If you want to launch an affiliate program, there are a few things you need to do to set yourself up for success. If you plan it out beforehand, it will help you tremendously. Your goal should be to develop a program that affiliates want to participate in. The following article will cover some essential topics about setting up your affiliate program to get it ready for launch.
- Competitive analysis
- Define your program terms and conditions
- Define a commission plan
- Affiliate signup page
- Affiliate resources
- Affiliate emails
- Tracking setup & testing
- What next?
Your business will always have competition. Getting to know your competition is essential to set up a program that stands out from the competitors and attracts the best affiliates to join your program. To get started, pick three to six competitors depending on how competitive your market is and join their affiliate program (You probably want to use an email other than your business email when signing up for their program). If you have never joined an affiliate program, you may also want to join a few additional complimentary business programs. Joining affiliate programs gives you an idea of what to expect from the affiliate’s perspective and provides valuable ideas on how best to plan and implement your program. Add the following information to a spreadsheet or note app so you can compare the programs and help you decide what is right for your business.
Commission levels – What is the base commission level for businesses similar to yours? Your goal is to come up with a competitive commission plan while ensuring it fits within your financial model. Each company has different margins, advantages, and other expenses to consider. The commission is one part of the equation as many affiliate programs payout more in additional formats, such as bonuses or tiered commission. Matching competitors’ commission plans without considering your margins and the need to leave room for other incentives to motivate your affiliates can leave you in a vulnerable position. (see commission plan setup).
Program terms – How often do affiliates get paid? What is the commission locking period? Are there any restrictions on using their trademarks or using PPC advertising? (see program terms setup).
Creatives – Look at the style and messaging of creatives, which may include text links, banners, or other visuals. Reviewing the creatives might provide concepts that are worth exploring or give some insight into current trends. (see creatives setup).
Brand elements – Do your competitors provide a brand style guide or branding elements such as your logos or color guide to help affiliates make their own creatives?
Incentive strategies – Some programs offer special incentives for the first sale, reaching certain milestones (tiered commission structure), time-boxed incentives for things like holiday based promotions. (see affiliate incentives).
Cookie length – The cookie length specifies how long after a potential customer clicks a link, will the affiliate still get credit for the referral. Most affiliate purchases happen within a few days of clicking a link, but in some cases, a customer may return a few weeks or after a month to make the purchase. Some affiliate programs have cookie tracking that is limited in length (e.g., 30 days). If your program uses indefinite cookie length, that is a selling point to affiliates.
Communication – How long did it take for competitors to approve your affiliate application? After getting approved for their program, you should receive a welcome email and any affiliate newsletters. Review the content, messaging, as well as the frequency. Lastly, did the affiliate manager reach out to you personally by email or phone? (see affiliate emails)
Popular products for affiliates – Many programs will highlight their best selling products for affiliates and give you an idea of successful strategies to promote specific products to affiliates.
Program presentation – How easy was it to sign up for the affiliate program? How clear was the messaging on the affiliate signup page? Once joined, was it obvious how to find and share affiliate links?
The process of gathering data about your competitors’ affiliate program is mostly a one-time event, but it doesn’t hurt to stay in their program to monitor what they are doing. The point of the competitive research exercise isn’t to copy your competitor’s affiliate program. It is to compare the various elements across all of your competitors, explore gaps and opportunities, and develop the right pitch for your brand. The goal is to set the program apart from competitors and attract the best affiliates to join your program. Ask yourself questions like: How can I make my program stand out from the competition? What are my competitive advantages? Why will affiliates choose my program over others? It takes some work to answer these types of questions, but they are quite valuable when planning your program and comparing yourself to the competition.
Keep in mind that not everyone uses best practices and that your competitors may not have a successful affiliate program. Don’t assume just because your competitors have it set up a certain way that it is the correct way.
Program Terms and Conditions
An affiliate program is based on an agreement between the merchant (you) and the affiliate. The program terms and conditions specify the rules of the relationship and are essential to a successful program. Not spending time on the terms makes you vulnerable to revenue loss and/or affiliates, fraud, and potential legal issues. The terms and conditions tend to focus on the legal aspects of the merchant/affiliate relationship. Typical program terms include details such as:
Commission plan / Payout terms
Affiliates need to know how much, how, and when they will get paid. Your terms should outline what the commission rates will be for sale. (How to choose commission plan) Include details such as commission amount (e.g., 10% of the purchase minus shipping/taxes), bonuses (based on various promotions), commission locking period (in case of returns of fraudulent orders), minimum affiliate payout (e.g., $50), and affiliate payment schedule (e.g., weekly/monthly). (see affiliate commission)
Decide what is considered a prohibited activity. Some affiliate programs have specific rules around: pay-per-click/paid ads, trademark usage, or coupon usage. It isn’t always as simple as allowing/disallowing activities but defining the activities’ specific rules. What you determine as a prohibited activity or the rules will vary depending on your program and brand goals. Many agreements add a clause in the terms and conditions that state if you violate any of the rules, they will be terminated and forfeit any accrued commission. (see affiliate program terms)
Pay per click (PPC) bidding
Should you allow affiliates to bid on PPC terms or trademarks? In many cases, those searching for your brand name or trademark will find your website at the top of the results. Allowing affiliates to bid on your business name may result in paying more commissions that are necessary. For this reason, we recommend that you prohibit bidding on your trademarks or business names.
However, this doesn’t mean you should necessarily not allow PPC marketing. Some affiliates bid on non-branded but industry-related terms. In this case, the affiliate is bringing value by accessing potential customers that you may not already be reaching. But if you are already actively doing PPC marketing, you may not want to compete in bidding with an affiliate. If this is the case, you should prohibit PPC marketing, whether it involves your brand name or trademarked term. If you don’t want affiliates to do PPC marketing, clearly outline it in your terms and conditions.
Some affiliates’ sole promotion model is through the promotion of merchant coupons. It typically involves creating a website dedicated to coupons, deals, or savings. In many cases, coupon affiliates can put you in front of a new audience. However, many merchants’ find that coupon websites tend to have a higher amount of fraud. An affiliate will lure a potential customer into clicking on the page to view a coupon. Meanwhile, when the link was clicked, the affiliate set a cookie to get the commission, but the potential customer never found a coupon code. The experience creates frustration among potential customers and a loss of revenue for the merchant when paying unnecessary commissions.
To prevent this type of click fraud, you may want to include a clause in your program rules prohibiting any form of click fraud or deceptive ads. The other method is to manually approve affiliate applications and only approve affiliates from trusted websites/businesses. (more about affiliate types)
If you have a registered trademark for your business, you may want to specify what affiliates are allowed and not allowed to do with your trademark. Some merchants prohibit using their trademark or misspellings of the mark in search marketing/Pay-per-click ads or domain names. Without specifying these restrictions, some affiliates may attempt to compete with you for paid ads on Google, create confusingly similar-looking websites, or use misspelled domains to divert your trademarked traffic through their affiliate links. To prevent such activities, add language in your program terms that affiliates can only use the trademark as authorized by the business owner and that the trademark can’t be modified, or use any form of misspelled domain names. The goal is to add language the prohibits affiliates from infringing on trademarks, copyrights, or intellectual property.
When a potential customer clicks on an affiliate link, a cookie is stored in their browser to track the referral. Typically, a cookie is stored for a specified period of time. Make sure to specify the length of time that a cookie is valid (assuming a customer does not delete their cookies). While most purchases happen within a few days of clicking a link, most affiliates prefer a long cookie life. With LeadDyno, cookies do not expire. It allows the affiliate to get the appropriate commission for each of their referrals.
The FTC is responsible for making sure that businesses follow ethical business practices. The FTC updated its affiliate disclosure policy and enforcement guide with requirements for compliance. Whenever a link is included on your website that may result in a commission, you must disclose it to your website visitors. The affiliate is required to put the disclosure in prominent areas near the affiliate links. The disclosures can’t be hidden in small text or an unobvious place on the website. The language used in the disclosure must also be clear and not include industry jargon that a typical website visitor may not understand. In your terms and conditions, remind your affiliates to follow the FTC guidelines on affiliate disclosures.
In 2003, the US Congress enacted the CAN-SPAM Act. The law, enforced by the Federal Trade Commission (FTC), has a few rules for sending commercial emails that require clear and accurate subject lines, providing a way for recipients to opt-out of future emails, and include your physical postal address. There should be a statement in your terms and conditions that require affiliates to abide by State and Federal laws, including the CAN-SPAM Act.
Ethics / Legal
The elements outlined in this document are by no means complete and do not include the legal language you should consider adding to your document. Details about limitation of liability, indemnification clauses, or other provisions are beyond this document’s scope. Consult an attorney to ensure your partner agreement contains all the necessary legal language for your country or location.
Define Your Commission Plan
Your commission plan is what incentivizes your affiliates to promote your products or services. Offering a higher commission than your competitors can help speed up the growth of your affiliate program. However, if you don’t have a good idea of your margins and expenses or forget to leave room for incentives, you might put your program and business in a vulnerable position. The following section will provide you with tips and strategies to develop your business’s best commission plan while remaining competitive.
1. Payment Methods
To get started, decide if you want to pay affiliates for a visitor, lead, or sale.
Pay per sale (PPS) – Pay per sale is the most common way to reward affiliates. Affiliates receive a commission after referring an order. The affiliate would receive a percentage of the sale or a flat rate. When paying per sale, consider the following commission options:
- Percentage – Paying a percentage of the sale, minus shipping and taxes, is the most common way to reward affiliates. If your commission was 20% and the order was $100, the merchant pays the affiliate $10.
- Flat rate – For businesses with products with the same markup/profit margin, consider setting a flat rate commission for each item sold. A flat rate commission example would be to pay $5 for each t-shirt sold.
- One-time or Ongoing – Decide whether you want to pay an affiliate a commission one-time or offer ongoing payments if you have a subscription-based service. For example, if you had a subscription service that cost $100 a month and the affiliate commission was 10%, decide if you want to pay them 10% one time or 10% for each month the customer continues to pay for your service. The affiliate commissions may be indefinite, or some merchants set a time limit on subscription-based commissions and offer ongoing commissions for the first 6, 12, or 24 months.
Pay per lead (PPL) – Reward affiliates for signups, newsletter opt-in, or phone calls, but it doesn’t require the customer to buy anything. Many pay per lead programs have parameters that ensure that a lead meets specific criteria to be considered a valid lead.
Per per visitor (PPV) – This reward system isn’t as common because it doesn’t measure the value or quality of the traffic sent by affiliates and can result in low-quality traffic and fraud.
It doesn’t need to be just one method. While most affiliate programs only use Pay per Sale, it is possible to also reward affiliates for leads or visitors.
2. Commission rate
To decide on a commission rate, first, figure out how much you can spend on commissions. Use the following factors to help you determine the ideal rate.
Calculate your profit margin – Calculate your profit margin and consider your business costs, expenses, and return rate.
Lifetime value (LTV) of your customers – If you are starting out, this might be harder to figure out, but as your business grows, understanding your customers’ lifetime value provides you with the top end of how much you can spend on each sale and pay affiliates. If you have a subscription business, know how long an average subscriber will stay with your business.
Competitive analysis – Do your research on your competitors to get an idea of their commission rates and incentive plans. (See competitive analysis)
Leave room for incentives – Keep the ability to raise commissions for all affiliates in the future. Use incentives to motivate dormant affiliates, allow for a multi-tier program, run special offers/promotions, and private offers. Might include options to have different tiers. For example, If you determine the maximum commission you can pay is 15% of the sale, don’t start at 15%; start much lower. Starting lower will allow you to create incentives and reward successful affiliates with a private offer.
There are two main ways to reward affiliates. Use in combination or separately.
Monetary – Money is the most common way to reward affiliates. Offer a set rate and consider offering tiered plans to be able to reward your best performers.
Non-Monetary – If your profit margins are tight, consider paying affiliates in something other than money. Some merchants will pay affiliates with gift cards, store credit, products, subscriptions, or other things that aren’t cash. Non-monetary items can be used as the main commission or as an incentive bonus for the first sale or reaching certain milestones.
Here are some trending affiliate commission rates by industry:
|INDUSTRY||AVERAGE AFFILIATE COMMISSION|
|Arts & Crafts||10%|
|Computers & Tech||15-20%|
|Food & Drink||10-20%|
3. Affiliate Incentives
It is essential to leave room in your commission structure to incentivize your affiliates to either grow their referrals or motivate them to get started. Incentives might be offered one-time, ongoing, or time-boxed to a specific date range. A few ideas for affiliate incentives include:
Tiered commissions – Tiers allow you to reward your top affiliates. Reward affiliates depending on how many products or services they sell for a given time period. An example is to increase commissions by 5% if the affiliate refers ten or more sales. The right percentage and numbers will need to be based on your business model, but here is an example to consider. If your standard commission is 10%, increase commissions based on the volume for a given period of time like the following:
- $500 in sales – 11% commission
- $1000 in sales – 12% commission
- $2000 in sales – 13% commission
Dual incentives – Allow the affiliate to get a commission and the customer to get a discount.
Bonus structure – Offer bonuses to affiliates. An example might be to reward affiliates with a $50 bonus if they get X sales in a specific week. Consider offering prizes such as gift certificates, products, or non-monetary prizes in addition to their standard commissions.
Multi-Level Marketing (MLM) – Allow affiliates to recruit other affiliates and pay them a small percentage of the referred affiliate sales. The downside of creating a multi-tier program is that the affiliate commission is spread among more affiliates resulting in less money for each affiliate to make. Many affiliates would prefer a higher commission for referring sales instead of requiring that they recruit more affiliates. There is also a risk that affiliates recruit themselves with multiple accounts to get the full commissions. Multi-tiered programs work best for Saas type models with large margins as opposed to lower-margin e-commerce products. (how to setup MLM on LeadDyno)
4. Affiliate Payment Terms
Once your affiliates start referring sales and earning commissions, they will want to get paid. Make sure to plan the payout threshold, payment frequency, commission locking period, and method of paying affiliates.
Threshold – To decrease the management time required to pay affiliates, many programs add a threshold before an affiliate will get paid. Typical thresholds are $25-100. If an affiliate has earned only $15 in commissions and your threshold is $25, the affiliate will not get paid until their total commissions reach at least $25.
Payment Frequency – Determine how often you want to spend paying affiliates their commissions. Common payment frequencies include weekly, bimonthly, monthly, or quarterly. Most affiliates prefer frequent payments, especially those who invest more than time and actual money into promoting your business. However, some international affiliates prefer payments monthly or less often if paid by wire transfer or another way that requires a one-time fee.
Payment Methods – Choose an easy to use payment method to pay affiliates wherever they are in the world. One option is Paypal, which is available in most countries. There are other resources and ways to pay affiliates if needed.
Locking period / Hold time – You will have the option to decide when to release commissions to an affiliate. It is commonly called a locking period or hold time. The hold time is different than when you pay the affiliate. Until the commission is released, it is locked. Once past the locking period, it will be released to the affiliate’s balance and included in their next payment. Many retailers match up the commission hold time with their return policy window. So if you are an e-commerce store with a 30-day return policy, they would set the commission release at 30 days. Various events can happen with the customer, affiliate, or merchant side, where you may want to hold off releasing an affiliate commission.
For the customer, it might include a: fraudulent sale, returned order, duplicate order, canceled order, or payment failure. For the affiliate, it might be a fraudulent order, test order, or self-referral. For the merchant, it might just be a test order.
When deciding on a commission plan for your business, keep it simple. It should be easy for your affiliates to understand. There are lots of ways to get affiliates to perform, most of which are from financial incentives. Substantial commissions help your program scale quicker. However, don’t start at your commission ceiling with the inability to offer more incentives. You don’t want to have to lower commissions.
Affiliate Signup Page
Your affiliate website landing page is an opportunity to convince affiliates to join your program. It should include a signup form and a program description that lets affiliates know what to expect from your affiliate program.
The signup form provides an opportunity to get to know your affiliates and be used as an application form. You can add as many fields as you want but keep in mind that it may discourage some affiliates from joining your program if your form is too long and complicated.
Consider the following fields in your affiliate signup form:
- Email address – Collecting an email is always mandatory for account creation and to keep in contact with the affiliate.
- Contact Information – Getting a name allows you to personalize your emails and know more about your affiliates. Depending on your program goals or restrictions, consider requesting an affiliate location, company name, or phone number.
- Marketing strategy – Find out how affiliates plan to promote your program: website, coupons, PPC, email marketing, or social media to promote your brand. (See affiliate types)
- Online Presence – Getting a website URL will let you review their website’s quality and see if they are a good fit for your business. Keep in mind that some users don’t have a website and may only be able to provide a social media profile (Facebook, Instagram, Twitter, TikTok, Youtube, etc.)
The program description should describe how your affiliate program works and be used to get your affiliates excited about joining your program. The program description is different from your terms and conditions. It isn’t as focused on the program’s rules but the opportunity for a partnership as an affiliate. The program description should be included on the affiliate website landing page and available within the affiliate’s account.
Description of your business – Let affiliates know about your business. It doesn’t need to be lengthy, just a clear description of your product or services and mission when relevant. It is also an opportunity to provide some details on your quality, guarantees, anything unique about your products/service, and anything else that helps your business stand out from competitors.
Commission structure – All affiliates want to know how much money they can make from your program. Affiliates care about the commission rate, cookie duration, commission lockup period, and payment terms. (see commission structure setup)
Statistics – Include statistics that highlight the success of your program. The data might include average order value, average commission, or your conversion rates. The data doesn’t necessarily need to come from your affiliate sales, even sharing your stats from your own marketing helps boost affiliates’ confidence in your program.
Share any advantages – Include a statement about any notable creatives, exclusivity, widgets, promotional tools, or resources available if they join your program.
Terms and Conditions link – Add a link to your program terms and conditions if a potential affiliate wants to know about restrictions not outlined in your program description. Affiliates will want to know about any restrictions on PPC, trademarks, coupons, or eligibility requirements before signing up. (see program terms setup)
Contact information – Ensure potential affiliates can reach out to you with any questions before or after signing up for your program.
Link to your website – Don’t assume potential affiliates have already been to your website. Make sure to have an easy to find link for affiliates who might want to check out your product or service.
Eligibility – If you have any restrictions on who can join your affiliate program, those eligibility requirements. Restrictions might include geographic location, website traffic, or social media follower count.
After signing up, the affiliate should be able to access additional information about your program. It might be similar content to your affiliate landing/signup page but in greater detail. Consider adding other information, including:
Program description – Include details on your commission structure, highlight your major program rules, and include a link to your program terms and conditions, your contact information along with a link to your website. (see program description)
Getting started guide – Make it quick and easy for affiliates to get started with your program. Add some of the same information included in your welcome email sent after an affiliate is approved for your program. It is also an excellent place to reference any tools and resources that are available to your affiliates.
Brand information – Include a description of your brand and any information you might have about your typical customer. Include anything about your brand and customers that affiliates might find helpful when promoting your product or service.
FAQ – Consider adding a page with frequently asked questions about your affiliate program or business that might include questions like What kind of tracking your program uses? How much can I earn? How do I know when I’ve earned a commission? How do I link to specific products?
Tips and Ideas – Let your affiliates know what works. Include things such as encouraging affiliates to review your products, use a specific type of link, or describe your product or service.
Marketing Materials / Creatives – Adding text links, banners, visuals, blog posts makes it easier for your affiliates to get started and promote your brand. (more on affiliate creatives below)
Make it easy for affiliates to share your content. Creatives are what entice clicks and bring visitors to your website. They aren’t just graphics such as banners. They include text links, pre-written copy, landing pages, photographs, product images, and email templates. Affiliates appreciate well-tested creatives that have a high click-through rate and conversion rate. As an affiliate manager, it is essential to track the effectiveness of each of the creative campaigns that you create. If you find that specific creatives aren’t converting, consider updating them or trying new ones.
Text links – Text links might seem basic, but they are frequently the most effective tool for an affiliate and often have the best conversion rates. Best practice is to offer a variety of text links that may include your store name, specific product links, category-specific links, or special offers/discounts.
Banners – Quick and easy for affiliates to add to their website. When creating banners, make sure to optimize the size for a quick loading banner. A few tips to consider when designing effective banners include:
- A clear call to action (Get started, Buy Now)
- Focus on one product
- Add a value proposition
- Keep them simple
- Include your logo
- Use clear images with readable text
- Sized under 100kb when possible.
Create banners in different sizes, including these standard sizes::
- 300×250 Medium Rectangle
- 728×90 Leaderboard
- 320×50 Mobile Leaderboard
- 160×600 Wide Skyscraper
Product images – Affiliates will frequently need visuals of your product or service to add to blog posts, social media posts, emails, and newsletters.
Pre-written copy – Help affiliates by adding pre-written copy for emails, newsletters, blog posts, or social media. The copy might be about your products, services, or brand.
Landing pages – While landing pages aren’t added to your affiliate website, your links should go to tested landing pages. High converting landing pages make it so much easier for affiliates to get sales. Spending time A/B testing your landing pages will help your own business as affiliates convert visitors into sales. For more info, check out Hubspot’s landing page guide.
Social sharing images & text – There are quite a few popular social media platforms, including Facebook, Instagram, LinkedIn, Twitter, TikTok, Pinterest, etc. Each of these platforms has its ideal image sizes and text length restrictions. One sized images won’t work for each platform. Here are a few handy guidelines for creating content for social media:
Branding assets – Make branding assets available for any affiliates who want to create their own creatives or display your website’s logo. A brand asset page might include logo files (vector and other formats), slogans, product photos, and details on the brand colors (hex codes). A few of our favorite branding asset pages include Mailchimp, Dropbox, and Spotify.
(more on how to setup marketing creatives on LeadDyno)
The primary communication with your affiliates will probably be over emails. Emails provide an opportunity to inform, educate, and engage your affiliates. A few of the typical emails to send to affiliates include:
Welcome email (Automated) – This is typically the first email that the affiliate will receive from your company. It is an excellent opportunity to onboard your affiliate and helps motivate them to get started promoting your business right away. The email should include the following types of information:
- Program description
- Include the affiliate’s link
- Link to their affiliate dashboard
- Commission structure
- Link to your Terms and Conditions
- Provide your contact information
New sale/lead/signup (Automated) – Affiliates love getting notified when they make a referral and are getting a commission. This type of notification is a great way to keep affiliates in the loop of important account information and remind them their efforts are working. However, affiliates should be allowed to turn off these notifications as some affiliates may bring in 100s of sales per day, which might mean too many emails. (how to setup automated emails on LeadDyno)
Activity Reports (Automated) – Send activity emails that summarize an affiliate’s efforts over a day, week, or month.
Email follow-up sequence (Automated) Take the opportunity to create an email sequence that goes to your affiliates after they signup. Adding an automated drip sequence that starts after they join your program allows you to engage affiliates with tips and information about your business and affiliate program. (how to setup follow-up emails on LeadDyno) Examples of content might include:
- Best way to promote your product or service.
- What links/banners/landing pages convert the best.
- Information about your brand with details about your target audience.
Newsletters (Manual) – Newsletters provide an opportunity to engage your affiliates and share specials, products, and promotions. Consider sending newsletters bi-monthly or monthly to keep affiliates engaged and informed. (how to setup affiliate newsletters on LeadDyno)
Affiliate invitation (Automatic) – Customers can be the best affiliates. Automatically invite new customers to join your affiliate program. Encourage your customers to get paid for their referrals they may already be sending to their friends and family. (how to setup affiliate invitations on LeadDyno)
Tracking links and codes
Methods of tracking affiliate sales – There are two main ways to track affiliate orders: links and codes. The affiliate link is the standard for tracking sales. In many cases, the affiliate URL can be customized with vanity text, helping affiliates when sharing. An example might be http://www.leaddyno.com/?afmc=yourname. Affiliate codes can track alternative marketing methods such as word of mouth, print, or phone. Codes can double as coupons to provide a dual incentive giving the affiliate a commission and the customer a discount on your product or service. When possible, we recommend offering affiliates both links and codes for tracking affiliate referrals. (how to setup affiliate links & codes on LeadDyno)
Installed and tested – Before launching your program, make sure your affiliate tracking code is installed, and you have tested that it is working correctly. Don’t launch your program until you are sure it is working correctly. Affiliates expect their traffic and sales accurately tracked. (how to test your affiliate tracking on LeadDyno)