An affiliate program (also known as a reseller, associate, referral or partnership program) is essentially a revenue-sharing arrangement whereby you, the affiliate, receive payment from the owner of a product or service that you promote on their behalf.
Affiliate programs are an excellent way for the new internet entrepreneur to start an online business.
TYPES OF AFFILIATE PROGRAMS
There are various types of affiliate programs.
The most simple involves you, the affiliate, placing a banner ad, graphic or text link at your site which is linked to the site of the business you are promoting. This link is coded with your unique affiliate ID so that the site visitor is recorded at the target site as having originated from your site, thereby allowing you to be credited with the sale.
Payment is generally a fixed percentage of the sale value (commission) or “pay per click”, where the affiliate is paid a certain amount for every time a site visitor clicks on the link at the affiliate’s site, whether or not a sale is made.
The more sophisticated affiliate programs are multi-tier and allow the affiliate to earn commissions not only on the traffic they directly refer to the target site but also a proportion of sales generated by their sub-affiliates.
BENEFITS OF AFFILIATE PROGRAMS
The greatest benefit of affiliate programs is that when you are just starting out in your own online business you don’t have to worry about creating your own product or service. You just promote someone else’s and get a share of the revenue pie for your efforts.
You also don’t have to concern yourself with warehousing, transport or logistics headaches. All of this is handled by the business whose products/services you are promoting. All you need concentrate on is driving traffic to that business’s website. This means that a high proportion of your revenue is profit.
The owner of the product/service is also responsible for collecting payment, customer service and the myriad other details that come up on a day to day basis in running the business.
DISADVANTAGES OF AFFILIATE PROGRAMS
The main and obvious disadvantage of affiliate programs is that it is the owner of the product/service who earns the lion’s share of the profit on the sale.
You’re working on commission. You will NEVER earn by way of affiliate program commissions as much as you can earn by way of profits from producing and selling your own product/service.
As a result, affiliate programs represent a high opportunity cost when you consider what you could earn if you instead channeled the time and energy you spend on promoting affiliate programs into creating and promoting your own product/service.
For this reason, it does not make sound business sense to rely solely on affiliate program income for the longer term growth of your business.
Instead, think of them as a way of dipping your toe in the water when you’re first getting started, and a nice little sideline once you’ve created your own product/service. Do NOT build your business around affiliate programs with the intention this will always be the backbone of your business. You’ll be stunting your own growth if you do.
CHOOSING THE RIGHT AFFILIATE PROGRAMS FOR YOUR BUSINESS
So, keeping in mind what affiliate programs can and can’t do for your business, let’s turn to what you should look for when choosing an affiliate program or programs to promote in your business.
First off, and this is a cardinal rule, only promote those programs which will allow you to create synergies with your site. This means selecting programs that naturally complement the subject matter of your site and that will therefore be of interest and relevance to your site visitors. This will ensure your prospects (ie your site visitors) are pre-qualified which will result in a relatively higher conversion ratio (the ratio of visitors to purchases) than would be the case if your traffic is untargeted (which will be the case if you promote unrelated products and services from your site.)
Quality In All Things
Keeping the need for synergy uppermost in mind, look for quality programs first and foremost. The last thing you want to waste your time, money and reputation on is a shoddy product or service. There are just too many quality programs out there to settle for anything less.
Stability of Company
Look for a company that’s been around for a while and that’s reputable and stable (both financially and in its management). Any reputable company will have full contact details readily available so do your research.
Look for testimonials and references from other affiliates. If the company you’re interested is not forthcoming when it comes to putting you in touch with other affiliates, move on.
Look for a professional, considered and detailed affiliate agreement (contract). This shows that the company is serious about its business.
Watch out for exclusivity clauses and other restraints. Some affiliate agreements will require that you not promote competing businesses’ products and services. This is not to say you should avoid such agreements. As a general rule, it is your interests not to promote competing programs anyway. Just be aware of what the agreement says on the subject to avoid getting yourself into hot water.
Look also for an agreement that treats spammers harshly. This protects not only the company but other affiliates as well. The last thing you or any other reputable affiliate needs is to have your reputation and the reputation of the product/service you are promoting besmirched by these sorts of tactics.
Promoting someone else’s affiliate program necessarily requires that you divert traffic away from your site and towards someone else’s. Make sure you’re properly compensated with a high commission structure. And be sure to set up your link so that when the visitor clicks on it, a new browser window is opened for the target site. This at least keeps your site in front of the visitor so they can go back to your site once they’ve finished at the site your link has taken them to.
Look for affiliate programs that will credit you with not only THIS sale but all other sales the customer may make in the future. Many programs are set up so that the customer is identified as “yours” so that when the customer returns to the target site in three months time, the sale is recorded as having been generated by you.
Include programs that offer residual commissions in your portfolio. Good examples are web hosting services, auto responder services and the like where customers sign up for a continuous service that requires periodic, regular payments. You receive periodic, regular commissions as a result.
Look for programs that allow you real-time access to your stats so you can keep easy track of your commissions.
When checking with affiliate references, find out what the business’s record is on paying out commissions. If they’re slow or there appears to be a pattern of problems, keep looking.
Frequency of Payment
Make a note of payment schedules too. Some programs pay weekly, some monthly, some quarterly. Some only pay once you accumulate commissions of a certain amount. None of these arrangements are necessarily good or bad in and of themselves. Just be sure you know what to expect.
Programs that Require Payment Up Front
Two words: MOVE ON!
Finally, take a look at what support the business offers its affiliates to make sales. Do they provide resources such as sample ads, banners, logos and the like? Do they provide useful advice about maximizing your sales? A good affiliate program provides affiliates with a LOT of support in these areas.
MAKING MONEY FROM AFFILIATE PROGRAMS
OK, now you know what to look for in an affiliate program. Here’s how to maximize your sales of those products and services and, therefore, your commissions:
No ifs, no buts. DON’T rely on the you-beaut self-replicated job the company provides all its affiliates. Link to that site from your main site.
This presents a much more professional image. Many people won’t give the time of day to a business that thinks so little of its prospects that the owner won’t shell out 70 bucks for a domain name. So mean business and look like it.
Get Traffic To Your Site
As a rough guide, you will need at least 500 targeted unique visitors a day to your site to make reasonable money from affiliate programs.
You Must Have A Site That Will Attract Repeat Visitors
If your website is nothing more than a splash page consisting of little else other than banners for umpteen different affiliate programs, forget it. Your site must be worthy of your visitor’s time and interest before you can even begin to think about converting that visitor into a paying customer. So create a real site with real content that will keep them coming back for more.
A personal testimonial will result in more sales than a mere link or advertisement. So take the time and trouble to write a personal endorsement of the product or service you are promoting. And, of course, it goes without saying that in order to write a personal endorsement, you must know that of which you speak. NEVER promote a program you haven’t first purchased yourself. If you don’t think enough of your program to invest in it, how do you expect to persuade others to?
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