How to start an affiliate program

An affiliate program is a powerful tool for significantly increasing the sales of your store. This marketing strategy is highly popular worldwide, with over 100 thousand companies currently offering their own affiliate programs. It’s no surprise that more and more people are choosing to make affiliate marketing their primary source of income. This shows the huge potential and effectiveness of this method in driving business growth.

This is a tool that benefits everyone involved. In this article, we will discuss the meaning of affiliate marketing business from the perspective of both sellers and marketers. Furthermore, we will explore the advantages it can offer your online business. Finally, we will discuss how to include an affiliate program on a WooCommerce site and provide 10 essential steps for creating a profitable program.

First, let’s take time to discover what an affiliate program is.

What is an affiliate program?

Affiliate marketing is a type of business that allows individuals to promote their products and earn a percentage or fixed fee from the sales. Users have the chance to earn money by promoting the company’s offerings.

In most cases, when someone signs up for such program, they are given a unique affiliate link generator. This tool allows the affiliate to enter the link of a specific product and associate it with their identification code.

When a user clicks on the provided link, a cookie is placed in the user’s browser and remains there for a specified period of time (or until the user manually deletes it). This cookie will track any affiliate sales made during that time.

The amount of money earned varies by market and niche, but there are certain factors that can lead to substantial profits. Many affiliates rely solely on the income generated from this industry, with some making thousands of dollars.

Of course, the percentage has a lot to do with the profit margin that you have on each product, but we will talk about that in more detail later on.

Given the clear benefits to affiliates in terms of earning money and informing customers about products and offers, what is the benefit to the seller of an affiliate program?

What is the purpose of an affiliate program

What are the benefits of applying affiliate marketing campaigns to your website? As you can easily see, having many people promoting your portal on social media and beyond is an extremely effective way to promote your products and increase both user traffic and sales.

Moreover, most affiliates have their own portal where they publish content promoting products. The result is a network of links that can increase your indexing position in search engines. This boost your authority both in the eyes of customers and in the eyes of search engine analytics systems.

It is therefore a very convenient promotional tool because the cost to the seller is ONLY applied when a sale is generated. Unlike other promotional tools, the seller does not pay for reaching a certain number of people, but a direct commission on the sale.

Finally, remember that you are creating a community of people who are actively working to make your business a success – this means that the entire effort will not fall on your shoulders, and you can expect more consistent and effective growth.

It is no coincidence that so many companies, including very successful ones, use this program. Let’s take a look at a few examples.

Examples of affiliate programs

As mentioned, there are thousands of companies that have integrated affiliate programs, some with great success, others with less results. Let’s see which name you certainly know.

Amazon

The leader among online marketplaces has long since introduced an affiliate program for its customers. This includes fixed percentages on sales generated through this tool as well as bonuses for special events (such as Prime registration).

The percentages associated with the sale vary from product to product. They range from a maximum of 20% of the sale price for products included in Amazon Games, to 10% for luxury and digital video products, to a minimum of 1% for Amazon Fresh and video games.

It is interesting that these percentages depend on both the products Amazon wants to promote and its margin on certain categories.

Amazon lets you collect commissions via wire transfer or coupons redeemable directly on the site (so you get most of your money back).

Etsy

Etsy, a platform known for selling handmade products and more, recently launched its own affiliate program. This addition further contributes to Etsy’s success as a thriving marketplace.

Because of the small profit margin, the program offers a fixed 4%. However, it has attracted a significant number of affiliates to its service.

The advantage of a fixed fee is that it simplifies the calculation of a potential affiliate revenue, which can be beneficial in certain business strategies.

Envato

Envato is a fascinating example. EnvatoElements, PlaceIt and EnvatoMarket all fall under this brand. But while they’re all under Envato, each platform has different rules for affiliating because of their different products and profit margins.

Envato offers three different affiliate programs. The first program focuses on EnvatoElements and pays a set amount for each user who subscribes to the site’s plan through the affiliate. The fee ranges from $20 to $120 per person.

When it comes to subscriptions, they can be quite interesting from an affiliate’s point of view. The vendor can choose to pay the affiliate a commission only on the initial purchase or on each subsequent purchase. Although affiliates tend to prefer the latter scenario because it allows them to earn a recurring fee on each sale and significantly increase their earnings, the former situation is more common.

The reason for this is that the vendor is only responsible for a portion of the initial transaction payment, so all future payments will be pure profit.

PlaceIt also pays a fee ranging from $20 to $50 for each new subscriber, while EnvatoMarket, which specializes in selling digital products, offers a 30% fee on the first purchase.

But again, these are often recurring purchases, such as WordPress and WooCommerce themes, which generally come with an annual subscription that includes updates and support.

In this way, Envato has managed to get the most out of its affiliate program, with the ability to offer high shares due to the high profit margin of digital products.

Is affiliate marketing the right fit for your business?

It’s hard to find a market where an affiliate marketing program doesn’t fit, but some niches are better suited for this marketing approach than others.

For example, if your profit margin is very tight, you may find it difficult to pay suitable commissions to your affiliates. You could reduce the commission rate, but if it is too far from the market standard, it will be difficult to find affiliates.

Selling custom products or services can be challenging when it requires communication between the customer and the salesperson, including the exchange and acceptance of quotes. Automating the sales process becomes difficult in these cases, making it less intuitive and functional for affiliates, who may feel left out of the team.

Finally, you need a platform that allows you to create and manage an affiliate program. For this guide, we will see how to implement an affiliate program on an eCommerce built with WooCommerce. But first, an important step.

10 Steps for Creating an Affiliate Program

1) Set your goals

We have seen that the affiliate program can bring a number of benefits, but this is only one benefit. When creating a program, you should have a specific, quantifiable goal in mind. This could be a percentage increase in sales, promotion of a specific product, or the number of people coming to your site.

You can also create more than one goal and give them different importance and percentages so you can monitor them over time. Having a clear vision of what you want to achieve will allow you to create a suitable affiliate strategy and see if the path you are taking is the right one from the first few months.

2) Choose the right plugin for your needs

Once you have established the goals you want to achieve, you need to move on to the technical part. Setting up a successful affiliate program requires a tool to automate sales tracking.

Some sites use a manual system where the customer enters the affiliate’s name at checkout, but this method is extremely inefficient. In fact, it does not protect either the affiliate (who loses any sales that are not credited to him) or you as the seller, as it can be used incorrectly.

One way to do this is to provide each partner with an individual discount code so they can track their use. This approach may present challenges in the future, though.

For this reason, WooCommerce allows you to integrate this feature by using a plugin. There are several alternatives on the market, but we recommend WooCommerce Affiliates.

We will see later what this plugin has to offer. For now, know that it allows you to create an affiliate system in just a few clicks, fully automated and with great customization freedom.

3) Decide which products to include in the program

Once the program is created, it is important to decide which products to include. In general, it is a good idea to include as many products as possible and to be clear about which products are covered by the affiliate program and which are not in order to avoid future problems with affiliates.

Be sure to include only products with a profit margin that allows for profit sharing, as you will be paying a percentage of the selling price.

4) Decide on affiliate commissions

As before, setting a commission requires an understanding of the market and the profit margin. If a product has a low profit margin, the percentage you assign to your affiliates will be minimal. Attracting affiliates will be difficult if your percentage is considerably lower than what other businesses offer in the market.

Start by researching the usual commissions for products similar to yours, and then decide if you can charge a similar margin in your store. Keep in mind that affiliate products may not result in the same net profit as traditional items, so increasing product costs could be a risky choice.

Make sure that you maintain a reasonable profit margin to prevent you from losing money. Note that the commission is calculated on the sale price and does not include additional charges such as taxes and shipping.

5) Establish your affiliate program’s policy

When setting up an affiliate program, it’s important to establish clear and precise rules for your affiliates. Your policy should cover all the important aspects, such as:

• Acceptance limits – Many stores allow anyone to sign up as an affiliate to increase the number of affiliate marketers. But if you want to restrict affiliations to people who can commit to a certain number of visits, state this clearly in the policy. Also, be prepared to explain why and how affiliates get rejected.
• Commissions Payment – Here you will need to enter the different percentages, excluded products, and allocation rules (like cookie duration).
• Promotion types – You can set up rules to prevent an affiliate from spamming your store, causing image damage.
• Terms and conditions – All aspects related to affiliation which includes logo use, image use, territory allocation, refund policy, additional rules, and more.
• Privacy – Be transparent and communicate openly with both affiliates and members. In the modern age, installing a cookie may raise suspicions, so it’s best to avoid giving the impression that you are hiding something. Instead, clearly state how you will use the data collected during registration.

Finally, remember to point out that the policy may be changed in the future at your discretion.

6) Prepare affiliate marketing materials

You do not need to create a lot of materials for your affiliates because of the plugin’s link generator. However, if you’re going to provide banners or logos for your affiliate website, it’s important to make sure that those resources are easily accessible.

Alternatively, providing visual representations of your products can help make their jobs easier. It would be helpful to create an ebook or video tutorial that explains the best way to use your program.

Remember: the more successful your affiliate site is, the greater your sales will be.

7) Recruit the best affiliates

Once you have created your affiliate program, don’t forget to promote it. This means highlighting it on your site, showing it on your social media, and talking about it in your newsletter.

You don’t have to search for affiliates on your own, just approach influencers who discuss topics related to your products and offer them a partnership in exchange for promoting your company on their social media, creating an affiliate network.

In this case, you might also consider providing a small discount code created with their name, so as to further encourage their audience to complete a purchase on your site.

8) Check out your competitors’ affiliate programs

Knowing how your competitors handle their affiliate marketing efforts is crucial for setting commission rates and protecting your own affiliates from being stolen.

Keep in mind: even though the affiliates are often involved in multiple affiliate programs, their main focus will be on the ones that offer the highest payment.

9) Manage the affiliates

Make sure to establish a convenient and efficient means of communication with your affiliates. They form the backbone of your team, so it is crucial to address their inquiries and monitor their inquiries and monitor their performance for any issues affecting sales.

Training is crucial. If the number of affiliates is rising, but sales are not, it might be necessary to invest in guidance to improve results.

You can also consider creating a leaderboard (activating the competition instinct) with rewards for the best affiliates.

10) Monitor the metrics

Finally, you should review all the information and statistics to get helpful feedback on how to improve your store. If affiliates are not signing up, it is most likely due to a sign up form that is too complex or hard to find. And if sales for a specific product aren’t increasing, it might be worth considering a higher commission rate.

It is important to consider the profitability of your business through a return on investment (ROI) calculation. To do this, you need to subtract the amount you paid to your affiliates and determine if the profit is enough in the long run.

Create your own affiliate program now

Now that you have everything you need, all you have to do is learn how to use WooCommerce Affiliate.

The plugin allows you to set up a fully automated system. All you have to do is purchase the plugin, install it and create a registration page for your affiliates.

In the control panel, you can manage different settings. These settings allow you to choose how long the recognition cookie stays active, set a commission percentage for all affiliates, or adjust it for each affiliate separately. You can also decide on the payment threshold and more.

Moreover, the plugin provides a detailed overview of the program’s progress, including general statistics and specific details on website traffic and conversion rates.

All within a few clicks.

Conclusion

The store’s affiliate program holds significant value and has the potential to greatly increase sales.

This tool has great potential, but achieving the best outcome requires studying its functions in-depth. We provide a step-by-step guide and recommend a plugin that is suitable for beginners to help you get started.

Learn how to use and create it for your needs, then let your affiliates handle the promotion work.