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Reach New Markets with Affiliate Programs

Feb 6, 2008
One of my clients recently created a new bundle of products and wants to find other people willing to sell them on her behalf. In return, they get a hefty commission.

She asked me for some advice about how to best approach these people, and how to convince them to be part of her extended sales force.

So I'm going to share some of that advice with you here.

This is known as an affiliate program, where you pay others to send people to your business, and you pay the affiliates a commission if those people buy from you.

This has become extremely common on the Internet, but it's been around long before the Internet as well for example, real estate agents sending business to mortgage brokers, and vice versa.

Three key principles

A successful affiliate program - on or off the Internet - rests on three important principles. If you get this mix right, you've got a better chance of making your affiliate program work.

Not all affiliate programs follow these rules. But if you break them, make sure you know why. Unfortunately, most businesses ignore one or more of these principles, without knowing why. And that's a disaster for their affiliate program.

1. Good Match

First, there must be a good match between the two parties. In other words, choose affiliates who have a list of the right sort of clients.

Otherwise, you'll waste time trying to recruit affiliates who aren't interested in promoting you, because they know you're not a good match for them.

Even if you do recruit them, if it's not a good match, you'll waste time creating useless joint venture deals, handling queries from customers who don't understand your offering, and processing refunds from disgruntled customers who were promised something that you couldn't deliver.

2. Commission Only

Second, money changes hands only on a successful sale.

Affiliates don't pay you to join the program, and you don't pay them unless they refer somebody who makes a purchase. This makes the deal a low-risk proposition, which makes it easy for both parties to accept.

There are different ways of calculating commissions, but the basic principle is that it's always triggered on a sale. You don't have to worry about paying your affiliates a "salary"; and they don't have to worry about paying you a "joining fee".

3. Win-Win

Finally - and most importantly - the single most important element of a profitable affiliate relationship is that both parties walk away thinking that they got the better end of the deal.

How can both parties get the "better end" of the deal? Well, the two parties bring different assets to the deal. You're happy to sell your product or service to new clients and give away part of a profit that you never would have had; and the affiliate has a list of potential clients, so is happy to refer them to you in return for a share of the profit.

Do you follow these principles?

If you've got an affiliate program, are you following these principles? If not, I bet you're struggling to make it work. You'll get greater leverage by following these rules - at least until you've got enough experience to break them deliberately.
About the Author
RanjuKumar is assistant to Gihan Perera is the author of "The Seven Fatal Mistakes That Most Web Site Owners Make - And How To Avoid Them" and "Spin: Turn One Idea Into Hundreds of Information Products and get your complimentary copies now.
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