097: What is an affiliate program & why you should start one - with Brady Cassidy
🗓 October 11, 2021
Brady Cassidy is the Co-founder of Rewardful, a platform that allows SaaS companies and memberships to set up an affiliate program. In this episode, he joins Ward to discuss how does a membership affiliate program works and why you should start one.
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📄 Show Transcript
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Ward Sandler: Welcome everyone. Today I'm talking to Brady Cassidy, the co-founder of Rewardful a platform that allows SaaS companies and memberships to set up an affiliate and referral program. He previously helped build three venture funded startups, leading growth and product from the first dollar in revenue to post series A and generated over a hundred million in market value. Brady, welcome to the Membership Maker podcast. It's great to have you here.
Brady Cassidy: Thanks for having me.
Ward Sandler: Sure thing. So what is an affiliate program and why should anyone start one?
Brady Cassidy: So the way I like to think about it is, an affiliate program is essentially a formalized system and process to incentivize word of mouth. It allows you to tap into other people's audience. A lot of people, you know, talk about, you should build your own audience before you, before you build a business, and it makes a lot of sense, but for a lot of peopl it's too late and building an audience can take a long time. With affiliate marketing, you can tap into other people's relevant audiences or network, and provide them with a smaller reward.
Ward Sandler: Yeah. I know word of mouth is like, especially important when you're first starting that's for a lot of folks, one of their main channels, right? So it's interesting. The way you phrase that as affiliate marketing is like taking, basically using that word of mouth to actually do sales for you. Could you dive into that a little deeper? Like, is it as simple as I have an affiliate program, then how do you transition that to actually getting people to use it through the word of mouth?
Brady Cassidy: Yeah, for sure. So, you know, essentially, the question is, there's just to back up a little bit from that, why not just let people spread through word of mouth? You know why not, why even put a program in place, you know, if some people might refer you anyway, what's interesting about it is, is that there's been, there's been lots of studies on, even through like Wharton, researchers have done studies and they ask like over a thousand clients and 83% of them said that they'd be comfortable providing a referral. But 12 months later, only 29% of them actually did. So there's this huge gap, which we often refer to as like the referral gap. So, you know, the purpose is to put these systems and processes in place., so that, you can deliver it. We closed that referral gap by offering people the right incentives at the right time. So a lot of people do referrals and more of like a passive income. But you know, the purpose of putting a program in place is to make it more proactive.
Ward Sandler: Yeah, no, I mean, it's good to know. And also, why don't we back up another step, what’s an affiliate program? For folks who are like, I feel like I've heard that word, but I'm not exactly sure what that means. Could you just kind of give the one-on-one summary of what exactly is an affiliate program?
Brady Cassidy: Yeah, for sure. So, you know, to explain it real simply like you invite people in, you often set up like a software, like a tool like Rewardful and provide them with like a link or a coupon or something like that, that they’ll put in front of their audience. When someone comes through and they make a purchase, it'll generate some sort of reward or commission for them, depending on what you set up as your commission. And therefore, you know, it automates, getting people to spread the word about you, in a way that's, a lot more systematized, and controlled as opposed to just hoping and praying that people will send you more customers
Ward Sandler: Yeah. I mean, it's one of those things that's like, oh yeah, it's funny, money actually incentivizes people to action. So if because people like you, or like whatever service you're providing and, you know, say that they would refer you, like you referenced in that study earlier, that doesn't mean they're actually going to do it, right? Because we all have a million competing priorities in our head, a million other things we have to take care of. But if it's like, yeah, I know you're busy. But if you refer me to someone else, I'll give you 30% of that sale. Suddenly that allows that referral to maybe jump higher up in the priority list because it's like, I'm actually going to get paid for this. It's not just being nice, just to be nice. It's like being nice and everyone wins. It’s interesting. You get money and I get money, you know?
Brady Cassidy: Yeah, exactly.
Ward Sandler: Yeah. I think there's something about that word. It's like everybody gets something, So it's like the person who's referring gets money. You as the business owner gets the money and the person they referred gets in theory, a good service that they, that is actually going to solve a problem for them. So three people win all through this one transaction and that's kind of rare. I think.
Brady Cassidy: Yeah, for sure. And the one thing that is sometimes overlooked in the channel is the reason people often love it is because it has essentially a guaranteed return on investment. So, I mean, you can set your percent, your commission, like you mentioned, as like 30%. And the reality is you only incur in like marketing costs if you get a new paying customer. So, you know, if you don't get a paying customer, you don't pay anything. Unlike, you know, using like ads or, or a lot of the other channels that you invest your time and effort into.
Ward Sandler: Yeah. That's a good point. It's rare. I only pay money when I make money, that usually doesn't exist in most business settings. So yeah, like you said, it's a guaranteed ROI. You can't really lose money on it. I guess theoretically, if would, if somebody were to like sign up and then, you know, let's say cancel after a month. Even in that case, it's like, yeah, they canceled after a month. And the site owner got paid and the affiliate got paid, whatever percentage, let's say 30%. And then the customer cancels, but that's it, all you did was pay that 30% cost and you still got that full month worth of payment from the customer. So you still don't lose money there, right?
Brady Cassidy: Yeah, exactly. But one other interesting thing about is that like, just going into customer retention and things like that. It's it's been showing that an improvement out that, there's an 18% lower turn rate for referred customers. There's some sort of like social currency there where if someone mentioned it to you, or recommended to you, and you signed up, you sort of feel a little bit more tied to the service, or the membership.Then if you just randomly discovered it, you're not familiar with it. And you're not part of like the community, engaging with the service will be more difficult. So, there there's a19% lower churn rate and 16 higher lifetime value. So, you know, referrals can be like, not only are they awesome because the guaranteed ROI, but usually you get better customer quality.
Ward Sandler: Yeah, exactly. It's like a warm lead. If you're thinking of sales there versus a cold lead, right? If, and all of us throughout our life, if somebody tells us, Hey, you should go check out X service or buy Y product. If a friend tells you it, you're just more likely to do it than if some random person on the street tell I shouldn't do that. Or if you see some random signs somewhere, So it totally makes sense that would translate to lower churn, higher retention, all that stuff. And just as an anecdote. So for example, MemberSpace, our company, we use Rewardful for our affiliate program and we have seen numbers like you're saying where we have a higher conversion rate, lower churn, higher lifetime value from folks that come via our affiliate program. So I can attest to that. That does hold true. So something to keep in mind.
Brady Cassidy: Awesome.
Ward Sandler: Yeah. All right. Thanks for taking the time to talk with me. We all really appreciate it. Where should the audience go to learn more about your work?
Brady Cassidy: Thanks for having me. You can find us www.getrewardful.com. And I'm more than happy to connect on, on LinkedIn or Twitter or wherever at @BradyCassidy.
Ward Sandler: Great. Thanks again, Brady.
Brady Cassidy: Thanks ward.