Affiliate marketing allows individuals to earn commissions by promoting your company’s products and services. Since you only pay when a sale is made, it can be a low-risk way to grow your business. Here are six steps you’ll take to create a successful affiliate marketing program.
Research top affiliate networks and software for small businesses
The first step is finding the right software to track and manage your sales. Some businesses run their own programs, while others join affiliate networks like Awin that connect brands with partners. Running your own program will result in lower costs and give you more control over the relationships, but you’ll have to do more of the work on your own.
Whereas affiliate networks give you access to an existing pool of affiliates so you can get up and running quickly, they come with high costs. If you go this route, look for a platform that offers automated payouts, real-time reporting, and fraud protection.
Decide which products to promote
Not every product is a good fit for an affiliate program. Focus on products with strong demand and high profit margins so you can offer competitive commissions. For example, digital products and services tend to perform well in affiliate marketing because they have lower overhead costs. Subscription-based products can also be a good fit since they create recurring revenue opportunities for your small business and your affiliates.
Using tools like Google Trends or following social media conversation trackers can also help you identify upcoming trends. You can also look at your existing sales data to see which products already perform well and are likely to convert through affiliate channels.
Determine your commission structure
Your commission structure needs to be generous enough to attract new affiliates while still being sustainable for your business. Start by calculating your profit margins to determine how much you can afford to pay per sale.
Physical products typically offer lower commissions because the transaction fees are higher. By comparison, digital products and services tend to pay higher commissions due to the lack of fulfillment costs. Most affiliate programs offer between 5% and 25%, depending on the industry. You can also offer tiered commissions so affiliates who generate higher sales earn a higher commission rate.
Not every product is a good fit for an affiliate program. Focus on products with strong demand and high profit margins so you can offer competitive commissions.
Outline your terms, conditions, and compliance requirements
Your terms and conditions should specify how affiliates can use your branding and the rules about paid advertising. Setting clear guidelines up-front helps prevent issues and ensures your program operates ethically.
You should also address compliance requirements with potential affiliates. For example, affiliates are required by the U.S. Federal Trade Commission to disclose their relationship with your business when promoting your products. This typically means clearly stating that they earn a commission on purchases.
Recruit and onboard quality affiliates
Before launching your program, decide what types of affiliates you want to work with. This will likely include influencers or niche content creators whose audience aligns with your target market.
When you reach out to potential affiliates, focus on why you think they’re a good fit and how the partnership could benefit both parties. Once affiliates join, make onboarding simple by providing clear expectations, promotional materials, and guidance on getting started. This might include sample links, messaging guidelines, and tips for promoting your products effectively.
Track and measure your results
To get the most from your affiliate program, consistently track your program’s performance. The following metrics will reveal your most valuable affiliates and how to improve your program over time:
- Clicks. The number of clicks on affiliate links shows you which affiliates are driving traffic to your website. This gives you insight into which partners are actively promoting your products.
- Conversion rate. The conversion rate is the number of clicks that turn into sales. Tracking this metric helps you understand how well your offers and landing pages are performing.
- Cost of sale. Monitoring the cost of sale helps you see how much you’re paying for each conversion and whether your program is still profitable.
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