3 Frequently Asked Questions about Affiliate Management

Aside from marketing as an affiliate of other programs, some marketers eventually become affiliate program providers themselves. A word of caution though, starting and managing your own affiliate program needs careful preparation and planning. If you want to move your affiliate activities one notch higher, proper preparation will give you the results you're yearning for. Here are three frequently asked questions about it:

1. How much commissions should I give to my affiliates?

The answer to this question depends on the profitability of your products. Of course you can't give out commissions that you cannot afford. As a general rule, electronic products that can be downloaded from your program go for a higher commission rate in the range of 25% to 50%, sometimes even higher. This is because the profit margins are normally high for such products. Consumer products on the other hand, having smaller profit margins, can have affiliate commissions as low as 5% and should generally not go beyond 20%.

Other considerations like taking into account the lifetime value of a client and what your competition is offering should also factor in.

In the end what you offer should be related to the unique opportunities that your business gives. Make your program competitive by working to have good conversion rates, effective promotional tools, and other things that makes your program as attractive as possible.

2. Can I run an affiliate program with my service-based business?

This is a common enough question because a lot of people have the mistaken notion that affiliate programs work only with products, especially electronic ones that are easily downloaded by buyers. In reality, any business that provides a hefty profit margin that allows one to provide commissions to agents can run an affiliate program for it.

The challenge lies in the way that your services are priced. If your services are available at fixed prices, automating an affiliate program becomes a lot easier similar to a business with purely products that have defined cost prices and price margins.

On the other hand, if your services are charged by the hour or if they require that you conduct some preliminary evaluation to be able to give project estimates, then it's a little harder to implement automation.

In such a case, one way to do it is to track who referred prospective clients to you. This way, even if a contract for your service is closed with this client further down the road, your system will identify who referred them and you can give a commission to the associated affiliate.

If your affiliates want faster commissions, you may opt to do a pay-per-lead program. In this manner, your affiliate will be paid a smaller fee for every prospect that they bring to your program. Most automated affiliate systems can handle such pay-per-lead transactions.

3. What kind of affiliate tools should my program provide?

You should not wrack your brain hard to come up with this because in general, the answer to it should not come from you. Just simply give your affiliates what they need and want.

 

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