How To Run An Affiliate Marketing Business sucessfully From Home


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Affiliate marketing can be a very powerful way to market your product or service in this age of social media.

Why? Because affiliate marketing essentially leverages two very important marketing phenomenon in this day and age: social proofs and customer advocacy. 

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Social proof is a psychological phenomenon when a customer purchases a product or service because someone in his/her social circle purchases the product/service, even more, if this person recommends it. 

On the other hand, customer advocacy is a condition when a paying customer is so happy about a product or service and then recommends it to their peers, essentially producing social proofs to those around them. 

Affiliate marketing, in a nutshell, is creating artificial advocacy that can be beneficial to both the brand and the affiliate marketers, and in this post, we will discuss a step-by-step guide to implement affiliate marketing for your business. 

Without further ado, let us begin.

What Is Affiliate Marketing

Affiliate marketing, in a nutshell, is allowing people (not essentially your customers) to promote your product or service on their platform. The platform can be their website (blog), social media profiles, YouTube channels, and others, and every time they make a sale, they receive a commission from you.

These people who sell your product/service in an affiliate marketing scheme is called an affiliate marketer, and discussed, is your artificial advocate.

For businesses, affiliate marketing is a great way to build social proof, while at the same time can be a high-ROI marketing effort when done right. You only need to pay your marketers when a product is sold, making it a cost-efficient channel. 

For affiliate marketers, affiliate marketing can be a great opportunity to create an online passive income, the dream of so many people these days. A marketer doesn’t need to have any product or service, or even a significant amount of capital to start earning income. 

ing affiliate programs, as we will discuss below.

How Does Affiliate Marketing Work?

The basic principle of affiliate marketing is for the business/product owner to track the affiliate marketer who is responsible for a sale. 

This is typically done by giving each affiliate marketer a unique link that these marketers can put on their platforms.

When a customer clicks on this unique link, a cookie gets stored on the customer’s device, and this cookie—a very small file— allows the merchant/product owner to track the sale and which marketer makes the sale. The cookie typically has an expiration date (i.e. 48 hours), so even if the customer doesn’t make the purchase immediately, the affiliate marketer can still get paid if the purchase is made before the expiration time. 

Businesses can then pay the affiliate marketer in various ways based on the business model, but commonly there are three commission models we can use: 

  1. Pay-per-sale

The standard model which we have briefly discussed above. In this model, the merchant pays the affiliate marketer a percentage of the product’s price after a customer purchases the product. 

  1. Pay-per-lead

In this model, the merchant pays the affiliate marketer based on lead conversion where the conversion isn’t necessarily a product sale. For example, the conversion can be a referral filling out a sign-up form, signing up for a product free trial, downloading software, etc. 

  1. Pay-per-click

As the name suggests, the merchant will pay the affiliate for each click. This is typically done in a campaign where the affiliate promotes the merchant’s website or platform on his/her platform, and the affiliate is paid based on the number of traffic that moves from the affiliate’s platform to the merchant’s site. 

Which business model should you choose? As a brand, the pay-per-sale (or pay-per-action) and pay-per-lead models are the best, which are essentially risk-free: if they don’t make any sale you don’t have to spend anything. 

However, most affiliates would prefer to get paid per click or even, per impression (every time they show your product to their traffic, you’d need to pay).

Hence in every affiliate marketing program, we are faced with a dilemma:

  1. We’d want to avoid pay-per-click and pay-per-impression models at all cost, but
  2. We’d like to attract as many high-quality affiliates as possible

The quality of your affiliates, and so, the referrals they’ll bring to the table, would ultimately depend on what you offer: offer too generously and you’d risk getting low-quality affiliates, those who are only interested in the offer and not actually interested in marketing your product. On the other hand, offer too little and you might not attract anyone. 

Finding the right balance here is very important, and if you can create a program with the right reward and attract the right affiliates, you are halfway there to affiliate marketing success. A good approach is to check your competitors that are also offer

How To Start an Affiliate Marketing Program?

Before we can discuss the technicalities of creating an affiliate marketing program, let’s first discuss something that is arguably the most important secret to your affiliate marketing success: your product. 

The better, or at least, the more well-known your product is, the higher conversion rates you’ll have, and the easier you can attract affiliates. Of course, higher conversion rates would also translate into higher revenue for you. 

For example, even if your competitor offers $100 per sale, but on average an affiliate can only sell 10 products a month, your offer would be more attractive if the affiliate can sell 10 products a week, even if you only offer half ($50) in commission rate.

So, make sure you have a high-converting product before you start your affiliate marketing program. 

Starting an Affiliate Program: Competitive Analysis

Performing a competitive analysis can be a great approach to gather insights before you start your own affiliate program. 

Why? Because you are competing with your competitors not only in selling your product but also in recruiting affiliates. You’d want to check how much in CPA (cost-per-action) or cost-per-sale your competitor offers, or cost-per-lead (CPL) if the competitor is using a pay-per-lead model.

For example, you might notice that your competitor pays 20% in commission per sale for a $100 product, then the CPA is $20. You should also check the channels where the competitor’s affiliate program is being promoted. If for example, the affiliate program is heavily promoted on relevant platforms (i.e. Facebook Ads, PPC ads, prominent review sites, etc.), then you can consider:

  1. Matching this competitor’s offers and promotional approach, but obviously, this would depend on your available budget and timeline.
  2. Be more creative so you can improve your conversion rates, for example by experimenting with new promotional channels or new affiliates. The higher your conversion rate, the more your affiliates can make in revenue, even if your actual CPA is lower than your competitor. For example, if your affiliate knows that they’ll have an easier time selling your product instead of your competitor’s, they might prefer promoting your product instead. 

End Words

Above anything else, there are two main factors determining the success of your affiliate marketing program: your product, and your commission strategy. If your product is selling, you shouldn’t have much problem in attracting more affiliates even if you don’t offer too much in commissions. 

Starting an affiliate program can be a very effective way to market your business, but keep in mind that affiliate marketing is not a short-term game, but rather a long-term investment. Keep monitoring your program and your affiliates’ performances, and optimize your strategy regularly.

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