How To Set Up An Affiliate Program

Most businesses thrive on referrals

Most businesses thrive on referrals. You're willingness to share a portion of the profit in exchange for new leads and more sales will improve your business a hundred fold. The first thing to do is to set up your affiliate system. Here are some of the things you need to consider when you're managing your first affiliate system.

Pricing

Proper pricing is crucial if you plan on splitting the revenue with affiliates. Make sure you have enough left over to maintain your operations after you remove the affiliate's cut. Price becomes a non-issue only if you're selling virtual (downloadable) items. 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.

Commission rates

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. The thing is, these affiliates are not employees. They get paid only after they make a sale. If the affiliate commission is too small, they will look for other products to promote for free .

Affiliates understand that in order to earn, they must promote quality products well. Affiliates will keep your incentive program in mind whenever they refer people to your website. They may even spend money to promote your product. Do a little research by finding out how much your competitors are giving out.

Think about your capital and how long before you can break even, even with an affiliate program in place. For downloadables, you can give as low as 40% and as high as 75%. If you're selling software, you can give 20% commission because you may have to hire someone for updates and maintenance. For physical products, you can give out 10% .

Cookie Management

If you're running an affiliate program, you should be familiar with cookies . A cookie tells you whether an affiliate made a sale or not. The best affiliates will get attracted to cookies that don't expire or those that last for six months or more.

Cookies are useful for when a potential customer referred by an affiliate visits the sales page but doesn't buy anything. 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.

by: Peter Rocker

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