Why You Should Launch an Affiliate Program

launchEvery online business owner in on a constant search for multiple income streams and different ways to make money in general. But selling something yourself is not the only way around…

In a series that’s been running on this blog lately I’m explaining some of the more popular business models for anyone who wishes to do business over the internet, so I’m not going to mention them here.

However, I will say right away that this post is about products, and different ways of marketing them. If you’ve read my post about products as one of online business models then you know what the biggest advantages of offering products are.

The only difficulty, however, is to actually sell those products. Or better yet, sell them successfully.

You can try different approaches here: advertising, social media, email marketing, SEO, and many many more. And this is also where affiliate programs come into play.

I have to say right away that affiliate marketing is not the most obvious technique out there. It doesn’t come to mind right away if you don’t have some online marketing experience under your belt.

Using affiliate programs to market your products is also a little intimidating at first because there are some mandatory steps you need to take before you can take part in it.

(Note. The online business models series also features an episode on affiliate income, but this is not the same thing as what I’m about to discuss here.)

What’s affiliate marketing

There are two sides to affiliate marketing:

  • You can be an affiliate – promoting other people’s products on a commission basis.
  • You can be the product owner – earning money because of the sales that other affiliates have generated.

Here I’m going to discuss the latter.

No matter what type of product you’re offering you can always create and launch an affiliate program of some kind.

The basic rules of an affiliate program are:

  • Affiliates can promote your products in exchange for a commission if they generate sales.
  • You provide the product.
  • You provide the marketing materials.
  • You take care of the payment processing.
  • You take care of paying your affiliates.

Sounds like a lot of work on your side, right?

But there’s one really big advantage for you here. If any of your affiliates manages to generate a sale this means free money for you.

Think about it. Even though you have to handle many things that can be considered the setup period, after that, every promotional task falls upon your affiliates, and you don’t have to pay for any promotional methods they use.

That means that the risk is all on them. If they manage to get a sale they get a commission, which will hopefully be bigger than the cost they had to take to get that sale. But you don’t have to take any preliminary costs. You’re paying only once you get a sale through one of your affiliates – hence the free money.

In a nutshell, affiliate marketing can be explained like this:

  1. Someone promotes your products.
  2. Your products get sold.
  3. You get the money.
  4. You pay a percentage of this money to the affiliates who have brought the sales.

Who needs affiliate programs

In the online world, essentially no one needs anything. But if you just simply decide that launching an affiliate program is not for you then you’re probably leaving a lot of money on the table.

First of all, try to think if you’re offering any product that can be easily multiplied or produced at really low costs.

Just a hint, if your product is digital then it most certainly fits the description perfectly.

Some examples of digital products just to refresh your memory:

  • E-books, reports, and all kinds of PDF and text content.
  • Membership sites.
  • Software, tools, and all kinds of apps.
  • Themes, scripts, and all kinds of programming related products.
  • Wallpapers, graphics, resource packages, and all kinds of visual stuff.

Also, many kinds of online services are great here too. If you’re offering a service then it means that some actual work has to be done, but if the service is easy to handle then it’s great as a base for an affiliate program too.


What if you don’t have such a product?

A fair question. There are different online businesses and not every one of them has to offer a product that’s easy to multiply.

But this doesn’t mean that you can’t create it…

Having an entry level product is always good for a business. It’s simply something cheap that you as a business owner use to get a new customer through the door so you can market to those people later with your other more expensive products and services.

Such an entry level product is also great for using as a basis to creating an affiliate program.

The idea is that you start by coming up with an idea on what is the most basic area of your expertise (or your business focus) that you can use to create an entry level product around. This idea shouldn’t be simple just for the sake of it. You still need to make it attractive for the prospective customers, that’s the whole point.

Product development is a very large topic so I’m not going to focus on it here, and I welcome you to check out some blogs that talk about this primarily.

Once you have such a product created you can start crafting your affiliate program.

How to launch an affiliate program

There are two basic paths you can follow:

  • be the host of the affiliate program yourself, or
  • sign up to an affiliate network.

Being your own host is great if you have some big marketing power and can reach some top affiliates directly. Also, this approach creates a lot more costs on your part. Moreover, running an affiliate program yourself requires quite a serious tech backend.

What I mean is that the program has to run on a custom-made affiliate software. So you either have to get it created (on a contract basis with a programmer, for example … very expensive), or create it on your own if you happen to be a programmer yourself.

Either way, it will require much time, money, and dedication. That’s why I advise you to sign up to an affiliate network.

Affiliate networks take care of all the technical aspects of the thing, and sometimes also make the payments to your affiliates too (on your behalf, so you don’t have to do it by hand).

Some of the more popular affiliate networks are: Clickbank, Commission Junction, ShareASale. Depending on the kind of product you want to offer, some of them will work better for you than others.

I advise you to go to each of the above networks and carefully read the rules of signing up and doing business with them. Depending on the company there will be slight differences.

Where’s the kicker? There’s of course a modest payment you have to pay to the affiliate network in exchange for their platform. Depending on the network this amount can vary. But it’s usually in the range of 5% of your product’s price (plus an additional constant rate).

Since I’m talking about the percentages let’s take a minute to decide what commissions you should offer to your affiliates…

Commissions and affiliate tools

For digital products, the market-wide standard is between 50% and 90% (60%-75% is probably the best rate).

For physical products, the commissions are much lower (because of the big cost of creating such products) and they often end up in the range of 10%-20%.

Now the affiliate tools.

Chances are that your affiliates will already have a plan on how they want to promote your products, but you still need to make their lives as easy as you can. That’s why you should provide some quality affiliate resources and tools.

These are things like: banner ads, example e-books, email marketing copy, ad copy, samples of your products, product images, and everything else that your affiliates can find handy for promotion.

Depending on how you want to make it happen it can require some additional investments. But it usually pays off because affiliates are more likely to do business with product owners who treat them seriously. Providing a great affiliate package is the best indication of that.

There you go, we’ve reached the end of this post. Launching an affiliate program is not a one-evening task. It will take a while until you can start seeing some affiliate sales, but if you do it right you can make significantly more money than you are making now, without that much additional work after your program is launched. It’s the setup phase that’s the most time (and money) consuming.

What’s your opinion on all this? Do you find an affiliate program as a good addition to your online business?

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