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How To Create An Affiliate Program the RIGHT Way

How To Create An Affiliate Program the RIGHT Way

Some affiliate marketers are into making blogs and monetizing via Amazon and some are into buying ads to promote Nutra subscription traps. There’s a wide range of people in the space, and we’re here to help break down everything you need to know about affiliate marketers and the programs they offer.

The Different Types of Affiliate Marketers

  1. The casual affiliate/mommy blogger:
    This marketer has a blog and writes various articles. They probably don’t get much traffic and, to them, affiliate marketing might be more or less a hobby or side hustle.
  2. The professional affiliate / small media company
    This marketer/group is more serious. They probably have a website in a certain niche that gets heavy traffic. They probably have relationships with brands that pay for high placement on their sites. SleepSherpa is a good example of one of these types of affiliates, along with many other mattress review sites.
  3. The performance agency
    This is an agency with a team of people that promotes various offers through various channels, usually paid ads. They are very serious and only want to work with higher-paying CPA offers. They might also own some offers or brands themselves.
  4. The solo media buyer
    This person promotes high-paying DTC offers. They’re a solo entrepreneur that has the cash flow to scale whatever offer gets them traction. They won’t consider an offer that cannot be monetized via paid traffic.
  5. The guru
    The guru loves posting on social media about how they found a way to make money online. They have the secret to wealth, happiness, and life, but you have to buy their offer to get the secret yourself. If your product is a biz-opp or self-help info product, you’ll want the guru on your team.
  6. The big media company or authority brand
    Nerdwallet, Lending Tree, and Sleep Foundation; these sites are cash cows and won’t be promoting your underwater basket weaving course anytime soon.

Making Your Offer “Back Out” For You…

If you want your affiliate program to be a large customer acquisition channel for your brand, you need to be OK with making some (or all) of your profit on the back end.

There’s a common phrase in the industry: “Is the offer backing out?” It means: “Is the advertiser (brand) making money on the back end, after paying the affiliate to acquire the customer?”

The formula for Calculating How Much to Pay Affiliates:

  • What is your average order value (AOV)?
  • How many customers purchase again within 3-6 months?
  • What is the value of a customer over a period of 3-6 months? (LTV)
  • Once you know the above averages, you can start to make a decision on how much to pay your affiliates.
  • Figure out how much you can pay an affiliate to acquire a customer without going broke but also without you making a lot of money on the front end.

Example: $49 item price. $90 AOV. $120 6-month LTV.

Payout: Pay your affiliate $50-$70 per NEW customer.

Hedging Your Risk on the Above Model:

Use daily/weekly caps to hedge risk until you pinpoint which affiliates have the best traffic.

If an affiliate’s traffic is not backing out, stop accepting their traffic or lower the payout. Show them your data and tell them you can’t take their traffic anymore or you need to pay them X amount. They’ll understand.

Why Should I LOSE Money Paying an Affiliate?

You shouldn’t be losing money if you are structuring your offer correctly.

Yes, you might take a loss to acquire the customer, but you should be making a net profit on the back end after you funnel that customer through your monetization strategy.

You’ll end up showing a much higher revenue number doing it this way. Guess what types of brands get acquired? Brands with high top-line revenue. If a buyer looks at your top-line revenue and sees a huge number, but sees that your net profit is low, it’s more comfortable for them because they know there is demand and a proven sales system in place.

All that to say, if you want serious affiliates to consider your brand, you need to first, know your numbers, and second, pay out enough to make someone consider testing your offer.

What You Need in Order to Have a Successful Affiliate Program

  1. Creative
    Give your affiliates good images and videos. Allow them to use all of the assets you created for your brand. Set up a Google Drive or Dropbox that you can easily give to affiliates.
  2. UGC
    Get user-generated content (UGC) vids recorded and provide your affiliates the raw, unedited files, plus the edited files. Good affiliates will tweak your videos to make them work.
  3. Tracking
    You need tracking. Refersion might work if you’re on Shopify. The most serious affiliate marketers will be using a tracker like Voluum or Redtrack. Everflow is an option but it’s expensive ($750 /month) for a brand just starting an affiliate program.

Why is it So Hard to Attract Affiliates to Promote My Product/Offer?

Give your affiliates a real payout. Don’t offer them the same 10% they can get on Share-A-Sale from a big brand.

Most affiliates would rather take 6% from Amazon than 10% from some random t-shirt shop since Amazon will convert their traffic much more than something like that t-shirt store.

Serious affiliate marketers (the ones who do this full-time for a living) are not interested in promoting an offer that pays out 10% or even 20% on a cheap product from a no-name brand.

If they have traffic, they are going to monetize it as much as possible and you’ll need to be competitive if you want them to even give you a second look.

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