Affiliate Marketing – What is it? Is it Right For Your Business?

by Dave Curtis on 10/11/2011

N, Q, R, 5th Ave Subway Station, 59th Street Entrance, Central Park South

N, Q, R, 5th Ave Subway Station, 59th Street Entrance, Central Park South

Depending on your type of business you might be selling products from your website that you ship to customers yourself. Or, in some cases you may offer services which, again, your site helps you sell.

But what if you were to have someone else on their web site (in addition to your site) also sell your products or services?

For a service you’d call that kind of help a referral and might offer some kind of commission, either a set fee or a percentage.

When selling a product the other web site would have a few options including becoming a distributor (paying you for your products first at wholesale and stocking them and selling them), entering into a drop and ship agreement with you (whereby any orders on that person’s site would be paid for there and the site owner would keep whatever markup he added, and then relay the order to you along with your agreed on price and you would ship it – usually with the other website owner’s business address), OR you would do what is called affiliate marketing.

If your company becomes part of an affiliate program (either through a third party middle man or by setting it up yourself) a lot of other web sites can be selling your products but the sale itself is made on your web site and not theirs. You get paid by the customer yourself and you ship directly. That customer is now your customer.

Affiliate programs offer a percentage of the profits to the affiliate advertiser (the person with the site who helped you sell your product) which is typically 5% to 7% of each sale on manufactured goods. eBooks, downloadable software sales and online language programs and the like usually offer higher percentages, but that’s because there’s no physical shipping or storage costs, no spoilage, breakage, insurance, or repeat labor involved.

Don’t be tempted to hand over 20% profits to affiliate advertisers because it won’t make you sell any faster. Getting an affiliate program off the ground takes a lot of work. There are just not that many people out there who want to do the hard job of selling products on their web sites. In my experience friends and acquaintances don’t make good salespeople. In one case where a client set up an affiliate program and got 10 friends to sign up to do sales and make money, in 4 months I was the only one who made any money through my own “example” links embedded in a few places to show them how to do it.

What you need for an affiliate program to work (the basics) is:

  • People motivated to sell who have
  • Web sites related to what it is that your company sells
  • These sites need to be decently well written, informative and interesting
  • Enough people have to visit their sites to make it a possibility that one out of a hundred will click on the site’s link pointing to your site

What you do not need for an affiliate program is:

  • Friends and relatives who want to make you happy today
  • People who are without web sites and the skills to build them
  • People who are interested in “self referrals” so they can buy from you at the 4% or 7% “discount” that you would have paid them for sending new customers.

Depending upon options sought after you may want or need to join an established 3rd party affiliate program with all the bells and whistles, or (depending on your available time to manage it or the limits of your technical skill) if your business is smaller, a self set up and managed program might be the way to go.

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