How To Start An Affiliate Program [Your Guide To Success]

Updated on June 13, 2023
ecommerce referral program

Table of Contents

Table of Contents

An affiliate program can be a great way to market your business online. Even if you aren’t familiar with the term, chances are you’ve seen affiliate marketing in action. An affiliate marketing program works like this: your partners, also known as affiliates, place links on their website. Then, when the links lead to new purchases, you pay the affiliates a commission for the new leads and sales they brought in.

In order to create an affiliate program that’s both smooth and successful, there are a few elements that you will need to look into. A successful program should include affiliate marketers with the right audience  (who also have to be trained). You’ll need to find a way to track your affiliates’ links, and ensure they are following rules set by the program. Plus, you need to set and pay a motivating but sustainable commission rate.

For help in creating your affiliate program – whether you’re an ecommerce or a service business – and ensuring affiliate marketing is right for you, check out this comprehensive guide.

Is an affiliate program right for you?

how does affiliate marketing work Before we dive into the deep stuff, it’s important to ensure that an affiliate program is a good fit for your business. The good news is that the affiliate marketing model is extremely versatile. Whether you sell products or offer a service, you can find a good way to incorporate an affiliate program into your brand’s marketing plan.

In the meantime, take these key factors into account.

When using an affiliate program, note that commissions have to be paid out for every sale made through an affiliate link.

Because fees are involved, affiliate programs work best when retention rates or repeat customer numbers are high. Take note of how long your customers stay with your brand, or how often they purchase, before starting an affiliate program

However, because your marketing budget is higher — bigger ROI while spending fewer dollars gaining new customers (and possibly new affiliates) — the odds are in your favor with an affiliate program. This means you can pay more out in commissions, which can allow you to attract bigger influencer affiliates and therefore, larger or more niche audiences.

Successful affiliate programs work best for brands with higher profit margins, as well as subscription brands that create ongoing revenue from a single click.

And if you want content creators to promote you through their own channels, then an affiliate program may be the way to go. As an added perk, you can gain direct traffic – as well as leads and sales – from their referral.

In some cases, though, a referral program may work better than an affiliate program. A referral program is best used when you want customers to personally recommend your brand or product to people they know. When customers have their own skin in the game – they personally use your product – it can add great value to a recommendation. This shows others that they love the product themselves, and aren’t just talking up a company for personal gain. Either way, with a referral program or an affiliate program, you can create a long email list of leads.

Take a look at this list of the best referral marketing software programs and how you can use them to grow a brand through word-of-mouth marketing.

How to start an affiliate program: The essential playbook for success

Now that you understand the benefits of starting a high-quality referral program, take a look at this comprehensive guide on how to start a successful program for yourself.

Conduct a competitive analysis of other affiliate programs

Start by looking at what others are doing and how they’re doing it well, step-by-step. Find at least two competitors who use existing affiliate programs as a key marketing strategy. How does each program structure their commissions? How do they find their affiliates? You may have to dig deep and do some research in order to find these answers.

You’ll also want to know what rules and conditions each affiliate must follow to stay in good standing with the program. Look at any additional factors, too, such as how long affiliate cookies stay active.

Finally, analyze the strengths, weaknesses, opportunities, and threats that exist within this competing affiliate management program. By seeing what others are doing, you can pull in key elements for your own program. You can also avoid what doesn’t work, and set realistic goals for growth.

Set your own affiliate program goals

One of the best ways to find success is to determine where you want your program to go. What goals do you want to reach? What heights do you want your program to meet? Set goals in terms of dollars, new subscribers, etc. Use whatever metrics you follow to mark success with your business.

New customers and monetary values should be your two main goals. You should also measure conversion rates (how many people click vs. how many eventually purchase). Tracking all three — after setting key goals — is the best way for you to track program success and to determine if you’re on the right track with your affiliate program.

Revenue goals are most important — making more money is what your program is all about, right? Therefore, set goals for incoming revenue first. Mark what you’d like the program to bring in annually, then break up the goals quarterly and by other intervals so you can determine if you’re on track.

You should also set goals for the type of audience you want to attract. Look at your target market and create numbers based on how many customers you want to attract. Add in different categories like how many will become repeat customers, etc. This is key data that will help you to better track your affiliate program’s success rate.

Finally, look at conversation rate goals. As mentioned above, you want to know how many customers will click on a link vs. how many will actually sign up. Being realistic in these numbers will give you the best possible understanding of how effective your affiliates are.

Other stats can also help you round out the entire outlook of your program, including:

  • Goals for each customer’s average order (first-time purchases and repeat orders alike)
  • The number of affiliate sales you’d like to reach in a given calendar timeline, for instance, in a month, quarter, or year
  • Other measurable affiliate goals that you can optimize – clicks, page views, and more

Decide on your affiliate commission structure

How much will your affiliate partners earn for a sale? And how do you set these numbers in the first place? After all, you want to provide enough of a reward to motivate the partner to promote your program. But you don’t want to cut your profit margins too thin in the process. It’s a fine line to create this number as a viable affiliate program kickback.

In other words, your online business commission structure must both be attractive to affiliates and competitive in your niche. How much are others paying their affiliates? Is there an incentive for your own affiliates to reach a new tier? (For example, a commission bonus when reaching a higher number of sales?)

Note that a commission is usually paid in cash. So, you’ll have to work out the logistics of paying affiliates, and have enough liquid funds on hand at any given time to compensate them. Of course, their sales should be bringing in their commission and then some. But, there can be delays as to when you see that money, so keep this in mind.

Of course, you should also work out when they will receive said commission. When will they be paid? How often will you payout? Monthly? Quarterly? Work this out when setting up your affiliate program so partners know what to expect from the get-go.

Commissions can be paid as a flat rate or as a percentage of each sale. There are perks to either structure. But this is another step to figure out in your beginning stages.

 You should also only pay out affiliates for closed business. Other programs pay for clicks or views, but this means you’re paying out of pocket, and not earning new business. Therefore, you should structure your program to only pay out for sales.

Another factor is the option to award bonuses to your top affiliates. Will you give a bigger reward for those bringing in the most dollars? This can be a good way to reward top earners and show your appreciation for what they do for your brand. It can also create a new level of loyalty among affiliates, too.

Finally, consider for how long an affiliate gets credit for a purchase. Are you using cookies to track users? Doing so can mean that a user can be traced back to an affiliate link even if they clicked on the link, but didn’t purchase until a few days later. Does the affiliate still get credit for that sale? For how long after a click is an affiliate eligible for credit? List out all of these details so there’s no confusion down the road.

Build out the rest of your affiliate program

affiliate marketing cycle

Now let’s look at program promotion.

  • How will you distribute links and share the program?
  • What terms and conditions must your affiliates follow in order to be in good standing with the program?
  •  How will you make your program stand out from the competition’s programs?
  • And finally, will you hire or designate an affiliate manager to help your promoting partners?

These decisions can help your program run smoothly and ensure there’s no confusion of roles, or about who’s to be contacted for help and/or affiliate questions.

Find your affiliates, and plan to track them

Next, it’s time to find your affiliates and track their growth for your brand. There are two ways in which you can do this. 1) With affiliate software and 2) with an existing affiliate network.

Will you use an existing affiliate network?

Using an existing affiliate network can allow you to grow your network quickly. This is especially true if the network you’re using has a list of contacts in your niche. If you want to get your program up and running quickly, this can be a great way to do just that.

However, affiliate networks charge hefty fees, which can lead to you paying a high percentage on top of the affiliate fees you are paying to partners themselves.

 In most cases, using an affiliate network also leaves you in the dark about at least some partner data. Numbers like views, clicks, conversion rate, and more are owned by the network themselves, leaving you missing out on important brand/program info.

Will you build your own affiliate network with affiliate software?

The other method for growing your affiliate program is by using affiliate software. This is a program that allows you to track your own data, leaving you in the know about each partner’s progress, with no holes or missing info. This data is key in growing your affiliate program.

Affiliate software is also an extremely affordable option, costing a small portion of what it takes to tap into an existing affiliate network. You also gain the freedom to create and nurture relationships with your own marketing partners. How to nurture these relationships effectively? Use this two-pronged approach:

How to find affiliates

Start by promoting the affiliate program on your own website, allowing potential partners to come to you. Screen each applicant thoroughly so you can be sure you have the most qualified members on your team.

Next, go out and scout yourself. Look on Google and social media platforms to find influencers or key individuals within your niche. Bloggers with quality content, and who are familiar with search engine data, are also a great place to look. You can also ask some of your best customers if they’re interested in joining the program. In addition, you can search for affiliate-related social media groups and forums where existing people with affiliate experience will be looking for new connections. You can then contact these individuals directly to ask them if they would like to help the cause … for a reward, of course!

Recruit and onboard affiliates

As mentioned above, it’s extremely important to screen affiliates carefully when onboarding. Decide on the best affiliates to recruit and require that they agree to your terms in the beginning stages. This ensures your partners are all following the same rules. Then, when agreeing to move forward with applicants, be sure to onboard them with a detailed training process.  Along with training, make sure to create a job aid for the applicants so they can complete tasks more effectively.

Regularly track your affiliate program’s success

Now it’s time to follow the program and determine if it’s meeting your goals. By including measurable goals that you have set via a landing page, you can easily follow the data to see if your program is up to par, or if there are areas in which you need to improve.

Track your affiliate site through your business model and digital marketing trends each user follows. This can include content marketing, email marketing, Facebook ads, and affiliate products, or affiliate tracking. You can even offer marketing tips or marketing channels to help in the optimization of their results and make each post  more shareable, knocking down the overall affiliate marketing work.

Wrapping up

Working with an affiliate program can be a great way to grow your business through online marketing. It can also be ideal in reducing ROI because you’re using existing platforms and others’ connections to spread the word about your business. Using rewards like commissions incentivizes your partners to gain more clicks and closed business, which only increases the profits you’ve brought in while you’ll also recruit affiliates.

With help from your affiliate software program, you can also track data in order to learn more about your affiliates’ progress and the users that they reach. Learn more about starting an affiliate program for yourself with the ultimate guide to affiliate software.