Setting Up Your 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. Setting up your affiliate system with a good company is just the start. Here are some of the things you need to consider when you’re managing your first affiliate system.
Product Prices
Proper pricing is crucial if you plan on splitting the revenue with affiliates. Strike a balance between reasonable pricing and generous incentives. Price becomes a non-issue only if you’re selling virtual (downloadable) items. But if your products have to be delivered and inventorized, you need to make sure the price covers the costs before you think of splitting the profits with affiliates.
Affiliate Incentives
Of course you want to keep as much of that hard-earned money as you can, but you have to remember the target with an affiliate program. Remember, good affiliates will be thinking in terms of quality products, commissions and return on investment. 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 you for free until they create sales. They may even spend money to promote your product. Research the exact amount your competitors are giving your affiliates.
Compute the amount you spent on product development, and include this factor when setting a percentage for your incentives and commissions. For downloadables, you can give as low as 40% and as high as 75%. Software commissions are slightly lower because you may have to pay for technical support. For physical products, you can give out 10% .
Tracking Systems and Cookies
Cookies in internet marketing are very relevant pieces of harmless code that gets uploaded in the browser of the website visitor. A cookie acts as a tracking system that automatically reports which affiliate landed a sale. Most affiliates look at the cookie duration when choosing an affiliate program to join.
A cookie with an affiliate’s referral code gets uploaded in a potential customer’s browser and stays there for the duration that you set up. If the customer doesn’t buy on the spot, she may return to purchase something in a week or so. 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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