know, what is affiliate marketing?
Dush Ramachandran: That’s a great question. So you can consider affiliates to be your online salesforce, so if you have a digital product, or pretty much if you have any product that you are selling directly to consumers…
Jason Hartman: Even a physical product…
Dush Ramachandran: Even a physical product, but the key is that if you’re selling that product direct to consumers and you have a website where you would like to attract traffic, affiliates happen to be people who either own Email lists or they have high traffic websites, or where they have perfected the art of advertising on search sites like Google and Yahoo and Bing. Essentially these are people who can direct a lot of traffic to your site. And if anybody from the traffic that they direct to your site end up buying your product, the affiliate makes a commission. So it’s an independent sales organization, if you will.
But what’s interesting about affiliates is obviously you pay only on performance. So if an affiliate sends a whole lot of traffic to your site, and nobody buys, then obviously you’re not paying the affiliate anything. And so it’s a very effective way by which you can build a brand and build a market for your product without prospectively having to go out and invest money in creating that brand. You’re paying for it based on performance.
Jason Hartman: Yeah, well pay for play is what every entrepreneur and business owner likes the best, because fixed cost overhead of sales people as employees, that or an overhead cost of any type that are fixed are the death of many businesses.
Dush Ramachandran: Exactly. So this is particularly appealing because all the cost is completely variable, and there are affiliates that can target different types of niches, different demographics. So all it requires is that you have a good understanding of your target market, and you have a sales page, a page to which affiliates will send traffic that converts well. And by convert I mean it’s able to effectively transform visitors into buyers. That is what we refer to in the industry as conversion.
Jason Hartman: Right, right. So my first question is, if this is so great why isn’t it a bigger deal? This is a relatively small part of our economy. It’s big in the internet marketing world, I know, but even in the internet marketing world not everybody does it. It would seem like it’s just such a no brainer.
Dush Ramachandran: Well, that’s a good point. Affiliate marketing is sort of rapidly passing into the mainstream, but there are certain sort of key differentiators that make certain products and certain markets ideally suited for affiliates and others not so much.
Jason Hartman: Okay. Tell us about those.
Dush Ramachandran: Yeah, okay so for example, if you’re selling directly to a consumer then that product is ideal for affiliates. If you’re selling on a website, if you’ve set up a website and you’re actually able to process transactions at that website, you’re able to accept credit cards, or other payment forms, and be able to ship the product direct to the customer or allow the customer to download the product directly, then you’re ideally set up for affiliate marketing. However, if you have say a network of dealers, where some amount of your margin is being shared with dealers or distributers or retailers in some fashion, then that’s not ideal for affiliates because what affiliates end up doing is they end up driving the traffic to a store, a physical store where people would go touch and feel the product and then obviously they would expect to buy there. And now you’ve created conflict between two channels. The one channel being affiliate marketing, the other channel being your retail channel.
Jason Hartman: Well that was certainly in the earlier days of the internet, and I’ll call those the late 90s, the early days of the big internet, we’ll call that. That was talked about a lot. Many people were saying that car dealerships would be disintermediated where you don’t need dealerships anymore; people can just go right to BMW when they want a new car. Who needs to go to a dealership? But of course we found that cars a little more complicated and it’s kind of nice to have the high tech high touch.
Dush Ramachandran: Yeah, that’s true but also very interesting about the car dealership as a specific example is that there are franchise laws in several states in the United States where you are not allowed to sell a car directly to the end user. You have to go through a dealership.
Jason Hartman: We’ve seen this with Tesla in the restrain of trade. It’s now going on in New Jersey.
Dush Ramachandran: Exactly. That is an issue. But electronics is a good example. Amazon has an affiliate program, and what’s good about that is that they don’t have a retail presence. So one of the big challenges that physical retailers often complain about is if the manufacturer has… for example Sony has the Sony experience stores where you can go directly online to the Sony store and buy whatever you want. Or you can go down to Best Buy and look at a Sony TV and buy that there. Now what the retailers complain about is that people come into the physical store, look at the experience, touch and feel the product and then buy it online. So they think of themselves as having set up a free demonstration service for the digital retailer. Which is a challenge that needs to be fixed in some cases.
Jason Hartman: So how does someone go about affiliate marketing, back to the listener, who has digital products so that’s really easy to distribute and they would love to have a non-fixed cost sales force. How do they do it? What is step one?
Dush Ramachandran: Well step one is of course to make sure that if you have a sales page on which you’re accepting orders, then a good idea is to test that out with affiliate traffic. A lot of people buy their own traffic, so if you have a product that is downloadable or is a digital product, you’ll probably go on Facebook, put some ads on there, you do some media buying, you go to CNN.com or MSNBC.com or any of the other high traffic websites that might have a demographic that resonates with yours and you might buy an ad on that space and direct traffic to your website. So that’s fine.
You’re spending the money prospectively hoping that it will convert. Now the first step towards affiliate marketing is have affiliates test it out and if necessary pay for affiliates to test it out risk free, and tweak and tune the site to make sure that the conversion is optimal. And then after that it’s relatively easy to go seek affiliates that will promote your product on your website. And that as a business, that’s what we do. we create affiliate programs for companies, and for brands and we go out and recruit affiliates and we manage them on an ongoing basis.
Jason Hartman: So the first thing is creating and then recruiting and then managing… would that be fair to say those three major categories?
Dush Ramachandran: That is correct.
Jason Hartman: Okay, so take us through that process if you would, just a little bit. Of course there’s a lot more to it than we’re ever going to be able to discuss on the show, you’ve got years of experience, there are nuances, etc. But the basic idea: what does one do?
Dush Ramachandran: Okay, let’s talk about creating first. So you are creating an affiliate program. So what that means is you first off start off with a revenue objective. You say, I would like, no my product sells for let’s say $100 per copy. So I would like to generate a million dollars’ worth of sales. So if you’re talking about a million dollars’ worth of sales, now you can then figure out the quantity that you need to sell. So what that then spits out is once you figure out the quantity that you need to sell over time, then you can break it down into a monthly basis and figure out now I need to sell this many copies in a month and so that then translates to this many visitors that I would need to bring into my site. So looking at the source of affiliates, looking at different numbers of affiliates, a couple different ways of doing it. You can go to a network, to an affiliate network like Commission Junction or Linkshare or Clipbank, and they have a network of affiliates, you can post your product on there and affiliates can come sign up and you can approve those affiliates in the case of some of the networks and they can start to promote you.
It’s the creation of a program. So you can go to a variety of these networks, list your product on the network, and that then allows affiliates to identify the product and apply to you to promote the product. Which then gives you the opportunity to choose between those affiliates and identify which ones you would like to then promote your offer, and then go from there. So the building of an affiliate program is probably the first step and then you can go from there.
Talking about creating an affiliate program: essentially the creation of an affiliate program comes down to identifying the audience to which your traffic will appeal, your traffic and your product will appeal, and then creating a sales page that speaks to that audience and then going out and identifying affiliates that could reach that target audience. And there are a number of different ways to find affiliates that will address that market. There are several networks like Commission Junction, or Linkshare or Clipbank that you can go to. And they have a variety of products; you can list your product with the network. They all have different criteria by which they judge the products that they take on, and you would then have a variety of affiliates that would apply to promote your product.
Once you’ve got some number of affiliates that have agreed to promote your product, obviously they would want to test it out. They will send out some traffic and see how it converts, and if it converts well and they get a good return on their investment they will start to promote in larger volumes. So that’s essentially the creation of a program. Now, recruiting affiliates is a slightly more challenging topic because that that requires is you identify new affiliates, not necessarily those who have approached you wanting to promote your product, but going out and recruiting people that may not know about your product, have not come to you. You have to seek them out. And usually you can do that by looking at people who are promoting competitive products to yours. Or you could hire a firm like ours that would go out and do that recruiting for you. That’s what we do day in, day out.
And then finally, there is the aspect of managing affiliates on an ongoing basis. So what’s involved in managing an affiliate?
Essentially it is monitoring their promotions to make sure they are maintaining the standards of your brand. Because one rogue affiliate can damage your brand, and so it’s very important that the quality of affiliates that you have is excellent and that they continue to manage your brand on an ongoing basis, and they represent your brand in an effective way. So you’ve got to look at their previous promotions, how they promote your product, are they making any extravagant claims which you’re not able to back up? So those sorts of things come into play.
And then you also have affiliates that sometimes promote on negative terms. Is this product a scam, or something like that. And that causes people to get attracted to the offer, click on it to find out if there is a scam report or something and they actually find that the affiliate is actually promoting the product. But even though that affiliate might be promoting the product, it creates a negative brand image and you don’t want that. So these are all things that you want to do on an ongoing basis pretty regularly to make sure that affiliate promotions are to the standards that you would expect.
Jason Hartman: Well, that’s true and that’s pretty scary. An affiliate, just like being a Franchise Ore, I was a Franchise Ore at one point, and if you have a bad franchisee they can really damage your brand. That’s why some companies, like Starbucks for example, don’t franchise. They want to control the brand experience very carefully, and that’s really important to them. But how many affiliates are we typically talking about in an affiliate marketing campaign? Are there ten affiliates? Are there a hundred? Are there a thousand? What kind of numbers are we looking at?
Dush Ramachandran: Well it depends on how popular the product is, and it also depends on the popularity of the niche. For example, if you were to take a really popular product category like weight loss or health and fitness, you will find a very large number of affiliates promoting it because it’s a very popular topic and there are a lot of people looking to find solutions in that area. So it’s not unusual in that type of a situation to find a product being promoted by as many as four or five hundred affiliates. But if you’re looking at a much more esoteric sort of rare sort of topic area, for example you might find something like a cure for autism or how to deal with children with autism spectrum disorder; that’s a fairly specialized area and affiliates in that area tend to be people who are qualified. And so you’re probably more likely to find four or five affiliates in that space.
Jason Hartman: So what about something that’s in between? Take real estate investing for example, say somebody listening is a real estate trainer and they have a book or info product.
Dush Ramachandran: That’s a pretty popular area actually, so it’s possible to get 50-60 really good affiliates promoting that type of a product.
Jason Hartman: And when it comes to monitoring and protecting one’s brand, what are you doing? Constantly looking at their websites, the Emails they’re sending? How do you… do you see their lists with Email addresses just so you can see what’s going on?
Dush Ramachandran: Yeah. A couple of different ways. One is of course you monitor all their promotions. What they’re doing on their websites, the Emails that they send, you get on their list so that when they send out to their list you get an Email as well and you can see constantly what they’re promoting. The other is to do an independent sweep. So you go and do a search on the brand terms of your client. So if it is your own product, you would go and search on your own brand terms to see who is advertising on your behalf. And if it’s negative advertising, if they’re making claims that you don’t support, then you would want to trace that promotion back to the affiliate and make sure that that’s taken care of and that’s not allowed.
Jason Hartman: Okay, good. So there’s the monitoring part and protecting one’s brand. Very important. What else do people need to know?
Dush Ramachandran: The nicest thing about affiliates of course is that, as I said, you’re spending money on a pay for performance, pay for play type of basis so that’s very nice. But as we all know, in life there is no free lunch. And so there is nothing that doesn’t have a disadvantage. The disadvantage in the world of affiliates is that you’re not entirely in control of your brand message, unless you build a very strong and close trusting relationship with your affiliates. Often what can happen is affiliates become very successful in bidding on your brand terms, and they can push up the cost of your advertising because they’re advertising on the same brand terms as well.
Jason Hartman: Oh wow, your own affiliates become your competitor.
Dush Ramachandran: Exactly. So a lot of brands restrict affiliates from bidding on their brand terms. For example, Walmart.com does not allow affiliates to use Walrmart.com in their advertising. And that’s fairly common. Target.com does this same thing and so on. Because they don’t want to have their prices, their costs driven up by affiliates competing for that same audience.
Jason Hartman: But are big corporate brands using affiliate marketing like this?
Dush Ramachandran: Oh, absolutely they do. Absolutely.
Jason Hartman: Wow. Okay, tell me about that.
Dush Ramachandran: Well, some of the biggest users of affiliates are Walmart.com, Target, Jeep, The Gap, Macy’s… all of them use affiliates. Many of the fashion brands use affiliates as well, and in their case they’re not necessarily expecting to have these affiliates sell products directly. What they’re expecting these affiliates to do is create exposure. So all they’re looking to do is have affiliates send traffic to their site even if the people don’t actually buy on the site. They’re just creating brand awareness. So you’re not going to go buy Jeep from the website, but if an automotive blogger were to write a blogpost about the latest model of Jeep and have a link in there, that drives people to the Jeep site. Then that affiliate gets paid purely on the number of visits of people that he actually sends over to the Jeep site. They don’t have to buy anything. He’s just getting paid on the visits, on the exposure.
Jason Hartman: It’s just paying for advertising.
Dush Ramachandran: Exactly.
Jason Hartman: Well, very interesting. Give out your website and tell people where they can find you and learn more about affiliate marketing.
Dush Ramachandran: Yeah, the website is TheNetMomentum.com and there is a contact link in there, so if I can answer any questions I’d be delighted. So please reach out through there and I’d be more than happy to answer any questions.
Jason Hartman: Actually, what we should do is give them my affiliate link for your net momentum, right? There is no such thing. But that would be a good time. Good, well this has been very interesting, and just any final words you want to mention about affiliate marketing? You know, here’s a question for you, maybe in closing: How should someone dip their toe in the water for affiliate marketing? Should they go out and hire a consultant like yourself? Should they try it on a small basis, maybe going to Clipbank or something like that?
Dush Ramachandran: Yeah, it’s usually a good idea to try it on a small basis. If you have let’s say a $50 product or a $100 product, if you’re paying an affiliate commission of 30,40,50%, whatever it might be… it doesn’t cost very much to dip your toe in the water. You could spend a few hundred dollars and see how that works and that would be by going and listing your product on Clipbank or one of these other networks, and seeing if that generates some traffic. Another way to do it is to put an ad on Facebook, because Facebook allows you to target your audience very effectively. So that’s another way to do that. Another good way to attract affiliates is to put the word out amongst your friends to say you’re looking for affiliates to promote your product and you’d be surprised at the number of people that either would refer someone or might be able to send traffic to you.
Jason Hartman: Good place to start is with your own tribe, your own followers.
Dush Ramachandran: Your own network.
Jason Hartman: Yeah, absolutely. Well, thank you so much. Very interesting talk on affiliate marketing, and the website one more time?
Dush Ramachandran: www.TheNetMomentum.com.
Jason Hartman: Fantastic. Thank you for joining us.
Dush Ramachandran: Thank you Jason, it was a pleasure.
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Transcribed by Ralph
The Speaking of Wealth Team