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WEB/DIGITAL Creating an Affiliate Program

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Diane Kennedy

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Aug 31, 2007
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I am very late to the party on this. I have products, services and seminars that I offer through my website and am finally adding an affiliate program.

How do I go about getting affiliates? What would be a fair percentage to offer? And what would be an amazing amount to offer? (So that everyone wanted to be my affiliate) What type of screening should I do on affiliates? (ie...I might not want some association with certain industries or people...or should I care?)

I don't know what I don't know on this. Any help would be appreciated!
 

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NerdSmasher

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Well, Diane, there are a few websites that can help you a great deal in setting up the entire affiliate program, and getting affiliates; such as Commission Junction (www.cj.com) or ClickBank (www.clickbank.com). I know of these, because I am an affiliate for different companies on both.

As far as commissions go, on CJ, you can find anything from 1-10% of sale price, to $50 per lead, or $0.01 per click. So, it all depends on what you're willing to pay, and what you're wanting to pay for. On ClickBank, however, almost nothing that doesn't have a 75% commission, which is the highest, ever really gets noticed. Though, on ClickBank, you only get paid for a sale.

Considering my experiences with both, I imagine you'll want to go with CJ; as they are a bit more professional, and I do believe they have more affiliates available. But, as far as a commission you can offer that would make everyone want to be your affiliate, I'm really not sure what you could offer, other than a program or item that simply sells extremely well. But, generally, the higher the % or $ amount, the better.
 

Andrew

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Aug 8, 2007
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CJ is garbage, they are horrible on both the merchant and publisher side.

I would recommend giving a serious look at LinkShare and Performics. (http://www.linkshare.com/ and http://www.performics.com/) Both have solid reputations. Google also have a CPA network running under their Adwords program. I believe it is still invite-only.

What should you offer for payouts? That really depends on the value of your market's traffic. Take the payout and conversion rate to figure out what each targeted visitor is worth (which would be someone who clicks on an ad.) Then you have to balance out your ad's clickthrough rate with the competitions.

The novices will look at payouts, but the experienced guys will take all factors into account. If an affiliate advertiser can make the numbers better than the competitions, saturation will occur. You can go to all of the big banner networks and have them run your ads on a CPA basis (in effect, having them act as affiliates) and get massive saturation and market penetration. If the numbers don't work, it goes no where.

Screening affiliates.. thats a tough one. Nearly all of the super affiliates will be building custom campaigns based off of your offers. You won't be able to look at an application and see that their site is #4 on Google for "tax help" (in that case, you'll need to proactively contact them because they won't be looking.) Also take into account that the referring source of the traffic may be masked, you won't know if anything bad is going on until you get complaints.

Before you take the affiliate approach, I'd recommending running your own test campaigns. Make sure your landing pages & conversion rates have been thoroughly tweaked. This is also where you'll figure out what a visitor is worth and how much you can pay.
 

Jonleehacker

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Diane,

Some thoughts about affiliate programs:

Lifetime Value of a Customer

The metric to primarily consider is lifetime value of a client in your business, as opposed to sales of individual products or services.

For example, if you know that every new client that comes into your business, on average purchases 4 times from you, then you could afford to pay out an affiliate commission of 100% on a $200 dollar product, because that client is going to make 3 other purchases where you will make your profit.

I operate a lot as an affiliate for web hosting companies. Even though they charge only $6 a month for hosting, some will pay over $100 for each new client...they have based their payouts on the lifetime value of a hosting customer (which is a lot more than $100).

The 80/20 Rule Applies

Like a lot of financial matters, it applies to affiliates as well. In one of my businesses, 2 affiliates accounted for 90% of the affiliate sales.

In most cases this rule will hold true. Therefore it may not be worth the hassles of managing a huge number of affiliates, whether through CJ or a private system. If you know your market really well, and know the players in related businesses, then you can just approach them directly (or hire an affiliate manager to do so).

Turn Your Clients Into Affiliates

At the very least, it is a good idea to enable your current clients to earn commissions on referrals, don't forget them as inside knowledge of a offer or product or service is the most effective selling tool.

What's Your Overall Strategy?

2 Possible strategies that are not mutually exclusive:

1.) Building a huge list of clients or prospects. Take my 100% offer from above and apply it to your most "mass market" product or service. Now add the offer on every affiliate network you can find, and hire an affiliate manager to promote it as well.

The goal here is to use this product as a loss leader. Essentially you are paying affiliates to bring in prospects for you and qualify them. If you see your business as being able to sustain very high volumes, then this method will get you that volume.

2.) Buyout your competition. In a service business or smaller scale operation, if your lifetime customer value (LCV) is high enough then you can take over your competition's business.

If Jon's Tax Shop's LCV = $3500 and Diane's is $10,000 then if you made your affiliate payout $5,000 it would be in my best interest to sell my clients to you rather than to continue to operate my own business.

This is a pretty extreme example, but useful as an example of the power of a well designed affiliate program.

Hope these ramblings help!
 

MJ DeMarco

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Diane, what CMS software are you using to run your website? Joomla? Drupal? Or is it custom? Or is it blog software? If you are using a widely used CMS, there might be some out-of-the-box plugins that could be used to create you own inhouse affiliate program.

The programs mentioned above (Linkshare / CJ) are expensive to join ... at least the last time I reviewed them for participation.
 

Diane Kennedy

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Aug 31, 2007
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Jonleehacker - Thank you for the ramblings. There is gold there! There seem to be three schools of thought on paying affiliates - One time when they buy something, limited period (everything they buy for x months or years) and lifetime percentage. I have a lot of products - it's not a clearcut Buy 1, Buy 2, Buy3 type of program. I do know how long it takes to convert to a CPA client (my ultimate goal) and what the typical person buys along the way. Thank you for the ideas. Rep++

Andrew - I read your post and went into the other room to ask my husband whether I should just build this myself. I think with some effort and focus I could really crank up the TaxLoopholes site and maybe build a couple of affiliated subject blogs....I know a lot of professionals who have great ideas and write well...just no time to manage their own blog and really overwhelmed with the technology of it. I've got a team who can write, edit, put the site up.... hmmm....... so now I'm thinking I do an affiliate program with a couple of a big dogs (people with big page views in related fields) but not aggressively grow it. Lots to think over. Rep ++
 

Diane Kennedy

Bronze Contributor
Aug 31, 2007
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Diane, what CMS software are you using to run your website? Joomla? Drupal? Or is it custom? Or is it blog software? If you are using a widely used CMS, there might be some out-of-the-box plugins that could be used to create you own inhouse affiliate program.

The programs mentioned above (Linkshare / CJ) are expensive to join ... at least the last time I reviewed them for participation.

MJ:

I have something custom that isn't live yet. In fact, I'm embarrassed to admit, it's been ready to go for a year or two. My biz has been running from drama to drama in 2006 & 2007...but all the drama actors (except me hehehe) are gone now. So, I can finally focus on business!

If I was starting it today, I probably wouldn't have gone the custom route. Back then there weren't as many solutions, or at least I didn't know about them.

One of my potential JV partners on another deal is foreclosures.com. Her affiliate program pays 30% lifetime. I was thinking of doing something similar back to her (her opt-in and unique visitor counts are much bigger than mine), but didn't have a clue what to do really until I started this thread. Now I have lots of ideas.

I think one of the things I enjoy most about this forum is that there are so many people here in specialities that I want to learn about. Thank you again MJ for a great forum.

Diane
 

M-M

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Aug 27, 2007
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I'll need this in a the next few months, but it seems so terribly confusing. I guess I just have to re-read it a few times. Thanks for all the info!
 

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