Q: Hi Alice, I have a retail website that has been on the Internet for two years and am thinking of starting an affiliate program. How would I go about this, and what percentage do you recommend I pay my affiliates? Thanks for your help.

Sincerely, Bonnie
A: Definitely a great idea. An affiliate program is a great way to create more name recognition in your market – but more importantly it’s the perfect way to create a sales force that you only pay when they produce results!

Many people think that starting their own program has to be complicated, but it need not be. Basically, you have 3 main options:

1. Have your programmer install a script on your server: This means you will have complete control over your affiliate program (within the abilities of the script you use) everything will be hosted on your domain. Basically, you pay a one-time fee and then you will likely need a program for maintenance and upgrades. You will also be responsible for managing and paying your affiliates. I can’t recommend many scripts because my experience is limited with them. I use IDevAffiliate for one of my products, but I have a few issues with the reporting it offers and the way it handles (or doesn’t handle) refunds.

2. Use a 3rd party hosted script: This means, instead of worrying about a script is running on your site and maintaining it, you have another company take care of it. They make sure all upgrades are done and you simply manage your affiliate program through your own account on their domain. This is likely a more expensive option than #1 because it carries a monthly fee. You are also responsible for managing and paying out your affiliates. I use QuickSales to manage my affiliates for a few products and do recommend it. My only complaint is that the program does not allow my affiliates to do their own ad tracking.

3. Use a full-service affiliate provider: This is the most hands-off approach, but the most expensive as well. They completely manage your program from hosting it to managing your affiliates to paying them as well. You could go with the big guys at CJ.com, but expect to shell out thousands of dollars just to get started. If you sell digital products, you could go with a program like ClickBank or if you’d like to sell any type of product through PayPal only, you can use PayDotCom.

Whatever you decide, do your research first and make sure that the program you choose really suits your needs. It’s quite a pain to get your affiliate program up and running and then have to switch midstream.

Things to Think About

- What kind of reports, tracking and statistics are provided?
- Do you want to manage and pay your affiliates?
- Do you need a 2-tier program (i.e. you pay commission on 2 levels)?
- Does the program allow for lifetime customers (i.e. do you want your affiliates to continue to be paid on future purchases made by their referrals)
- What is the company’s reputation (do searches on Google, ask around and do your homework!)
- Are the fees affordable? Can you still make a profit after you payout affiliates and pay any fees associated with the script/program you choose?
- Can you pay your affiliates by PayPal?
- If needed, can the affiliate program handle recurring payments?
- How does the program handle refunds? If you issue a refund, does it automatically get recorded in the affiliates account?

How Much Commission?

You definitely need to be competitive. If you are selling digital products, it’s possible to offer very lucrative commissions to lure affiliates to you. If you sell a physical product, it may be a bit harder to offer big bucks per sale. Have a look at your competition and see what they are offering. If you can offer a better payout on a product that sells great…you’ll win the game.

Just one word of caution – really do your math. Don’t just give into the temptation to offer a big commission so you can get things rolling. Only offer what you can afford. You’d never want to reduce your commissions and lose the loyalty of affiliates who are already working hard for you.

Further Resource
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