Making
14 June 2011
Affiliates are the real moneymakers of businesses. 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. The first thing to do is to set up your affiliate system. There are a few important things to consider during setup.
Price of Products
If you are going to be offering commissions for the sale of products you will need to consider your product pricing. 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.
Affiliate Incentives
Whatever you do, make sure the affiliates will think your incentive offering is worth it. The thing is, these affiliates are not employees. They get paid only after they make a sale. 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.
Affiliates will work hard for you if they know they are being rewarded fairly for doing so. Affiliates will keep your incentive program in mind whenever they refer people to your website. They may even spend money to promote your product. Research the exact amount your competitors are giving your affiliates.
Remember to take into consideration the money you spent on product development (and your own ROI) when setting up your incentive system. The average commission for digital products like ebooks and MP3s is 50-70%. Software commissions are slightly lower because you may have to pay for technical support. For physical products, you can give out 10% .
Cookies or Tracking Systems
Affiliate programs work through the use of cookies. This cookie tracks what link that visitor clicked on and when. One more reason why your affiliates will join your program is cookie duration.
Let’s say the potential customer visited the website through a referral link. A non-buying customer may decide to buy only after 20 days. If the cookie’s duration is 30 days, the affiliate who referred that customer will still get commission for the sale.
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