How to Manage Your Affiliate Program
Most businesses thrive on referrals. It’s called word of mouth marketing and you can expand your business through people who refer new customers in exchange for a percentage of the profit. When you set up your affiliate system with a reputable company, you’re just getting started. There are a few important things to consider during setup.
Product Prices
If you are going to be offering commissions for the sale of products you will need to consider your product pricing. Strike a balance between reasonable pricing and generous incentives. Price becomes a non-issue only if you’re selling virtual (downloadable) items. 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.
Incentives for Affiliates
Of course you want to keep as much of that hard-earned money as you can, but you have to remember the target with an affiliate program. Remember, good affiliates will be thinking in terms of quality products, commissions and return on investment. If the affiliate commission is too small, they will look for other products to promote for free .
Affiliates will work hard for you if they know they are being rewarded fairly for doing so. Affiliates will be working for free for your in exchange for a percentage of the profit. They may even spend money to promote your product. When deciding on commissions have a look at your competitors to see what is standard in your industry.
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 physical products, you can give out 10% .
Cookie Management
If you’re running an affiliate program, you should be familiar with cookies . A cookie tells you whether an affiliate made a sale or not. Most affiliates look at the cookie duration when choosing an affiliate program to join.
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. A cookie with a duration of thirty days makes sure that the original affiliate who referred the customer first will get credited for the sale.
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