Most businesses thrive on referrals. You share a portion of the profit to certain individuals in exchange for the leads they send in. Setting up your affiliate system with a good company is just the start. The following are the things you must take note of when you’re managing your own affiliate program.
Product Prices
Proper pricing is crucial if you plan on splitting the revenue with affiliates. Make sure you have enough left over to maintain your operations after you remove the affiliate’s cut. If you are selling digital (information) products this is likely not an issue. But if your products have to be delivered and inventorized, you need to make sure the price covers the costs before you think of splitting the profits with affiliates.
Affiliate Incentives
Whatever you do, make sure the affiliates will think your incentive offering is worth it. Your goal must be to run a program attractive enough that affiliates will be happy and proud to work for you. If your incentives are not exciting enough, affiliates will go to your competitors.
Affiliates understand that in order to earn, they must promote quality products well. Affiliates will be working for you for free until they create sales. They may even spend money to promote your product. Do a little research by finding out how much your competitors are giving out.
Compute the amount you spent on product development, and include this factor when setting a percentage for your incentives and commissions. The average commission for digital products like ebooks and MP3s is 50-70%. If your product is a downloadable software, 20% is generous because you may have to pay a full time technician to deal with customer complaints and tech support. For products that have to be delivered, 10% is generous.
Tracking Systems and Cookies
Cookies in internet marketing are very relevant pieces of harmless code that gets uploaded in the browser of the website visitor. A cookie tells you whether an affiliate made a sale or not. One more reason why your affiliates will join your program is cookie duration.
A cookie with an affiliate’s referral code gets uploaded in a potential customer’s browser and stays there for the duration that you set up. If the customer doesn’t buy on the spot, she may return to purchase something in a week or so. If the cookie duration is for a month, the affiliate gets paid as long as the customer buys within 30 days.
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