Grace Judson is a marketing strategy consultant and marketing content creator for independent entrepreneurs and small businesses. She writes a biweekly article for subscribers and more or less twice-weekly blog at Svaha Concepts, where she invites readers to discover new prospectives on understanding their customers and creating content that connects.
At some point, everyone who sells a product or service starts to wonder… how much more could I be making if I had affiliates selling my stuff?
At some point, everyone who sells a product or service starts to wonder… how much more could I be making if I had affiliates selling my stuff?
It’s a great question. And yet, it’s not the right question. Why? Because it taps into that part of your mind (and heart!) that wants to maximize profits. And while there’s absolutely nothing wrong with maximizing profits, looking at the profit picture first (or exclusively) is seldom a good way to determine your strategy.
Strategy?!
That’s a scary word for a lot of small business owners. But all it means is ensuring that the actions you take are in alignment with who you are, what you want for your business, and how you want your business to be experienced by your customers.
And that means being sure that you’re really ready to make the leap into having affiliates for your services and products – so that when you do make the leap, it will be a three-way success: a success for you, for your affiliates, and most importantly, a success for your customers. If you’re thinking about creating affiliate programs for your products or services, here are four key questions to consider in determining your strategy.
1. How will you select your affiliates?
That may sound like a strange question. After all, why wouldn’t you simply allow everyone who wants to sell your stuff to take part in your program?
But your reputation is built on more than just what you do. It’s also based on who you associate with – which means, who your affiliate partners are.
Some small business owners prefer to hand-select their affiliates, issuing personal invitations to just those people they want to be in partnership with.
Others open the doors wide to allow everyone in who’s interested.
If your business offers exclusive, personal services that tap into your customers’ feelings of vulnerability in some way – you and your customers may find the first route more appealing. On the other hand, if you offer services or products that are widely applicable and less intimate in feel, your goal could be to make your offer as widely available as possible.
2. Which of your offerings will you make available?
If you have a single product or service, this question is easily answered.
On the other hand, if you have multiple products and/or a range of services, you may want to pick and choose which to offer. Some products or services might be widely applicable – and some, as already noted in the first question, could be more “touchy-feely” or one-on-one in nature.
None of those attributes make something inherently more or less suitable for an affiliate program. They’re just part of what you’ll want to consider as you evaluate your offerings to see which would bemost suitable for your initial venture into affiliate marketing.
3. How will you reward your affiliates?
Obviously, your affiliate partners receive a portion of the revenue from every sale they make – but how large (or small) a portion?
You’ll want to consider the base price of your offering, what your competition is doing, and your answer to the first question as you evaluate your options here.
As with any pricing decision, you may feel a lot of uncertainty about what’s best to do. Don’t let yourself get stuck. Make a choice that seems reasonable, and move forward!
4. What’s your personal tolerance for vulnerability and risk?
When you put your work out there for others to market, you’re taking a big step – and you’re giving up a lot of control.
What if no one wants to be an affiliate for you? What if someone engages with your affiliate program – and sells absolutely nothing? What if an affiliate ends up with a lot of refunds and/or unhappy customers? What if an affiliate gets angry with you for some reason?
You’ll want to consider your policies and procedures ahead of time – both from a business perspective, and from the standpoint of how it might impact your personal experience of your business, your work,and your customers. Eventually, one or more of these situations – or something else unforeseen – will happen. It’s far better to be prepared than caught off guard with no idea of how to respond!
There’s no across-the-board right or wrong answer for any of these questions.
As you consider them, keep coming back to the deepest question that’s at the heart of it all: what’s right for you?
And only you can determine that!
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I was just working on my affiliate program this morning, so this article could have better timing! I adopted a strategy in my business last year (when I signed up for ejunkie) and decided that my affiliate program would be by invitation only. I now have 26 people in it and every one of them has worked with me, understands my target market (cluttered creatives) and appreciates the unique approach I use for organizing. These folks aren't affiliates as much as they are advocates. What a difference that makes!
I'm curious if there are standard percentages that are recommended as the "reward"?
Thanks for such a helpful, insightful article!
Jennifer - thanks for your question, and my apologies for taking so long to get back to you!
I love the distinction you make between "affiliates" and "advocates." That's really beautiful. And I applaud your care in understanding how you wanted to approach affiliate marketing.
Now, as for your question - I haven't seen anything I'd consider a standard in terms of percentages. What I have seen has ranged from 10% on up to 50% or even 60%.
I think it depends on the price - and maybe even more importantly, on whether it's a product or a service. After all, a digital product bears no production overhead. Once it's made and is ready for download, there's no cost of inventory or production. So the percentage offered to the affiliate (or advocate!) can be higher without having a serious impact on your workload or expenses.
On the other end of the spectrum, a highly hands-on personal service - one-on-one coaching, for instance - is obviously significantly more labor-intensive for the person providing the service. So I would expect to see a relatively lower percentage of the fee being given to the affiliate.
Like everything, there really aren't hard-and-fast rules. It's got to line up with who you are, who your affiliates are, and what it is that they're helping you market and sell.
Does that make sense?