How to Set Up an Affiliate Program

Affiliates are your most valuable business tools. It’s called word of mouth marketing and you can expand your business through people who refer new customers in exchange for a percentage of the profit. When you set up your affiliate system with a reputable company, you’re just getting started. The following are the things you must take note of when you’re managing your own affiliate program.

Product Prices

Proper pricing is crucial if you plan on splitting the revenue with affiliates. Strike a balance between reasonable pricing and generous incentives. If you are selling digital (information) products this is likely not an issue. However, for physical products, you must make sure that your price covers inventory costs and taxes before you think of setting up a generous affiliate program.

Affiliate Incentives

You must make sure the incentive you’re offering will attract the most aggressive affiliates. The thing is, these affiliates are not employees. They get paid only after they make a sale. If you are too stingy with your affiliate commissions your affiliates will find someone else’s products to promote and you don’t want that.

Given that your products are quality, the affiliates will be working hard to promote you with the home of making money for themselves. Affiliates will be working for free for your in exchange for a percentage of the profit. The most aggressive ones pour thousands into advertising just so they can sell your product. Research the exact amount your competitors are giving your affiliates.

Think about your capital and how long before you can break even, even with an affiliate program in place. The average commission for digital products like ebooks and MP3s is 50-70%. Software commissions are slightly lower because you may have to pay for technical support. For physical products, you can give around 10-25% especially if you’re in a competitive market like exercise machines.

Tracking Systems and Cookies

If you’re running an affiliate program, you should be familiar with cookies . A cookie acts as a tracking system that automatically reports which affiliate landed a sale. The best affiliates will get attracted to cookies that don’t expire or those that last for six months or more.

Let’s say the potential customer visited the website through a referral link. A customer who visited the site once could return in a week or so with the intention of buying something. If the cookie duration is for a month, the affiliate gets paid as long as the customer buys within 30 days.

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