3 steps small-business owners can take to build successful (and affordable) influencer collaborations

• Small-business owner Molly Fedick and consultancy owner Alexandra Shadrow discuss influencer marketing. 
• They discuss strategies for affordable influencer collaborations. 
• Building influencer relationships and staying within prices comfortable for the business are top tips.
• This article is part of "Marketing for Small Business," a series exploring the basics of marketing strategy for SBOs to earn new customers and grow their business.

In a world where mega-influencers can be paid tens of thousands of dollars to post on social media, influencer marketing may feel out of reach to small-business owners with smaller budgets. But working with influencers can be an expedient marketing channel for getting your brand in front of aligned audiences, building trust, and even gaining new customers in a cost-effective way.

Molly Fedick, founder of nonalcoholic beverage company Buzzkill Wines, saw her direct-to-consumer sales jump 327% when she started investing heavily in influencer marketing. This didn't surprise her, she told Insider, since she came to understand the value of activating a niche influencer community in her last role as the creative director at Hinge. 

Alexandra Shadrow, founder of Trailblaze Consulting, said she's relied heavily on influencer marketing for a recent client, live resale app Jamble. 

"We could build our own community from scratch one by one, or we could leverage communities that already exist to create a much larger community much more quickly," she said. Shadrow, with over 10 years of influencer-marketing experience and an influencer herself, collaborates with over 600 influencers a month to help grow their user base on both the seller and buyer side.

Shadrow and Fedick shared with Insider the best practices they've used to ensure their influencer collaborations are successful — while staying within a small-business budget.

1. Focus on engagement and fit more than follower size

Rather than going for the biggest influencers in your industry, Shadrow recommended stepping back and making a checklist of the criteria for your ideal influencer. 

For her, the No. 1 thing she looks for, even over a big audience size, is a strong engagement rate. 

"Think about this: An influencer with 10,000 followers and a 20% engagement rate has an active audience size of approximately 2,000 people. Compare this to an influencer with 100,000 followers and 1% engagement — only 1,000 people," Shadrow said. 

This can allow small-business owners to target more affordable micro-influencers that have small but mighty audiences. She uses the free Chrome extension UpDog to gauge the engagement rate of influencers she's considering, and looks for people with at least 5% overall engagement on their pages.

She also ensures the influencers they pick are an industry and value fit. For Jamble, that means a focus on thrifting and sustainability — and that their page is not oversaturated with brand deals. "If a person is willing to promote every brand under the sun, it's very likely that you're going to get lost in the sauce of all the other collabs that they're doing," Shadrow said. 

2. Understand the different ways you can offer value — and stay under budget 

When it comes to paying influencers, there are plenty of ways to make this approach more budget-friendly. 

Depending on the community they're targeting and the product they offer, business owners may be able to get away with simply offering free products in exchange for promotion, Fedick said. She mostly reaches out to influencers who review nonalcoholic options or make mocktails, and offers to send the free product (which only costs her around $35 with shipping). 

"I'll tell them I'm a small, one-woman show with basically no budget to spend, but what I can do is I can send you product, and I can send you as much as you want," she said. Fedick estimates this strategy has helped her achieve over 2 million impressions on others' TikTok channels, based on data reported to her by the influencers she collaborates with. 

If you are entering the world of paid influencers, Shadrow told Insider small businesses can save money by avoiding influencers who have a manager (it will automatically make the cost higher), and being firm about the budget they have. "Do not simply pay the asking price for an influencer," she said. 

Shadrow said she successfully negotiated influencers down from their initial cost to something that felt more comfortable for the brand. "I also share that — if all goes well — there will be more opportunities for a higher budget in the future. The right influencers will see the value in your brand and want to grow with you." 

There are other ways to offer compensation even if you don't have the money. For instance, you could offer an affiliate link where influencers get a percentage of the sales they help drive. Fedick is taking this a step further for a big partnership she has in the works, offering a small amount of equity in exchange for the promotion. 

"They're not getting paid cash upfront, but they have a definite reason to want to push the product as much as possible," she said.

3. Create an ongoing, two-way relationship

Fedick recommends focusing your time on forming legitimate relationships with influencers. For example, she always works with the influencers she's collaborating with to figure out what would be exciting to their audiences, such as a coupon code, free shipping, or other perks that would engage their community.  

Fedick also lets the influencer guide the content they create, given they know their audience better than she does. And Shadow, who works on paid collaborations, takes a similar approach. She even provides a short Google document of dos and don'ts and example content, which she finds most influencers appreciate to help guide them.  

Once influencers post, Fedick recommends business owners engage by liking, commenting, and reposting. Not only does this show appreciation, but it also gives brands great content to populate their own channels. "We're all interested in the same topic, so there's no reason that I shouldn't be promoting these influencers to my audience as well," Fedick said.

Finally, rather than sending out hundreds of influencer packages, Fedick recommends focusing on creating deeper relationships with 20 to 50 people. "I don't believe in short-term, one-time-off posting — I believe in long-term partnerships," she said. 

Fedick plans to send a new product they have in development to existing influencers rather than focusing on reaching out to a ton of new ones. "You're only gonna get that type of exposure if you have a real relationship with the influencer," she said.