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Affiliate Programs: What Startups Need to Know about Affiliate Programs

Due Affiliate Program

Affiliate programs can be the lifeblood that jumpstarts a new business venture. By building relationships with top bloggers and online personalities, you can reach new audiences and take your business to new heights. But you have to pay a little something for the privilege. Learn more about how affiliate programs work and what you need to do to build a successful affiliate relationship.

Build an affiliate program for bloggers

First, identify your target market and major online influencers in that space. For example, if you wanted to reach fans of entrepreneurship, gurus with large audiences like Pat Flynn, John Lee Dumas, and Gary Vaynerchuck are ideal affiliates. Of course, these guys are bombarded with requests so they may not be the right fit specifically, but it can put you on the right track for the type of blogger to look for.

Once you land a few great bloggers, consider expanding your search to podcasts, YouTube personalities, and others thought leaders with a large following. Because you only pay when they make a sale, there is no cost and little risk to starting a blogger focused affiliate program. In the next section, we will look at how affiliate programs work and fit in with your greater marketing strategy.

How affiliate programs work

Affiliate programs are essentially a commission engine where bloggers and other online publishers can market a product and earn a piece of each sale through a commission. Each affiliate program is a little different, but most programs have these key features:

  • Revenue driven payments – In affiliate marketing, you only have to pay an affiliate when they lead a customer to a sale. No sale, no commission. Because you only pay when you earn revenue, as long as you remain margin positive on each sale and affiliate don’t steal sales you would have made anyway, there is no incremental cost when using affiliates.
  • One-time or ongoing payments – Affiliates can be paid once when a sale is made or in perpetuity for the life of a customer. In some industries, like email marketing, affiliates are paid a percentage of the user’s fee as long as they are a customer. In other industries, like physical product sales, the commission just happens once on the confirmed sale.

That’s it! From there, affiliate programs can be as complex or simple as you want to make them. In some cases, the company prohibits the affiliate from paid search advertising, but others don’t. Some companies offer bonuses and higher tiers of payments to the highest performing affiliates. Some companies treat affiliates like true business partners, others offer affiliate newsletters, others just send over some images, links, and guidelines and let the affiliate figure it out from there.

One vital component of any affiliate relationship is a link tracking system or referral code system. Some companies build their own tracking systems while others use a 3rd party platform. More on that in a moment. Just keep in mind that without affiliate links and tracking, there is no way to make an affiliate program work.

Structuring your payouts

The hardest part of building an affiliate program is structuring how much you want to pay the affiliates. Of course, they want as much as possible. But depending on your product or service, you may have some big costs behind the scenes. For digital products like eBooks and courses, it is not uncommon for affiliate commissions to reach 50% or more. In physical product sales, most affiliates pay 30% or less.

For subscription-based products, you may also have to decide if you want to pay once at signup or on a recurring basis. Paying a recurring affiliate commission costs more, but in the long-run makes an affiliate much more excited about sending traffic your way. It also gives them a more incentive to continue to push your product above others.

Tools to make it easy

If you are ready to go all-in on affiliates, start by looking for the right platform or tool to generate your affiliate links and track incoming referrals. There are a few really big affiliate platforms and some do-it-yourself options available.

For outsourcing, the 100-pound gorilla in the industry is CJ Affiliate. Headquartered just around the corner also in Santa Barbara is ImpactRadius. Other big platforms include LinkVehicle, Rakuten LinkShare, Flexoffers, and Shareasale. They do just about everything for you including paying the affiliates. You can also build and manage your own program on a 3rd party platform with HasOffers.

If you run a WordPress site, you can build in your own affiliate program using a plugin. If you use a sales platform like WooCommerce, adding an affiliate tracking system takes just a few clicks!

Turn your affiliate program into a revenue engine

Affiliate programs are a big deal. Even Amazon is in on the action with its own massive Amazon Associates program. If you want to draw in customers quickly, one of the best ways to do so is through trusted referrals. If you want those referrals, you may need to build an affiliate program. With low costs and big long-term potential, an affiliate program may be just what your business needs to go to the next level.

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