How To Scale Your E-Commerce Business With Successful Affiliate Programs with Noah Tucker

00:00 Andy Splichal Welcome to the Make Each Click Count Podcast. This is your host, Andy Splichal. We're happy to welcome this week's guest to discuss today's topic, which is how to scale your e-commerce business with successful affiliate programs. Today's guest is the founder of Social Snowball. Social Snowball specializes in helping innovative, direct consumer companies scale with affiliate and referral programs. A big welcome to Noah Tucker. Hi, Noah.

Hi, thanks for having me.

Thanks for being here. So let's start by defining affiliate marketing versus referral marketing versus influencer marketing. What are the important ways they're different?

00:36 Noah Tucker Good question. It's funny because I feel like there's so many different terms. Like there's also like ambassador and creator, and there's like so many terms that are tossed around. The way I look at it is like affiliate is more of a style of partnership. So like an affiliate can be an influencer. It can be a customer, which is usually when it's called referral. It could be an ambassador creator, but an affiliate really just means like a partnership where you're paying someone a commission for driving your conversion, and you're only paying them if they drive the conversion. So it's like kind of a risky way to acquire customers. Referral usually refers to when it's a customer of yours that's actually driving the referral to like a customer referring a friend. And then influencer usually refers to when it's like, someone with an audience that's sharing your products with their network and audience. So the way I like it is like affiliate is more like the structure types of people that you'll want to set up an affiliate partnership with.

01:29 Andy Splichal Got it. So what are some of the common misconceptions behind affiliate marketing?

01:44 Noah Tucker I think the biggest one is like, I mean, like if you were to say to a brand the word affiliate like five years ago, like the type of affiliate they were partnering with is like a publisher or like PR outlet, media buyer, blog, listicle, like review site. Those are kind of like the only affiliates that brands are partnering with. And then today, I think brands, I know brands are partnering with like a whole like new wave of affiliate that I call like the modern affiliate. So it's kind of what the terms you're throwing around for like influencers, ambassadors, the customers, creatives. So I think the biggest misconception is that brands are still kind of stuck in the old ways, thinking that like the only type of affiliate partnership they can set up is like with those like more legacy affiliates like the publishers and media buyers. But the truth is like affiliate partnerships with like your customers and like small creators can be extremely lucrative and are really easy to set up. And obviously they require like a little bit different management and onboarding them is a little bit different. But if you have the right platform to do it and you have like the strategies in place, it's very powerful. So brands that are like only doing that older style of affiliate, I think they should definitely consider like tapping into this new era of affiliate.

02:52 Andy Splichal Yeah, I mean, I know when I think of affiliate marketing, it must be the old era because I think a coupon sites like RetailMeNot. Yeah. So that's not really what you're talking about then.

03:09 Noah Tucker No, those are like the enemy now. Those are like, you know, we're actually very actively building products to block them from being affiliates and block coupons from leaking altogether. That's like a very top of mind problem that Social Snowball is working on solving because the way we look at it is those coupon sites, although they'll show a lot of attributed referred revenue, they're not actually driving any incremental revenue because most of the revenue that's attributed to them is high intent buyers that were already placing a purchase and they just go to a coupon site or they have a browser extension and they get a discount. And then the browser extension gets attributed for that referral even though they didn't actually drive that customer, they just gave the existing customer that was already going to buy a discount. So it's pretty harmful for brands obviously because not only are they giving that discount to a customer that was already going to buy it without a discount, but then they're also paying a commission on a sale that wasn't from like an actually new acquired customer. So those have like kind of become the enemy nowadays.

04:07 Andy Splichal Yeah, I mean, the other one that is Honey, right? That app that goes on. And I never understood just for the reasons you said, why a e-commerce retailer would allow those coupons to get out there to Honey when they're paying Honey a commission and plus like you said, they're losing whatever discount is gonna be.

04:27 Noah Tucker Yeah, well, they shouldn't. They shouldn't. Like I think, yeah, it's not, there's no incremental revenue created from these almost 100% of the time. It's very harmful to a business with profit margins. We look at Honey and all those coupon sites and browser extensions as the enemy. I don't think a branch should ever intentionally partner with them. And I think a branch should take proactive steps to ensure that other affiliates codes don't leak to those sites because that also causes a lot of harm.

Andy Splichal So how do you opt out of those?

Noah Tucker So there's no opting out. You can message them to request, have your code removed, but it's kind of aggressively, like it's just like nonstop playing catch it because new codes will leak. And the whole point of these browser extensions in particular is like they're constantly picking up new codes. So it's like a never ending battle. Right now in social snowball, we have a feature that can detect when an affiliate code leaks and basically just notify you. So like if a code is found in a browser extension, someone injects that into the coupon field and check out, we can notify you. We can tell you like, hey, this code is leaked. This is the affiliate that's leaked. When is this podcast going out by the way? There's something I want to talk about. It has to be after a certain date. This is going to go up. We're live now in July. Okay. Okay. So the new thing that social snowball very recently released is a functionality called Safe Links. And this is basically a new type of affiliate link. And essentially what it does is it allows affiliates to distribute coupons without the possibility of them leaking. And if you were to think about it, like ideally every affiliate, if they wish to share like a single use coupons, there's obviously problems with that, but a single use coupon, if it leaks to Honey or any coupon site, it doesn't matter because it's a single use coupon. You're not going to lose any revenue. You're not going to overpay commissions. You're not going to have any affiliates. Single use coupon, it holds no value to any of those coupon sites and their protection margins. But obviously like to expect an affiliate to generate a unique single use coupon for every referral that drives unrealistic people I put to use on blogs and social media and sharing with friends. Like it's just not realistic to like generate a new coupon.

06:33 Andy Splichal So I'm a little confused though. Can you just not sign up for Honey or not sign up for Reef 29?

06:41 Noah Tucker They just leak. They just leak by nature. That's the whole problem actually. Like Honey picks up coupons when someone uses a coupon at checkout. If you have the browser extension, it just picks it up. And then there's other coupon sites that just like scour the internet, however they do. And they just put them on their website. They get out unintentionally almost all the time for our platform at least.

07:04 Andy Splichal So- Right, right. But how do they get paid if you're not signed up for their program?

07:08 Noah Tucker So that's the thing. Honey's not getting the commission in that case. And this is why it's even more harmful sometimes. The affiliate is getting the commission because their code leaked to Honey. And then the affiliate gets angry because they think they're getting all these commissions. And then you realize the code was leaked and you get into this like weird area where it's like, we can't pay you all these commissions but we didn't even know how many that you actually drove versus how many came from Honey. So the affiliate doesn't think they're getting paid enough. You want to pay your margins. It damages the relationship. So that's basically what the core of the problem is. For sure. So essentially with Safe Links, whenever, so it's an affiliate link. And think of it, it looks like a normal affiliate link but every time someone clicks on it, a unique single use coupon is generated for them, just for them and can be used in that browser section. So if I have an affiliate link and you click on it, you'll get a unique single use coupon. If your friend clicks on it, he'll get a different unique single use coupon. So everyone who clicks on the affiliate link gets a unique single use coupon that they can then use in their purchase session. And then if any of those codes leak, it doesn't matter because it's a single use coupon.

08:18 Andy Splichal Right. So that's kind of, it sounds like it's similar to like the magic login links where you don't have to remember a password anymore. You just request the link and it's one time login. Is it similar to that?

08:30 Noah Tucker It is a similar concept. It is a similar concept. It basically just allows affiliates to distribute a discount to their audience at scale with a shareable mechanism, which is an affiliate link. Nothing super new there. But if any of the codes leak, there's just no damage that happens from it. And you could still have like, you still share something with your audience. It's not like you need to generate a new single use code manually every time, which would be unrealistic. So that's the new thing that we've released that's been amazing so far. And that's how we're combating coupon sites.

09:03 Andy Splichal So let me ask you, what are some of the common mistakes that you see companies make when first getting started with affiliate marketing?

09:11 Noah Tucker Yeah. So I think, you know, one is that kind of stuff we talked about, like only partnering with the older school affiliates, you know, considering coupon codes is like, or coupon sites is like an affiliate they want to partner with. I think a bigger one though is like a lot of brands do realize that they want to partner with like this more, you know, I'm just going to use the term again, modern affiliate creators, ambassadors, customers, et cetera. But there's a lot of nuances to making those partnerships successful. And brands that are coming from a background of more, maybe there's more traditional affiliate partnerships. They might try to operate these new types of affiliate partnerships in the exact same way. And when you do that, a lot of things break and it just creates like a kind of clunky experience for the affiliate. So for example, like if you were to onboard an affiliate with like a more legacy platform, let's say you wanted to onboard a customer into a program that's more built for legacy affiliates. After a customer places a purchase, they have to like navigate back to your site, find a link in your footer navigation with an application form, fill out the application form. The application form probably isn't even on your, like your brand's colors or anything. It's like just kind of whatever the app gives you. Someone on the team, they have to submit the application then someone on the brand's team have to approve the application in the backend. And then they get their tracking link and discovery, which obviously like for a customer, that's a lot of friction to expect them to do in a lot of groups. A smoother way to do it, and what we do with Social Snowball is basically, every time a new customer makes a purchase on the store, they're already giving us a lot of data from checkout. So we're able to take that order data from Shopify checkout and use it to automatically generate them an affiliate account, automatically generate them a custom tracking link and discount code with the name in it, and then give all of that to them natively on the thank you page by the time they complete the purchase. So without any like sign up here or pop-ups or click here to get your code or anything, every customer can just become an affiliate automatically and you can give them their information natively on the thank you page when they're just made their purchase and they're super excited to probably share. Then of course you can figure additional follow-up touch points in the post purchase journey through like email and SMS, but basically just making that process of onboarding affiliates easy is something that you should be doing when you're partnering with these more modern affiliates. Again, if you're partnering with like publishers and media buyers, you probably don't want it to be that easy, but this is a different type of affiliate, so you need to cater to this new affiliate.

11:29 Andy Splichal That's really neat. What percentage of people who are doing their thank you page do you find share when they're excited, like you said?

11:39 Noah Tucker Yeah, good question. So the biggest North Star metric we're tracking with this is like customer affiliate revenue as a percentage of total revenue. That's like the biggest metric we're looking at. A high-performing program is usually between five and 10%, which is pretty significant. As far as the actual share rate, people who just share in general, not like kind of ignoring if they are actually driving a referral. Depends on the brand. It's also usually in like the five to 10% range. People will at least try to share. Obviously there's brands with really passionate customer bases who are already driving a lot of referrals that a lot of people often do this, and then there's brands who have a very transactional relationship with their customers, and there's not a lot of brand loyalty, and those obviously are the ones that don't perform as well.

12:26 Andy Splichal Yeah, let's talk about that. I mean, where, like what kind of businesses do you see perform the best? Is it just based on the brand loyalty of the customer base, or is it specific type of products?

12:38 Noah Tucker So it depends. It depends on the program. So if we're talking about a program that's specifically for customers, like turning customers into affiliates post-purchase, like I explained, then yeah, brand loyalty is a pretty good indicator of how successful the program will be. Also, like if you have any sort of post-purchase attribution surveys for customers, and making a purchase, people are already saying like from a friend or word of mouth, that's obviously another great indicator that a program like this would crush. For brands that are using affiliates with like influencers, that could really be any, like you don't even need to have the most loyal customers. If you are working with influencers that are just like hitting the nail on the head with your target audience and making great content, that could crush for anything. So I wouldn't say like any of this is specific to like any sort of vertical or niche. I think for customers, you definitely want like to have a strong brand and customers that are loyal. For influencers, it could really be anything. It's really that game is more about finding an influencer that actually has an audience that your product will resonate with.

13:42 Andy Splichal Let's talk about that. How do you do that? How do you match one of your clients, one of your e-comm clients with an appropriate influencer that will drive sales?

13:52 Noah Tucker So we don't actually handle that. We're just a platform to manage the relationship. As far as actually finding those influencers, I think it's a game of scale, honestly. Like you probably have to work with a lot of it. And this is why it's great to work with micro influencers because they're usually free to work with. Like you just send them the product and they'll post or just like smaller influencers in general that aren't gonna like break the bank to work with. If you work with a lot of them, you kind of start to see who's actually driving revenue. It's difficult to predict. And there's a lot of analytics tools that really break down an audience of an influencer. And you could try to get super technical with that and predict who's gonna work. But if you're working with really small influencers, I kind of think it's better to just like spray and then see who's actually driving revenue. And then of course, double down on that partnership as well as influencers with similar audiences. So that's kind of one of the best. Yeah, go ahead.

14:51 Andy Splichal So if you're not connecting, where does Social Snowball come in on that?

14:54 Noah Tucker So we manage the entire relationship after you find an influencer. So we're not just helping you discover influencers, but we're helping you, for example, obviously the customers, they can join the program by making a purchase. With an influencer, you can create a signup page. Maybe you put that on your website and then an influencer could go and just self-serve on board, create their code and link instantly, and then start sharing with the audience immediately. So Social Snowball is a platform that lets you onboard the affiliate, generate their codes and links, have activation and tracking for all of the referrals that they're driving, mitigate any fraud or people who are trying to gain the system. And then another very important one is generating commissions and sending commissions to the affiliates, which is obviously really important to keep them happy.

15:39 Andy Splichal Yeah, of course, of course. So let me ask, I mean, where does somebody even, I mean, it's a ton of stuff we've gone over, but where does somebody even begin with this?

15:49 Noah Tucker I think the lowest hanging fruit is turning your customers into affiliates. You have to think if someone is passionate enough to buy from you, there's a likely chance that they're probably, I guess they're happy with their experience and happy with the product they receive. It's very likely that they're already gonna be sharing with friends or maybe a friend's gonna like see the product and be like, hey, where did you get that? You just wanna be tracking those sales and you wanna be maximizing that. And the best way to do that is to turn customers into affiliates. And it's very, and I say like this is where you should start because it's very automated because like when you're working with influencers, you have to like figure out outreach and like that's a whole new job for an e-commerce founder or operator that's really doing a million things. You know, as your customers, you could automate it and you could turn customers into affiliates with the data that they already give you and check out and just like remove as much friction from their onboarding process. So I think that's definitely where to start.

16:41 Andy Splichal So, I mean, I think that's a great idea, but I guess let me ask, where do you see e-commerce go into the next 12 and 18 months and what role do you see this referral marketing playing in it?

16:57 Noah Tucker Well, I think like the trend that's been happening and that's definitely not slowing down is like brands are starting to realize that they can't 100% rely on payouts. It's becoming more expensive. It's just unpredictable. Attribution is getting less and less accurate as data privacy laws are ruled out. So brands just know that they can't rely on it for customer acquisition. So leaning into your customers to drive referrals, leaning into influencers to drive referrals, those are definitely great ways to kind of like diversify your customer acquisition and diversify it with a channel that's owned, that is not gonna be super expensive tomorrow because the algorithm, you know, had a glitch or something. Like it's an owned channel that you have control over and I think that's really important. I think brands are gonna focus, I think, you know, to answer your question, brands are gonna continue focusing on channels like referral and affiliate and just like more owned audience channels that they have control over for both customer acquisition and retention. Anything that the brand owns, they are gonna value more because they're starting to learn that with these pay channels that they don't own, it's very unpredictable and if their entire business is relying on it, when a new privacy update comes out or when the next, you know, VPM spike happens or whatever, their entire business can't be screwed and I don't think brands are at a point yet where they could like completely stop relying on paid, but at least, you know, they could diversify 10, 20, 30% of their customer acquisition on pay channels. They're already in a great place for, you know, when or if things with paid get worse. So I think that's a trend that's gonna probably just continue on and on.

18:37 Andy Splichal So let's flip the page a bit and talk about Social Snowball. When did you found the company and why did you decide to really exclusively focus on this referral, affiliate, influencer kind of marketing?

18:50 Noah Tucker Yeah, that's a good question. So for like five years before building Social Snowball, I was on the merchant side of the e-commerce world, so I was building stores and I was helping other brand stores and pretty deep in the marketing side, which was like media buying stuff. I was also running a ton of affiliate and ambassador programs and basically having that experience, I just basically happened to have played with all the existing affiliate tools for Shopify. And quite frankly, like they were all kind of, like what I was saying before, like really tailing towards that more legacy affiliate, but the affiliates that I was partnering with was very much like customers and small creators and none of the tools were really meant for that. And when you tried to partner with, you know, creators on these older tools, it was just very clunky and just didn't really work well. So after years of dealing with that and realizing other brands were also dealing with the same issues, that was sort of the label moment for it and that's kind of how the idea started. And then basically, so, you know, we launched two and a half years ago and the reason I focused solely on it because brands love it and we've been growing. So, you know, it's really exciting to be building something that people like and to be able to have like a creative outlet where I could, you know, come up with cool ideas and turn them into reality, it's a ton of fun.

20:03 Andy Splichal So you had mentioned Shopify. Do you guys, are you, I guess, platform agnostic or do you work with exclusively Shopify stores?

20:19 Noah Tucker As of right now, exclusively Shopify, then we will be expanding to other platforms in the pretty near future.

20:23 Andy Splichal All right, so do you have a favorite success story you could share of one of your clients?

20:29 Noah Tucker Be curious on that. Yeah, definitely. Oh man, there's a few, but my favorite one has to be this brand called Outway Socks. Really, really cool performance sock company with awesome designs. They make the best socks in the world honestly. I had gotten custom social snowball pairs made of them already because of how great these socks are. But anyway, they are definitely a brand with a super passionate customer base. Like the customers love their products, super fans of it. And basically they had had, like before they came to social snowball, they used basically every referral app and affiliate app that existed in the Shopify app store, trying to find something that would work. And even though they had a really passionate customer base, the customers weren't really sticking with any of these other apps because the incentives were like not really great or it wasn't really automated. So like, you know, an app that has like coupons or points as incentives usually doesn't really drive as much referrals as an app that has like caps as an incentive like social snowball, because it's just not as incentivizing usually. So they tried it all and then they came to social snowball. The only thing they set up is the post purchase stuff. Like they turn new customers into affiliates and they just have really good messaging, really good emails. They send a lot of emails to their affiliates and they just have such a passionate customer base that people really stuck to the program. Within three months, they were generating almost 10% of their total revenue. And these guys do very large numbers. They're generating just 10% of their total revenue just from customers referring to friends. So again, like talking about diversifying your customer acquisition, if you could get one channel that's literally your customers that you already have, like it's not even like you need to do outreach and find something new. You already have your customers. If you could get them driving 10% of your total revenue when you're in like the seven, eight figure range, like that's very significant. And that can be game changing for your business. So they're probably my favorite story. We have a case that they leave them on our website if anyone wants to see like more of the strategy they did. But yeah, they really did well.

22:24 Andy Splichal So it seems like there's always challenges. What are some of the common challenges that you go on with a new client where maybe it doesn't work?

22:35 Noah Tucker Yeah, I think like the biggest one could be like, again, just sticking with the customer referral topic. If your customers really don't care about your brand, and I'm not saying they don't like your product. I'm just saying they have no connection to the brand. They might just not be inclined to drive referrals. Like no matter how smooth you make that customer to affiliate process, you could just optimize the messaging and test everything and make it perfect. If people don't wanna drive referrals, it's not gonna really matter. So that obviously is like something that you have to work on in a brand perspective is like building more loyalty and connection with customers. Beyond that, like honestly, what used to be a really good problem is these coupon codes leaking, but like it's kind of resolved now with Safe Links. Those are probably the biggest ones, honestly. I think most brands that we work with, they come to us because they know that they do have a passionate customer base that's gonna do well with a program like this. So usually things work out pretty well, pretty fast.

Andy Splichal So how does your fee structure work?

Noah Tucker Good question. Very, very simple. We just have two plans. Our starter plan is $99 a month. And then on that plan, we take 3% of affiliate generated revenue. And then we have a higher tier that's just flat 500 a month, no commission for bigger brands. So even if you're doing like tons of affiliate revenue, we're not gonna bill you over 500.

23:54 Andy Splichal So who is the perfect client to check out Social Snowball?

24:10 Noah Tucker Any brand selling on Shopify. I would say if you're just just starting out, maybe the turning customers into affiliates isn't gonna work yet, because if you don't have customers when they can't, there's no way to become affiliates. But if you're just starting out and you wanna use influencers as part of your strategy to acquire customers, and obviously you're gonna need a place to track their sales, to give them codes and links, to pay them commissions. You don't wanna be doing that manually through PayPal and spreadsheets. Like that's a nightmare. So really any brand selling on Shopify, you know, should definitely check it out. And how can an interested listener find more about you? About me, I think Twitter is the best place. I'm just Noah Tuck. It's spelled a little bit weird. It's N-O-A-T-U-C-K. I'm super active on Twitter, I'm almost like too much, like it's a bit of a problem, but definitely like I check my DMs all the time. So if anyone wants to ask me questions, I love talking about this stuff. So feel free to. And then for Social Snowball,

25:01 Andy Splichal just check out socialsnowball.io is our website. Great. Well, this has been a lot of fun. Is there anything else you would like to add

25:07 Noah Tucker before we wrap it up today? No, I think this was great. I really appreciated you having me and you asked some really good questions.

25:13 Andy Splichal So hopefully the listeners got some value for this. Fantastic. Well, thanks for joining us again today. Thank you. For listeners, remember if you liked this episode, please go to Apple Podcasts and leave us an honest review. And if you're looking for more information on Social Snowball or connecting with Noah, you'll find the links you just mentioned in the notes below. In addition, if you're looking for more information on growing your business, check out our podcast resource center, available at podcast.makeeachclickcount.com. We've compiled all of our different past guests by show topic and included each of their contact information in case you would like more information on any of the services discussed during previous episodes. Well, that's it for today. Remember to stay safe, keep healthy and happy marketing. And I'll talk to you in the next episode.